Monday, July 19, 2010

Interview with Jack Schwager at CIO

Aiki14 points us to this excellent interview with Jack Schwager at Capital Ideas Online.

If you're a fan of The Market Wizards book series and the trader interviews Schwager has compiled over the years, you'll definitely want to check out the distilled wisdom in this piece. Here's an excerpt from the discussion:

CIO: Thank you Mr. Schwager for taking out time and talking to us. Over your long career in the markets you have interacted with some of the greatest traders. Could you share with us what you perceive are the qualities of great traders?
Jack Schwager: There are really very many. I will give you a few key ones. First on the list would be discipline. I can't think of anybody I have interviewed or met as a trader who has been very successful but has not been disciplined. I think that's probably an absolute essential.
Secondly, money management and risk control is certainly critical in one form or another. Most of the traders that I have interviewed will be the first to acknowledge that they consider money management actually more important than the methodology.
The other thing that is definitely worth mentioning is that successful traders find an approach that fits their personality. Time and time again, I see that the method that a trader is using very much reflects that person's characteristics or natural tendency.
For example, when I interviewed Paul Tudor Jones, he set a time that was during market hours. At the same time I was interviewing him, phones were ringing, people were coming in with messages, and he was watching multiple monitors around his office and yelling out orders on open phone lines to a number of different floors. It was almost complete bedlam, but he actually thrived in that type of atmosphere. That's the way he traded..."
There are some very fine insights on risk management and trading discipline here, along with some discussion on the efficiency of markets and the role human behavior has in shaping market conditions and individual returns. Certainly a worthwhile read; check it out.