The author of The Little Book of Market Wizards is Jack D. Schwager, an American trader and the author of the Market Wizard series. This book is primarily about trading or speculation, instead of investing.
Layout of The Little Book of Market Wizards
There are 23 chapters in The Little Book of Market Wizards.
The chapters are short and some chapters are divided into subchapters. The chapter title elucidates its content. Due to the large number of chapters, I would not elaborate them here.
At the end of the book is an appendix about options.
Highlights
According to the author, the two things that make consistently profitable traders are an approach to the markets reflecting one’s unique personality and aggressive money management. I feel these two are equally important for long-term investors too. We have to find a working system that suits our personality. Otherwise, it will be hard to follow the rules consistently and this inability to stick to the plan is one of the reasons why investors lose money. Besides that, we also need to have good risk control. It is important to conserve capital.
The author also advises against making trades due to impatience. Sometimes, inaction is the best action. Instead of making dubious trade, it is better to wait for the best opportunity to strike. I think I need to improve on this attribute.
It is important to not let emotion influences our decisions. Do not hold on to a losing investment because we do not want to admit the mistake. We should dispose the position once it is clear that the trade is wrong. Mistakes are unavoidable in investing, so we must be prepared to deal with them.
Conclusion
Although The Little Book of Market Wizards is mainly about trading, I find that there are some lessons that can also be applied in long-term investing. The author mentions that this book is about success in trading but the traits highlighted are applicable to success in any endeavour. I concur with him for the most parts and I think this book is a good summary to the complete Market Wizards series for investors.
As usual, let me end with some quotes from the book.
“There is no single market secret to discover, no single correct way to trade the markets.”
“To make money, you need to have an edge and good money management.”
“The larger the position, the greater the danger that trading decisions will be driven by fear rather than by judgment and experience.”
“Emotional influences can compromise the objectivity of market analysis and trading decisions.”
“Trading mistakes cannot be avoided, but repeating the same mistakes can be, and doing so is often the difference between success and failure.”
Recommended book
If you are interested in The Little Book of Market Wizards, you may get the book from MPH Malaysia through the link below.