You are no doubt aware of the fact that you could dramatically improve your trading skill sets if you were mentored by the best traders in the world.
The challenge has always been getting access to world-renowned traders.
One man has helped the average trader bridge the gap by writing The Market Wizards series of trading books. Of course, I am referring to the world’s best trading author, Jack Schwager.
How to find the hidden gems to fast track your trading
If you have been a trader for any length of time, you would have heard about the Market Wizards books. They are all-time classics.
But what most people don’t realise is at the back of the book, Jack distils his top 40-65 biggest lessons learned from the world’s best traders and fund managers of all time.
For example, in The New Market Wizards, Jack identifies his top 42 greatest observations from interviewing the best of the best.
In ‘Stock Market Wizards’ there are 64 lessons and in ‘Hedge Fund Market Wizards’ there are 40.
Having run hundreds of trading seminars over the years, I often ask who reads the lessons at the back of his books. The response has always been underwhelming, with many not even realising all the trading gold sitting there.
This month, I wanted to run through the top 5 Lessons Jack Schwager distils, passed on by traders we can only dream of becoming.
- Match the trading method to your personality
Finding a method to suit your personality sounds like such a simple task. But the real challenge begins when you start down the rabbit hole of trying to find a trading system.
Marketing brochures and online websites match power words with fast cars, yachts and overly impressive mansions.
Just a quick search online will give you an idea of how tough it is to sort the real trading systems from the best marketing copy.
Asking a few key questions is helpful at this stage
- Do you like to give back your open profits?
- Does sitting in front of a screen all day trading lots of positions sound like fun or torture?
- Are you more likely to follow a set of clearly defined rules or happy to trade with more discretion?
In The New Market Wizards, Randy McKay tells us ‘Virtually every successful trader I know ultimately ended up with a trading style suited to his personality.’
Get to know what gets you excited, what makes you tick and the style that resonates with your mindset and trading timeframe.
- You must have an edge with your trading system
I remember buying a roulette trading system online, which had rules similar to an ideal trading system. It enabled you to add to a hot streak and had defined exit levels.
But having the background of testing hundreds of mechanical trading systems, coupled with the knowledge the casino has the edge in roulette, I wanted to test it first.
So, a friend and I built an excel sheet that generated random roulette numbers. This particular roulette system was to be played over 17 spins. One game equals 17 spins.
With the click of the ‘RUN’ button on our excel sheet, we could test 5,000 simulations faster than you could hit the buy button on your trading platform.
Very quickly we 100% confirmed who had the trading edge. The casino of course.
So too with your trading system. You must develop a trading edge. You must place the probabilities in your favour.
Your edge could be:
- Trading with advanced risk management rules
- Being able to manage open trades successfully
- The ability to remain calm during market uncertainties
- Trading your systems with less than 5% errors (a figure Van Tharp talks about with his super traders)
- Excellent discipline
- The ability to find low risk, high reward trading opportunities
You must continue to work on your trading edge as a priority.