The New Market Wizards: Conversations with America's Top Traders

By Jack D. Schwager

Quick Summary

The second volume in Jack Schwager's legendary Market Wizards series, featuring in-depth interviews with some of the most successful traders of the late 1980s and early 1990s across futures, currencies, stocks, and fund management. Each interview reveals the trader's methods, philosophy, risk management approach, and the personal qualities that enabled exceptional performance. The book demonstrates that there is no single path to trading success, but that discipline, risk control, and psychological resilience are common threads across all market wizards.

Categories

• Market Wizards
• Trading
• Trading Psychology

Detailed Summary

"The New Market Wizards: Conversations with America's Top Traders" (HarperBusiness, 1992) by Jack D. Schwager is a 512-page collection of interviews that continues the format established in the original "Market Wizards" (1989). Schwager, an experienced futures trader and fund manager himself, brings the rare combination of technical knowledge and interviewing skill that allows him to extract genuinely useful information from traders who are typically reluctant to share their methods.

Prologue: Misadventures in Trading is Schwager's candid account of his own trading mistakes, establishing credibility through humility and demonstrating that understanding what great traders do differently requires first understanding what most traders do wrong.

"Hussein Makes a Bad Trade" opens with a geopolitical vignette -- Saddam Hussein's invasion of Kuwait -- that sets up the theme of how exceptional traders responded to an extreme market event.

Part II: The World's Biggest Market features Bill Lipschutz ("The Sultan of Currencies"), who made hundreds of millions trading currencies at Salomon Brothers. Lipschutz discusses position sizing, the psychology of handling massive positions, and his conviction that the best traders are those who can manage both the analytical and emotional dimensions of trading simultaneously. He reveals that he lost his entire trading stake early in his career before rebuilding, a common pattern among Market Wizards.

Part III: Futures -- The Variety-Pack Market features several legendary futures traders. Randy McKay shares his evolution from a $2,000 grubstake to enormous wealth through futures trading, emphasizing adaptability and the willingness to change methods as markets evolve. William Eckhardt ("The Mathematician"), the partner of Richard Dennis in the famous Turtle Traders experiment, provides one of the most intellectually rigorous discussions in the series. Eckhardt discusses the counterintuitive nature of good trading (systems that feel right are usually wrong), the importance of trading small enough to allow for error, and the mathematical foundations of trend following. His insight that "what feels good is often the wrong thing to do in trading" encapsulates the central challenge of trading psychology.

Additional interviews cover traders across multiple markets and styles, including systematic traders, discretionary traders, and hybrid approaches. Common themes emerge across the interviews: (1) all successful traders have a well-defined edge; (2) risk management is uniformly considered more important than entry technique; (3) the ability to accept losses emotionally is what separates profitable traders from intelligent people who lose money; (4) patience -- waiting for high-probability opportunities rather than forcing trades -- is a universal trait; (5) the best traders are continuous learners who adapt their methods; (6) every Market Wizard experienced significant early failure before achieving success.

The epigraphs that frame the book capture its philosophical range: Primo Levi's "More is learned from one's errors than from one's successes" and William Blake's "I must create a system or be enslaved by another man's." These quotations bracket the tension between systematic and creative approaches to trading that runs through every interview.

Schwager's editorial skill lies in asking the right follow-up questions -- pushing past platitudes to get specific, actionable details about how these traders think, how they size positions, how they handle drawdowns, and what they have learned from their worst trades. The result is one of the most valuable trading books ever published, not because it provides a single answer but because it demonstrates the range of viable approaches while identifying the common principles that unite them.