Lessons from the Stock Wizards

One of the best books available for learning how to trade is called Stock Market Wizards, a book by Jack Schwager, who has also written a similar book called Market Wizards. The premise of the book is that he interviews the best known traders in the markets today, from Steve Cohen to Mark Minervini to Michael Masters. There is something to be learned from each of them. The book is a few years old but can still be bought via Amazon or simply by Clicking Here .

In any case, I thought everyone could benefit from the sixty-four lessons that are taught. Here’s what I view as being the best of the lessons taught.

1. You have to trade your personality

2. It requires time to become a successful trader

3. Keep a record of your market observations

4. Develop a Trading Philosophy

5. Market Wizards tend to be innovators, not followers

6. To be a winner you have to be willing to take a loss

7. Value alone is not enough

8. Understand the importance of catalysts

9. If market behavior doesn’t conform to expectations, get out!

10. The question of when to liquidate depends not only on the stock but also on whether a better investment can be identified

11. Set goals

12. This time is never different (personal favorite)

13. Fundamentals are not bullish or bearish in a vacuum; they are bullish or bearish only relative to price

14. Successful investing and trading has nothing to do with forecasting (another favorite)

15. Beware of your ego

16. Don’t get emotionally involved

17. Analyze your past trades for possible insights

18. Don’t worry about looking stupid

19. Complexity is not a necessary ingredient for success

20. View trading as a vocation, not a hobby

21. Trading, like any other business endeavor, requires a sound business plan

22. Define high -probability trades

23. Be sure you have a good reason for any trade you make

24. Insider buying is an important confirming condition

25. Pay attention to how a stock responds to news

26. Holding on to a losing stock can be a mistake, even if it bounces back, if the money could have been utilized more effectively elsewhere

27. Like a coin, the market has two sides – but the coin is unfair

28. Wall Street research reports will tend to be biased

Hope you enjoyed the tips. There are a lot more of them to be found in the book. But these were some of my favorites.