Advantages of Being a Smaller Trader
Legendary Author Jack Schwager explains why being a smaller trader is an advantage over being a big trader & a whole lot more!
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Hey everyone,
In this past episode of Confessions of a Market Maker, Ray and JJ interview Jack Schwager, a recognized industry expert in futures and hedge funds and the author of a number of widely acclaimed financial books. They discuss his trading background, his participation in financial markets, and the impact of interviewing traders on his own trading.
Jack Schwager shares how he fell into trading by luck and how being an analyst in the markets led him to try trading himself. He also talks about the positive impact of interviewing traders on his own trading and how it helped him become a better trader. The hosts then discuss the resiliency of the market in 2020 and how it has surprised them, with Jack Schwager sharing his thoughts on the unique situation.
The episode also mentions a charity poker tournament hosted by Jack Schwager and his participation in webinars. JJ shares his experience of never seeing such a situation in his 30 years of trading, and how large concentrations of positions in money management funds that are longer timeframe aren't selling.
Jack Schwager explains the difference between discretionary and systematic traders. Discretionary traders have specific methodologies and may use intuition, while systematic traders rely on computer algorithms and complex systems. Schwager notes that it is difficult to find systematic traders with extraordinary performance, with the exception of firms like Renaissance.
When asked about the surprising success of unknown traders in his latest book, despite the increasing dominance of professional managers in trading, Jack explains that he was also surprised by this trend, as he expected it to be more difficult for independent traders to achieve spectacular returns in the current market.
Jack Schwager discusses the importance of finding an approach that works for an individual's personality when it comes to trading. He uses Jason, a trader who always takes the contrary position, as an example. Jason believes that nothing is absolutely black and white, and there is always something on the opposite side that's right.
Jack Schwager talks about his admiration for Ed Thorp, a pioneer in quantitative trading strategies. He highlights Thorp's use of convertible arbitrage and statistical arbitrage, and his exceptional track record with only three losing months in 19 years, all less than 1%.
In conclusion, this episode offers valuable insights into the world of trading and the different approaches traders can take to achieve success. As Jack Schwager notes, finding an approach that works for an individual's personality is key to success in trading. So, if you're interested in learning more about trading and the different strategies traders use, be sure to check out this episode of Confessions of a Market Maker.
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