The Traders Journal

Mr. Market Wizard: Jack Schwager Speaks Part II

Gatis Roze

Gatis Roze

Author, Tensile Trading: The 10 Essential Stages of Stock Market Mastery

YBMMH7H5President Harry Truman once said “We must have strong minds, ready to accept facts as they are.”   He must have been addressing a convention of individual investors. 

Let me pick-up this week where I left off last week.  If you missed last week’s blog, I suggest you visit that Part I blog to get a better foundational understanding of this week’s Part II.

  1. The mindset of an exceptional trader has the ability to change from bullish to bearish – or vice versa – in a minute.  Mental flexibility is essential, provided you are then able to react appropriately with that new mindset.
  2. Investing is unique.  You can’t turn around a losing trade by trying harder.  If you hit a slump, take some time off and come back slowly.
  3. Without exception, every successful trader Jack Schwager’s met has formulated a specific methodology that fits him or her perfectly.  It’s different for everyone.
  4. When historically-correlated markets stop being correlated, you can bet on a return to normalcy or a regression to the historical mean.
  5. Never let your targets and your goals define your trades.  Leave that to the markets and be flexible.
  6. If you ever feel as if you are frozen in a particular equity position, take 50% of the position and sell it.  If you are still uncomfortable, sell the other half.
  7. Ray Dalio of Bridgewater Associates worships mistakes.  He chronicles each and every mistake, and he then becomes a man obsessed.  Ray and his entire management company focus in and gear up to make sure they never repeat previous mistakes.

The bottom line is this.  In listening to Jack Schwager speak about what is required of a successful investor, I was reminded of the famous quote by Sir John Templeton.  “If we become increasingly humble about how little we know, we may be more eager to search.”

Trade well; trade with discipline!
-- Gatis Roze


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Gatis Roze
About the author: , MBA, CMT, is a veteran full-time stock market investor who has traded his own account since 1989 unburdened by the distraction of clients. He holds an MBA from the Stanford Graduate School of Business, is a past president of the Technical Securities Analysts Association (TSAA), and is a Chartered Market Technician (CMT). After several successful entrepreneurial business ventures, Gatis retired in his early 40s to focus on investing in the financial markets. With consistent success as a stock market trader, he began teaching investments at the post-college level in 2000 and continues to do so today. Learn More