A short review of The Market Wizards - The Next Generation

The latest addition to the Market Wizards series is perhaps the most anticipated addition to me personally. The reason is simple, it includes many traders I've followed online for years and have become to know more indepth over this time.

The Next Generation includes interviews with the following traders:
Kristjan Kullamägi (@Qullamaggie)
Lance Breitstein (@TheOneLanceB)
Simon Russo (@SimonRusso__)
Lukas Fröhlich (@TheShortBear)
Phil Goedeker (@Tradestl)
Kelvin Chiu (@KC_SilverCape)
Jason Berry (@JasonHBerry)
Kenny Sharkness
Rick Bandazian Jr. (@Off_The_Tape)

I've especially followed Kullamägi and Fröhlich over the years as they've turned somewhat small amounts of money into tens of millions of dollars.

I've listened to the previous books and this as an audiobook and while the graphs are available as a PDF, I've not really missed them. The technical details of the charts are valuable and interesting, but the main message is clear without them as well.

The interview style approach works very well with this book series. Some may feel it is a bit lazy to include the interviews in the books in this manner, but I think I speak for many when I say, I truly want to hear the interviewees speak out in their own words without anybody else summarising their thoughts. The interesting parts are in the nuances and larger concepts that almost all the market wizards share.

Some of the key traits, that I've taken away include, perseverance (to pursue the dream of becoming profitable and successful), resilience (the ability to quickly bounce back from drawdowns and not have them hold you back), work ethic/discipline (the ability to relentlessly sit in front of screens and stare at the market) and the ability to honestly review your work (you can only take what the market offers you and if you're not able to review your trades truthfully - you will fail).

All of the investors have achieved performance metrics which put traditional funds in shame. Then again, the risk profile and trading styles are dramatically different. One quote that I found very useful, but forget in which chapter it was included in, was that all successful traders are exceptional risk managers and take every possible step to make sure they continue to trade the next day as well.

Additionally, all interviewees have been able to adapt and change their trading style over the course of their careers. While finding your sustainable edge is key, it may be that it does not survive the course of time. Many traders, for example, highlighted trading parabolic shorts before the covid years. Since then, finding locates has become extremely difficult and costly, meaning much of the ability to hold shortable shares overnight eats into your profit and renders the approach less usable. Hence many have turned to other strategies that work better.

Schwager also mentioned a couple of times that the traders interviewed in the book approached the market as a game. Many have played different console/computer games and felt the market is a game that can be beat. This analogy is great, because there is not set path that everyone can take to beat the market. You need to find your personal approach that works with you and persevere through the challenges of becoming profitable.

Personally, I've blown my account over the years about 2-3 times and finally become sustainably and clearly profitable in the past 4 years. I find inspiration in many of the interviews and feel I also share similar traits like almost delusional belief in one's abilities and putting in the hours to make it work. I can also attest to finding your own style - you need to be comfortable with it and it needs to match your personality to make it work.

I can recommend the whole series, and especially the latest addition, without hesitation to anyone interested in trading, markets and overcoming challenges. The books cover interviews from three decades and it is clear in them how the markets have developed to make trading more challenging with the approach of algorithmic and high frequency trading. Regardless, the best can always overcome and beat the markets.