7/6/2026 - The epilogue to the most recent Market Wizards book explains that "Two critical factors limit the possibility of becoming a Market Wizard: 1) Not everyone possesses an ineffable talent and the emotional composition that would make this goal possible, just as not everyone has the innate genes and skill to be a world-class athlete; 2) Achieving extraordinary performance in the markets requires tremendous dedication, passion, hard work, and forgoing other interests and endeavors--a sacrifice that most people are not willing to make" (p. 318).
It's easy to see how the shortcuts developing traders often take to achieve success--watching videos and following the social media postings of gurus--just don't work. It is only when we draw upon our "ineffable talent" that we develop the drive to hone our skills and become the best we can be. Then, the hard work is not a sacrifice--it's fulfilling.
I'm working with someone currently who is working on a large research project to track swing patterns in the stock market. The goal is to automate this research so that there is a constant flow of signals across multiple patterns and stocks. The quant signals thus act as an analyst, informing when and where there is opportunity, when to step aside, etc. The trader follows the best historical signals by looking at the charts of past successful trades and developing criteria for entering, exiting, etc. Market history thus becomes his mentor.
What's the "ineffable talent" in this case? It's the love of learning. It's the joy of discovery. When our process draws upon what truly speaks to us, the hard work becomes absorbing play and we can achieve amazing results. That's the lesson of market wizardry.
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7/5/2026 - Jason Berry's interview in the latest Market Wizard book contains a number of insights. He mentions that he trains traders to "find triple-F trades: fantastic fill feeling. These are trades where the market instantly goes in your direction" (p. 238). He points out that he trades by following a trend "on different short-term time intervals, using 1-, 2-, and 5-minute bars. By breaking down market activity into multiple short-term intervals, he is able to see quickly when trades are likely to go his way and when they are failing. This allows for unusually good risk management. If the trade doesn't work right away, it's not an A+ trade.
Berry also offers a unique perspective on trend behavior. Markets don't trade the same at every hour of the day. There are certain time periods for each market each day in which trends are most likely to continue. "I trade each market during specific times every day. I know how the markets move during those times. I don't trade during the times of day when a market typically experiences choppy bars" (p. 238).
Berry's trading is anything but mechanical. He explains that "Innovation is one of my secrets to longevity in the markets. My best trades often result from thorough research, where the findings are so compelling that they lead to trades with a high probability of success" (p. 241). He reviews his trades each day and then again at month's end to refine his process.
George Coyle, reflecting on Berry's interview, observes that the "gut feel" from repeated market study and experience allows Berry to quickly recognize when a market is behaving normally and when it isn't (p. 252). Jack Schwager explains that Berry's ability to sustain "a trainee mindset" (p. 254), continually learning from changing market patterns, is essential to his success.
The idea that markets trade differently at different times of day and that certain times offer particular opportunity is, in my view, a game changer. Success results from trading only when the odds are in your favor...not so unlike poker.
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7/3/2026 - Lukas Frohlich, interviewed in the most recent Market Wizard book, asserts that "If you don't have the willpower to fight through the pain, you shouldn't be a trader" (p. 164). He observes that "The trading landscape is constantly changing, especially when moving between different liquidity brackets. My job is simply to find the opportunities with the best expected value" (p. 166). George Coyle, reflecting on Frohlich, points out that "It is unusual to find traders who can switch trading styles successfully, especially when the styles are radically different" (p. 167). Jack Schwager, noting Frohlich's flexibility, observes "To succeed as a trader, you not only need strategies with an edge, but also the ability to use the right strategies in the right environment" (p. 169).
The clear implication is that even the best traders need to "have the willpower to fight through the pain", because there will always be pain (i.e., drawdown) when regimes change and what had been working no longer succeeds. Psychologically, what is outstanding about Frohlich is that, not only does he not wilt under the pain of drawdown, he draws upon it to feed his creativity and trade with a radically different style. Drawdown, for the trader who follows rules well, is a sign that the market has changed. This requires rapid adaptation.
Great traders, like great companies, are adaptive. They make and remake themselves to fit the new demands of the environment. For the excellent rule follower, drawdown signals the end of one opportunity set and triggers the search for new ones. Instead of viewing the drawdown as failure, the great trader responds to it as a call for creativity and adaptation.
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7/2/2026 - In his interview in the new Market Wizards book, Kenny Sharkness observes that "Another pattern I've noticed is that many successful traders are former gamers, and they look at the market and speculation as a game. They're more focused on winning the game than the money that results from winning" (p. 284). In my research regarding success at hedge funds, this theme also came up. Interestingly, the games that were most popular with active/day traders were different from those that appealed to portfolio managers with longer holding periods. The active group loved video games, for example. The money managers loved slower games of strategy such as chess and poker.
There's an important insight here. Whatever will fuel your trading success will draw upon something you already do and have a passion for. Yes, we learn unique skills as traders, but ultimately we channel our talents and interests to create our success. One of the greatest challenges of trading psychology is to identify what we do well, how we do it well, and how we can draw upon those strengths to fuel our development as traders.
Sharkness also offers something revealing when he was asked what he would do if he were starting out today. He responded, "I would try to get a seat somewhere with exceptional traders so that they could instill in me a sense of what is possible. Seeing others achieve greatness inspires people to strive for the same level of excellence" (p. 286). It is not just talent and skill that make for great traders; it's also a vision "of what is possible". This is one of the great shortcomings of traditional mentoring and coaching in trading: It focuses on correcting weaknesses, but rarely offers models of elite success. A continual emphasis on problems cannot create a visionary mind frame of success.
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7/1/2026 - Lance Breitstein, in his interview in the latest Market Wizards text, makes a very interesting point regarding edges in trading. He points out that "Most patterns are indeed noise, but when you align enough nuances, there are very specific moments in time that provide tremendous positive expected value" (p. 46). And how did Breitstein identify these specific moments of opportunity, particularly after 11 consecutive months of losing money? He spent his Sundays watching recordings of the trading sessions, focusing on "the most critical points each day" (p. 47). He watched these at advanced speeds, thereby exercising his pattern recognition ability. When patterns then showed up in live trading his "real-time trading felt slowed down" (p. 47).
What's the key insight here? Once again we see the value of immersion in developing real-time pattern recognition. To trade all week and then immerse oneself on Sundays to hone one's game takes determination and a real love for markets. But the most important insight is that success does not rely on indicator patterns, but on "nuances" within these indicators that occur at "very specific moments in time". In other words, what Breitstein found were the patterns within patterns: the nuances.
The nuances that offer "tremendous positive expected value" can only be identified through extensive, focused exposure to market turning points. George Coyle, in the book, points out Breitstein's "commitment to work harder than anyone else...He adhered to his plan regardless of whether he felt amazing or awful" (p. 77). The insight here is that it is the intensity and consistency of effort that produces unusual returns. We cannot find and exploit subtle nuances if we are only casually engaged with markets.
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1) Learning by immersion - Kullamagi insists that there is nothing original in the patterns he successfully trades. He indicates that "I got them from other people...I haven't invented anything" (p. 27-28). But he also explains, "I looked at thousands of historical charts and verified that these patterns occurred repeatedly" (p. 27). Seeing firsthand that these patterns are reliable gave him the confidence to trade and bounce back from losses.
2) Innovation - George Coyle points out that "Kullamagi's amazing results came from playing where many say you shouldn't play" (p. 29): very high volatility situations. Jack Schwager explains that Kullamagi spent 60-80 hours a week for a decade honing his skills (p. 30) with patterns that only make money 25-30% of the time (p. 31). Most traders would avoid such patterns, but Kullamagi has succeeded with them because of his ability to tolerate--and control--losses. He's not playing the game better; he found a better game that works for him.
3) Persistence - Schwager explains that "One of the critical qualities of Market Wizards is that they refuse to give up" (p. 33). Their resilience comes from a deep belief in the rightness of what they are pursuing: they see something unique and distinctive in markets and are not willing to walk away from that. Kullamagi experienced several early setbacks, but retained his confidence and his quest.
Great traders are intellectual entrepreneurs. They delve deeply into markets and perceive unique opportunity. It is the depth and beauty of their vision that provides them with the drive to overcome their learning curves and achieve success in their own, distinctive ways.
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6/29/2026 - One of the most insightful interviews in the latest Market Wizards book is with Simon Russo, who first became passionately attracted to music and then to financial markets. Like many of the greats, he blew up multiple times in his early trading development, but retained the sense that "I had learned a lot about how to make money in the markets". He wrote a letter to his parents explaining his decision to drop out of school and pursue trading. In that letter, he explained that "It has never been about the money for me; it is about the path of self-discovery and mastery necessary to become proficient" (p. 97). Comparing music and trading he told his parents, "That is what attracts me so much to these two areas; you can never master them, and you have to be self-aware to excel at them. You can't be a sheep or sell out to become a good musician or trader; you have to put in hard work and countless hours to get where you want to be. And guess what? Hard work and countless hours are the best part; it's what fires me up" (p. 97).
Later he noted to his parents, "I will not go with a Plan B because I am worried I will fail. I have learned to accept and even welcome failure because I don't think you can ever truly succeed without failing first" (p. 126). Jack Schwager quotes Russo, "I love every part of the process, the entire journey, not just the results. I love studying and doing the research" (p. 129-130).
What's the key insight here? Passion comes from mission. When we find something that speaks to us deeply, it becomes our purpose, our mission. Quite literally, Russo found two areas that he fell in love with, so that "hard work and countless hours" did not tire or overwhelm him; they fired him up. A mission is an organizing principle in our lives. It is what gives us purpose and meaning. It is what we are meant to do. An important challenge for those who wish to excel in markets is to find something so meaningful in your trading that it becomes your guiding principle, your mission to develop. Then the work will give you energy; it will never exhaust you.
This is what positive trading psychology is all about: discipline comes from love. When we fall in love--in any sphere--our effort fuels our passion and our passion fuels our effort.
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