6/17/2026 - In the Unknown Market Wizards book, Jack Schwager is interviewed and asked about his three favorite quotes from Wizards. One of those particularly stood out from a psychological perspective. Jim Rogers explained, "I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime" (p. 418). In other words, Rogers doesn't hunt and hunt to find something to trade; his default mode is to "do nothing". What drives Rogers is clarity. If the opportunity is not clear and apparent, he doesn't take risk.
A different aspect of clarity is Schwager's favorite quote, which is from Bruce Kovner: "Know where you will get out before you get in" (p. 416). If a trader is very clear what would tell him his trade is wrong, then managing risk becomes a straightforward task, not something laden with emotion.
Achieving such clarity requires considerable experience, which is why the paramount priority for developing traders is surviving their learning curves. When we've seen enough opportunities and understand what would tell us to stay in the trades and what we would need to see to get out, then decisions are no longer tainted with fight or flight reactions.
The great trades come to us as the result of deep pattern recognition. That is why so many Wizards, in their development, have spent long hours tracking markets. Not many traders have the inner security and confidence to sit and sit and sit, trusting that the right opportunities will come along. And not many clearly know and accept what they'll need to do if those opportunities don't work out.
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6/16/2026 - The most recent Market Wizards book, Market Wizards: The Next Generation, contains a number of gems. In the interview with Lance Breitstein, he is asked whether he was confident he would succeed when he started out. He replied, "I wasn't confident that I would succeed, but I was highly confident that I would outwork everyone at that firm." Indeed, he spent hours recording his trading and reviewing key decision points on Sunday. This extra exposure cemented his ability to recognize patterns in real time.
For Breitstein, this was not simply experienced as hard work. Jack Schwager points out "that for Breitstein, trading was like an elaborate game, something fun that he loved to do, just like he loved playing video games as a kid" (p. 80). There's an important psychological point here. Lots of traders work hard. Many work long hours. What makes the Wizard stand out is working long hours in what is known as the flow state: being so immersed in what is fun that the learning becomes supercharged and internalized.
This is why many of the Wizards work just as hard when markets are closed as when they're open. They love the discovery process. They love the hunt. They love markets, not just trading. Those who love trading tend to overtrade. Those who love markets will learn to master those markets long after trading hours are over.
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Equally important, however, they did not simply return to what they had been doing. The big loss led them to change their approach to trading in a way that prioritized risk management and avoidance of large losses. Instead of going for large absolute returns, they focused on solid risk-adjusted returns, where the amounts gained relative to the amounts lost were high. They redefined success and created a business that was sustainable: financially and emotionally.
Again and again, we read the words of the Wizards and risk management comes up as a key element of success. What I find noteworthy as a psychologist is that the high focus on managing loss does not come at the expense of excitement over discovering opportunity. The Wizard has the unique ability to keep one eye on the horizon of growth and achievement and the other eye on the bottom line.
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