Jack Schwager – advice for newbies

What advice would you give to newbies?

Jack Schwager: I would advise rookie traders not to assume any particular trading strategy is right or better for them.

The process is first, read.

That’s a challenge in itself. However you do it, just pick up different things. Look at different things. See what they’re saying. You’ll find what you gravitate. Once you figure out where you’re gravitating to, read more on that.

Then start thinking about, on your own, start thinking about ideas based upon what you read. Start looking about how you might implement it in the market.

Watch the market. Take those ideas. Try different things.

Then eventually, we’ll try to evolve that into some sort of methodology that you could define rules with, come up with a risk management plan. Once you have that in place, paper trade. Paper trading’s not the same because you don’t have the emotional thing component, but it’s a way of checking whether you really have an edge.

If it seems like you do have an edge, then start with a small amount of money and implement it. That’ll make it real, and I say a small amount of money because most people will lose when they start trading.

I think it is a matter of personal discovery. Because what works for one person is not going to work for someone else. Some people will gravitate towards fundamentals, others to technicals, and still others to both. Some people will prefer short-term positions over long-term and vice versa. Some people will be more inclined to trade multiple markets, others just one market.

There are a great many possible combinations of trading elements, and people coming into the market first need to discover what’s right for them. They can figure that out by reading books, then observing the market and then getting some experience. From there they can develop their own approaches.

But when starting to trade, new traders should start out with very little money, or even paper trade, and then gradually increase their positions as they become successful.

Then of course, if you’re trading with real money successfully, then gradually increase it as you feel comfortable. That’s basically the line of progress that I would recommend.


Jack Schwager is a recognized expert on markets and trading who has authored a number of very well known trading books. Among them are ‘Market Wizards’ and ‘New Market Wizards’ where he interviewed many of the world’s top traders discussing the secrets of their success and how they amassed millions of dollars.