How to Become a Market Wizard

---

For nearly four decades, the legendary Market Wizards series has offered one of the most detailed studies ever written on elite traders. The exceptional author, Jack Schwager, has documented multiple generations of market history, from the macro traders of the 1980s to the highly specialized traders of today.

Now, with the release of the New Market Wizards book, Market Wizards: The Next Generation, we spent time with Jack Schwager and co-author George Coyle exploring what this new generation of exceptional young traders can teach us about markets and the changing nature of trading success.

The Three Principles Great Traders Live By

One of the most striking lessons from the Market Wizards series is how little the core principles of great trading have changed. Across more than a hundred elite traders and through different market regimes, the same three rules recur: respect price action, let winning trades run, and cut losing trades quickly.

Respecting price action means listening to what the market is actually doing rather than what you want it to do. Letting winners run requires patience and the ability to avoid taking profits too early when a position is working. Cutting losers quickly demands the emotional discipline to admit when a trade is wrong before a small mistake becomes catastrophic.

Regardless of trading style, age, or strategy type, these foundational principles remain almost universal among the very best traders.

Why the New Generation of Traders is So Different

One of the most fascinating themes from Market Wizards: The Next Generation is how different many of today’s top young traders look compared to the classic Market Wizards of earlier decades. The original generation was dominated by macro traders and long-term trend followers riding major economic themes over weeks, months, or even years. This new generation often operates at a completely different speed and in very different corners of the market.

Some short small-cap momentum stocks that are experiencing speculative surges. Others actively sell options, a strategy older generations of traders often viewed as dangerously asymmetric. Several trade intraday using minute-by-minute price action rather than large macro themes. On paper, many of these approaches look like the very strategies traditional trading wisdom warns people to avoid.

Another major difference is that this new generation of market wizards is overwhelmingly discretionary. Earlier generations included more classic macro traders and system-driven approaches operating in markets with less competition and more inefficiencies. Today, fully systematic trading is dominated by massive quantitative firms with huge research teams and advanced infrastructure that individual traders cannot realistically replicate. The new Market Wizards tend to rely more on judgment, adaptability, and pattern recognition.

Despite how different their strategies look on the surface, the foundations underneath are often remarkably similar. They still respect price action, control risk obsessively, and know when to get out quickly when the market proves them wrong.

The Cost of Becoming a Market Wizard

It’s easy to look at the Market Wizards stories and focus on the spectacular returns, but one of the strongest themes running through this conversation with Jack Schwager and George Coyle is that becoming a “Market Wizard” is rarely all glitz and glamour.

Many of the traders featured in the new book failed, sometimes catastrophically, before they ever succeeded. Several blew up entire accounts multiple times early in their careers. Friends and family often encouraged them to quit and pursue something more stable. Yet the people who eventually made it were the ones who kept going despite repeated setbacks, emotional pain, and long periods where there was little evidence they would ever succeed.

The lifestyle itself can also be brutal. Some of the traders described spending 14 to 16 hours a day in front of screens, glued to markets with almost no mental separation from their work. Others endured massive performance swings, including drawdowns of 30% or even 50% in a single month. Living through those kinds of swings is psychologically brutal.

The 8 Traits Shared by Great Traders

While trading styles constantly evolve, the personalities behind exceptional traders tend to share remarkably similar characteristics. Again and again, the traders featured throughout the Market Wizards series display a high degree of self-awareness. They understand their own strengths, weaknesses, emotions, and decision-making tendencies far better than most people.

They also tend to have very clear goals and an unusually strong belief in themselves, even during periods when the evidence gives them little reason to feel confident. Many continued to pursue trading success despite repeated failures and devastating setbacks because they believed they would eventually figure it out.

Independence is another recurring trait. Great traders are often comfortable thinking differently from the crowd and operating outside conventional opinion. They are deeply passionate about markets and intensely committed to improving their craft over many years. Trading rarely remains just a job or hobby for them. It becomes a central part of their identity.

Another common trait is persistence. Many of these traders show a willingness to keep going despite fear, uncertainty, and repeated failure. Even after blowing up accounts or enduring painful drawdowns, they continue refining their process and coming back to the market.

Finally, there is focus. Many of the traders profiled possess an ability to concentrate on markets, patterns, and execution with a level of intensity that most people would find exhausting. Combined together, these traits help explain why so few people ultimately reach the highest levels of trading success.

Can Anyone Become a Market Wizard?

One of the biggest questions surrounding the Market Wizards series is whether extraordinary trading success can actually be learned, or whether the people who reach that level are simply wired differently from the start.

The honest answer is probably somewhere in the middle. Most people can improve as traders. With enough discipline, education, risk management, and experience, many can become consistently profitable over time. But the kind of spectacular performance associated with the “Market Wizards” label appears to require something rarer.

Again and again, the traders profiled display unusual psychological traits that are difficult to teach: extreme focus, emotional resilience under pressure, comfort with uncertainty, independence of thought, and an almost obsessive level of commitment. In many cases, these qualities appear less like learned skills and more like deeply embedded aspects of personality.

That does not mean these traders were instant naturals. Many struggled and failed repeatedly, and they developed their abilities over years of experience. But there is also a strong sense throughout the series that certain people may simply be wired differently for this kind of environment. Just as not everyone can become an elite athlete or concert pianist, not everyone is likely to reach the level of performance associated with the Market Wizards.

This does not mean people should give up on trading. It shows that spectacular success at the highest level probably requires a rare combination of temperament, resilience, obsession, adaptability, and skill that goes far beyond simply learning a strategy from a book or course.

Lessons for Traders

Perhaps the most valuable lesson from the Market Wizards series is that great trading is ultimately as much a test of character as it is of skill. Markets constantly expose fear, ego, impatience, overconfidence, and emotional decision-making. The traders who eventually become exceptional are usually the ones who learn how to manage themselves before trying to manage the market.

The books also reinforce the idea that great traders think in terms of probabilities, not certainty. They are not trying to perfectly predict the future or prove they are right on every trade. What separates them is how they respond when they are wrong, how quickly they manage risk, and how disciplined they remain when markets become uncertain or chaotic.

---

DISCLAIMER: This article is based on a conversation from Top Traders Unplugged and reflects themes, ideas, and perspectives discussed during the episode. The views expressed are those of the guest and participants in the conversation and should not be interpreted as investment advice or as the official views of Top Traders Unplugged.

To receive future episodes, research, and weekly insights from the world of investing, macro, and trend following, sign up for our newsletter or subscribe on your preferred podcast platform.