Most Great Traders Failed First: These Key Rules Saved Them | Practical Lessons from Jack Schwager

Two Quants and a Financial Planner

In this episode, Matt and Jack dive into the timeless wisdom of Jack Schwager, renowned author of the Market Wizards series. Drawing from two insightful interviews with Schwager, they explore key lessons from some of the greatest traders he’s interviewed, like Paul Tudor Jones and Steve Cohen, and unpack how these principles apply not only to trading but also to long-term investing and life.

From risk management to overcoming failure, this episode blends Schwager’s expertise with Jack and Matt’s commentary, offering valuable takeaways for investors of all kinds.

Main Topics Covered:

Paul Tudor Jones’ approach to avoiding complacency by evaluating your portfolio as if you started it today.Steve Cohen’s strategy of cutting positions in half when uncertain to manage indecision effectively.

The commonality of early failures among top traders and the resilience needed to learn from them.

Debunking the myth that good money management can salvage a poor trading system—why edge is essential.

Jack Schwager’s personal realization that he wasn’t suited for trading and how he found his strength in curating trading wisdom.

The necessity of adapting trading strategies as markets evolve over time.

How Schwager found discretionary trading less emotionally taxing than systematic approaches.

Stanley Druckenmiller’s bold position sizing under George Soros’ influence and when to break the rules.

Joel Greenblatt’s lesson on waiting for the right opportunity rather than forcing trades.

Simplifying risk management with straightforward rules that anyone can follow.

The value investor’s dilemma of buying more as prices drop versus cutting losses.

How technology, like social media, has opened new trading strategies unavailable in the past.

Position sizing as an extension of risk management, determined by acceptable loss levels.