From 40k To 500 Million Jack Schwagers Ultimate Market Wizard Secret

TITLE: From $40K to $500 Million: Jack Schwager’s Ultimate Market Wizard Secret CHANNEL: Trading Nut DATE: 2026-06-24 ---TRANSCRIPT--- He turned a $40,000 account into what now is a half a million.

Half a billion? Half a billion. [laughter] And why? All of these people are tremendously obsessed with the markets and devote their just their entire life to it. We’re talking about the fireman, for example, gets up at 3:45 to check the markets and doesn’t take his last look until 8:00 p.m. Not saying that’s the way you want to live your life, but that’s what he does. The musician I mentioned would like eat, sleep, drink, you know, market research and sort of morning through late night would would just be studying markets and and so forth. One prop trader talked about how it of course being near the whole trading day, but then after the trading day would be reviewing his trades and making notes and keeping a journal and then would even come in on the weekends and reap and we would be taping his trading and he would replay his trading both fast and slow, faster than normal, like an athlete, like a Yeah. Yeah. baseball player taking a heavier bat before he gets up to the plate just to so the regular bat seems lighter. Uh so he did that plus he did it in slow slower so he could see exactly what he was doing wrong and stuff. And but that was on weekends. So you’re talking about just all consuming dedication and hard work. And that was definitely a unifying theme. All right, folks. Here we are on Trading Nut. We’ve got hopefully a familiar face as Jack uh Schwager on the show. Welcome to Trading Nut for the very first time. I know we tried to get you on ages ago. Um this guy is a legend in the trading space, created the Market Wizard series. And we’re going to talk about his new book today. So Jack, welcome to the show finally. Thank you. Um so look at we’re right on the cusp of I suppose the official publication date. I think it’s like a couple of days away. Uh it’s a completely different um take on I suppose how you’ve done the Market Wizards before. Do you want to talk us through that and why this book is so different and what people are going to um get away take away from it. Sure, I’d love to. Well, first of all, it is in the same format and style and and feel as and philosophy and intention and all of that [clears throat] as the past Market Wizards books. Um, this one is the difference is well, first of all, first time I had a co-author. It hasn’t changed the uh the way the material comes out, but there was a co-author, George Colwell, and uh was a drill, and actually did the whole the he did all the heavy lifting on the verification, which was substantial for this book. Um, and you know, of course, the part of writing. The The other difference is that the group of traders is without question the youngest cohort of any group of uh uh wizards I’ve interviewed. So, this book uh if I remember correctly, six were I I would say 20s and 30s. I I I think some are still in 20s. So, I say six were in 20s and 30s, which is very young cuz I’m I’m looking for people with track records typically of 10 years and preferably 15 or more. And uh and then there were two in their 40s, and and the senior one had just turned 50, you know, so basically so this so this is a very young group of traders. Uh and uh but but otherwise, the style of the books and everything else is pretty much the same. Hi folks, what a view behind me. I’m at BlackBull Markets headquarters here in Auckland, New Zealand. Speaking of views, you can get TradingView paid plans for free at BlackBull Markets, saving you up to $600 a year. That’s right, get either the essential, plus, or premium plans absolutely free, and all you need to do is trade from one lot a month at BlackBull Markets. And you can also get a 100% deposit bonus for your first deposit up to $1,000. All you need to do is click the trading that link in the description below. Yeah, and I suppose it’s it’s it’s probably a sign of the times really, isn’t it? In terms of I mean I I’ve I’ve interviewed traders who are very young. Like I think the youngest I did was 15, and he was like his understanding of what, you know, price action was doing and and how to read a a price chart was was phenomenal. Uh I mean, what what do you sort of attribute that to? This kind of skew to a younger age for Well, I guess the results. The internet and media uh social media uh the uh the the dramatic drop of brokerage, you know, brokerage commissions and various things of that nature. So, detecting all all of them coming under the bailiwick of uh technology, I guess. So, it’s put the it’s put the lot of the uh nuts and bolts of trading into the hands of a of anybody, really. And it’s opened it up to everybody. And uh and then I guess uh it’s one of those things where there’s just more interest in trading than there used to be. Uh and if people are Yeah, I guess one thing is it seems like the younger generation is more maybe not more, I don’t know. I guess there’s always been people who been gambling oriented. And while I don’t view trading as gambling oriented, although it is it practically speaking for most people cuz they don’t they don’t do what they need to do to make it to make a trading, but are really almost using it as a gambling tool. Uh but in so far as you have uh all of the, you know, sports betting and the prediction markets now and all of that, uh this becomes another another avenue similar avenue. But there is an important difference here is that uh while with no skill, uh uh the odds are still against people like any like anything else. But it’s not Las Vegas where no matter what you do, you can have to lose over the long term because here, if you do things right, uh it it is not a crapshoot. There is There are lots of inefficiencies as demonstrated by the fact that I keep on coming up with people who have made incredible fortunes from nothing over long periods of time. Now, you you can you can be lucky [clears throat] for a couple of years, but uh for somebody who’s who makes a a lot of money uh just over both bull and bear market, you know, it’s that fortune sort of builds uh throughout the years, then it that’s not luck. I mean, anybody can get into a bull market like the we’ve had over the last few months and and do very well even though they know nothing. But to make that long-term, it’s a different story. You say You’ve had some interesting um characters on there like a security guard, uh volunteer firefighter who’ve all managed to do some ridiculous numbers like, you know, what, 5,000 to 100 million? Yeah. And and like 12 years. I mean, Wait wait wait wait wait. That is an understatement because he’s Remember, he’s a Swedish security guard. That means he’s paying he’s paying Swedish taxes out of his winnings, which is substantial. So Right. So it’s not compounding like it is for some other people. Right. Right. And so so um I mean, out of all these all these traders that you interviewed uh and got on the book, which one was probably your favorite from a story point of view? Well, I like quite a few of them, but if I would you put a gun to my head and you asked me for the favorite, it would probably be the uh What is I think the third chapter? Uh and it and it is the only time I’ve put an anonymous interview into one of the Market Wizards books. So this is the sixth Market Wizards book. And on one one past occasion, I mean I always I always guarantee the the people I interviewed that they’ll get a chance to to review the thing and all that. And for reasons that had nothing to do with what I wrote, but one of the traders backed out after I’d written the piece. So, I I ended up with that book and and I I kind of there was one piece that I really wanted to include. So, I let me include these two pages and I’ll call you trader X and you agreed. That was the only time I’ve had any anonymous material. But in this book, there’s an anonymous chapter. And not only is there a the chapter, it’s the longest chapter. And not only is it the longest chapter, it may well be the longest chapter of any Market Wizards book. And this trader is started out as a musician. He was in prestige music school and was very passionate about music and has this attitude about mastery and he was he was into master music. Uh and but then he found trading and he found that even a little more enticing and he decided he couldn’t do both. And so, he dropped he left music school. I I hesitate to say dropped out because it’s he was voluntarily. He didn’t It wasn’t that he was struggling or anything. It’s just that he had another desire. And so, he went So, he decided if he’s going to if he’s going to succeed succeed as a trader, he had to be a master of the craft and he couldn’t do that going to you know going to full-time music school and and so, that’s what he So, then he So, he ended up ultimately and interestingly enough, he he fluffed out of he blew up his account several times. But ultimately, he turned a $40,000 account into what now is a half a million. Half a million? Half a million. [laughter] Why? It’s a quite amazing quite an amazing story. And along the way he occasionally broke his own rules and those led to some very large losses and when I’m saying large losses, I’m talking like 50 million, 100 million like type of losses. And those stories are incredible, too. But he’s now at a point where he said he says that’s crazy, you know, so he’s now set up things so he automatically cannot do that. He’ll get sold out of positions at certain points. Uh so but that story is I found totally incredible. And we talk a lot about strategy and mindset here on the Trading Nut podcast, but that doesn’t really matter unless you’ve got the right environment to trade. And so if you’re struggling with a prop firm, then I recommend checking out our partner propfirmmatch.com. These folks have got a massive database of prop firms, got them all verified there with customer reviews, is completely impartial and transparent. It’s worth while checking them out. There’s a coupon code and link in the description. It’s going to help you save some money at checkout, too. And what What markets was this guy trading and time frames? Have you got any insights on that? Stocks. Stocks. Stocks. Okay, yeah, yeah, yeah. Started out as a started out selling short small cap stocks. Uh that’s all he did in the initial years. But then got too big for that and then transitioned into other strategies. And so so out of all the markets, if you’re going to say like what would be the most lucrative, obviously that that guy that guy managed [laughter] to make half a billion, but what one what market would you go to look I tend to see His traders a common theme was what as they got bigger and a few of them started for whatever reason, uh a few of them started selling small cap uh stocks, which is a not a scalable strategy. And also a dangerous strategy, so I should mention that. Uh But once they got a little bit once they made their first few millions or beyond 10 million or whatever, they had to sort of find other other ways for these traders who started that way. They had to find other strategies. And And this trader, you know, now, you know, would be trading you know, would be trading larger size cap stocks and predominantly from the long side. And And so, what what are common elements that all these traders have from when you look at the Look at what they’ve done What what What kind of common things could other people take away and go, “Okay, well, if I was going to sort of hone down what I need to do myself, these would be like top three things.” Yeah, the first the first thing, which is always the case, this book and other books, and it’s true of almost all, and I would say almost all because there are a couple of There’s always a couple of exceptions, but virtually every market wizard I’ve interviewed, and certainly all of them in this book, there are no exceptions, will probably tell you that that uh that money management is is the essential element over everything else. Sure, you’ve got to have a method, you’ve got to have an edge, you’ve got to have the discipline to execute, you’ve got to put in lots of hard work, you’ve got to be able to have control of your emotions lot of extra trading. On and on, there’s all these lessons that come out. But the one the one absolute necessity is money management. And as demonstrated by many of the traders in this book, where when they didn’t have the money management element, they either completely wiped out or did serious damage to their account. All right. So, money money management was was a big one. What about Did Did these people learn from somebody else to get the skills or did they Were they all self-taught? Yes, that’s another thing. Yeah. So, quite a few of them did have did have mentors, and or like in the case we’ll take one of the the Swedish security guard, Christian Kulumaki. Uh he he has a great quote in the in in the chapter. He says, “I haven’t invented anything. Nothing I do is original.” He says, “Everything I do I’ve learned I’ve gotten from somebody else.” So, uh he uh he kind of got his stuff from so from social media. Uh he kind of attributes where he got it from in the in the interview. And uh he made those he went through many different uh he tried different things and he studied different uh different methods and all of which not were his own original original ideas of from other people and he found those that work for him and then turned them into uh his own by trading them in his own specific ways. And uh and yeah, so he basically kind of he got his he got his ideas off off the internet essentially. Uh some other one trader uh uh uh Brightstein uh he uh he was in a uh prop trading shop and uh most of them are in New York and they had a they it turns out their best trader uh was uh had just had a child or something and wanted to move out of the city and moved to Princeton and open a satellite office there. Now, uh he’s a young guy and uh just out of college like I know I as are most of the people hired initially and uh you know, everybody prefers you you know, would like to be in New York. It’s more fun fun life than being out in Princeton. And uh uh but he but he recognized that that this other trader was the best trader in the firm and he wanted to learn from that trader and so that trader turned out to be his uh his his mentor uh initially and then of course he developed his own methodologies, but that certainly got him started and and he’s not the only one. Others Others had mentors. Some Some though um, others though were completely self-taught. So, it’s a mixture, but definitely some people did have mentors that, uh, that were in influential and instrumental. [snorts] Yeah, and it sounds like did anyone actually sort of have a mentor and then go, “Right, that’s the only only thing I’m going to do. I’m not going to elaborate on it at all. I’m just going to follow those rules step by step and execute.” And that was that was it or did they all kind of like elaborate on whatever the mentor taught and find their own unique way of doing it? No, in fact I would say it’s quite the opposite because what do you One thing you don’t want to do, even if you have a really good mentor, is you’re not trying to duplicate what they do. You’re trying to learn. So, there’s a big difference here. So, I would One one lesson I always try to bang across in my books is, uh, don’t try to get a trading approach on a silver tray. That never seems That never works. It’s not going to fit for you. You’re going to You’re not going to have the confidence in it. You’re not going to apply it the right way. Yeah, you can learn from other people, that’s for sure, and you can build your own strategy with getting other ideas, whether it’s from the internet or books or whatever. Uh, but you have to ultimately find You have to find an approach that fits what what you believe in, what you want to do, what you can trade, what’s emotionally comfortable, what you can find an edge in, all of those things. So, ultimately and you’ll see it in my books, every time I interview somebody, their approach is different. Mhm. And so, for from a you know, you talked about money management, uh, from a sort of seeding capital point of view, what were some of the unique ways or or did everyone start from a fairly high balance to get their, you know, trading underway. Well, uh, money management in terms of specific money management approaches, uh they each they each have their own, you know, approach, but ultimately it comes down to having a maximum amount you’re risking on trade and not getting over leveraged and things of that nature. And the specific thresholds that people define is dependent on their own methodology. Uh you know, in some cases people may take um more risk on a trade, uh but um you know, they’ll do that when they have a very strong conviction. So, it’s it really varies from individual to individual, but I can give uh the general advice I would give, which is simple to follow, well, simple to just to say. Uh I know I think it’s simple to follow, but some people may not feel so. But, it which is very effective that which anybody can use, and you don’t have to read a book to do it, and that is simply the concept of uh figure out how much you’re willing to risk on any trade, and whenever you enter a trade, you enter a stop at the same time, uh so you kind of limit your loss on that trade to a predetermined number which you did which you decided with uh the objectivity of not being in the trade yet, rather than waiting until you’re in the trade and get emotional about it. Uh and that is a That is a uh approach that was that was succinctly stated by one of my market wizard interviews, and actually the first wizard book, uh was Bruce Kovner who said, uh I always know where I’m getting out before I get in. Very, very sage advice. Yeah. Uh which I follow myself, by the way. Right. Right. Um Now, what about uh algorithmic versus discretionary, that, you know, manual trading? How did that split across the book? Okay. So, I’ve I’ve interviewed both kinds over over the years in every book. In this book, uh there were no algorithmic traders. They were all discretionary. Uh one thing one reason for that is that and in most in the last book all but one was discretionary. And in most books the majority a a significant majority are usual discretionary and the reason for that is that it’s very very very difficult to get a market wizard type of record. And and let me back up a second and explain what I what that means. Uh what I look for is one or two things when I do these books. Either somebody who took a relatively modest amount of money and turned it into a large large sum. Like uh you know, like some of the ones we mentioned. That starting at 40,000 to half a billion is is as good example as I’ve ever come up with. Uh but there were others in the book who’s done you know, also uh along the lines similar type things. Uh that’s one way and the other way is to have kind of phenomenal return risk. As in this book one trader has no losing months ever. And and that’s the that’s the volunteer fireman and uh doesn’t make a fortune by any means. Just makes a living but he has no losing months. And another trader who’s trains who himself trains traders uh in his own account has had like five small losing months over well, we couldn’t document the whole period cuz we the records weren’t available. But he’s been trading since 2000 or whatever. Uh and uh I I got confident that he had very few losing months in the period we couldn’t document but during the period we could document it was uh five losing months over all all tiny all tiny. So, so those are the types of things when I say market. Now, you don’t get those type of records, uh very difficult to do to do those systematically. It usually requires an extraordinarily skillful discretionary trader. So that’s why that’s discretionary. And I would I just want to make one kind of sort of [clears throat] I want to qualify it. That’s what I’m looking I want to qualify it. There are people who’ve used algorithmic approaches to to do phenomenal like one trader I interviewed at Thorp in one of the books who were the most famous one Renaissance, maybe the best track record ever who I couldn’t get to to be interviewed Jim Simons. But those those firms well let’s talk about something like Renaissance. Firm like that, it’s not doing system like people think of it. They’re literally trading tens of thousands of securities across the world and have hundred plus quants coming up with formulas. looking for tiny edges. They’re looking to create like a hundred different casinos like each they may trade one instrument against three other instruments and look for they’re looking for just to pick small amounts of money and the whole thing is always diversified very well so there’s no net market exposure, no sector exposure all of that. So they’re putting together this highly complex quant model which has supercomputing power behind it. God knows God knows the amount of code and all that. But that’s how people think of systems. That’s the only the only example I can think of where algorithmic trading and maybe AI will get there. I don’t know. But that’s the only I can think of where algorithmic trading really generates market wizard type results. Yeah, it’s it’s interesting you you kind of think that given the the time we are in now with AI it’s should be shifting but I don’t I don’t know if it will. I mean, I don’t really know if it will. Um I mean, what about from a So, given the fact they’re all discretionary, what about from a mindset point of view? Were there any common elements you noticed when you were interviewing these guys? They all tended to be like this, or at least they had some kind of skew in one direction so that they could I suppose overcome the greed and fear and and whatever else comes with trading. Well, a commonality that you would see is all of these people are tremendously you know, I really are are tremendously devoted, obsessed with the markets, and devote their just their entire life to trading life. So, we’re talking about the fireman, for example, gets up at 3:45 to check the markets and doesn’t take his last look until 8:00 p.m. Not saying that’s the way you want to live your life, but that’s what he does. The musician I mentioned would like eat, sleep, drink, you know, market research and so the morning through late night uh would would just be studying markets and and so forth. Uh the uh so many other traders uh uh like the prop trader, one prop trader talked about how he would of course be near the whole trading day, but then after the trading day would be reviewing his trades and making notes and uh keeping a journal and then would even come in on the weekends and reap and we would be taping his trading and he would replay his trading both fast and slow slow fast faster than normal to kind of like an athlete like a Yeah, yeah. baseball player taking a heavier bat uh before he gets up to the plate just to so the regular bat seems lighter. Uh so, he did that plus he did it slow slower so he could see exactly what he was doing wrong and stuff. And but that was on weekends. So, you’re talking about just all consuming all consuming dedication and hard work. And that was definitely a unifying theme. And did did these these traders kind of swing trade mostly or were they scalping or something else? The trade no, their approaches were all different and the some of them are still very short like the the volunteer fireman long long trade for him is is half an hour. That would be a winning trade. And his losing trades he’s probably gone in the first minute or two. So, uh so some are extremely short-term. Some started out the like Lance Wright started started out as a prop firm. In fact, the prop firm only allowed day trading. So, he started out very short-term. But then he left eventually he wanted to pursue longer-term trading trade his own account and he made multiples of what of what he made for the prop firm doing it that way. And so he still initially starting out still relatively short week or two but you know, gradually lengthening and two of the two of the other traders as well. And would you say that all these traders had some kind of base of data that they um based their strategy off? I.e. they went and backtested it for X number of years or whatever it was before they sort of got confident and this is what I’m going to go forward with. They they they did. For example, the the fire the the volunteer fireman his approach is he’s in he’s a real expert in merger arb. So, he reads all the filings, he knows all the nuances. Uh he’s actually able to beat the bots because he can exploit situations where it’s too complex and nuanced for the bot I mean, if there’s a headline comes out the bots will beat everybody. But he finds those situations where there’s enough nuance that the bots can’t take advantage of it. For example, uh some some merger arb is announced and the market rallies. Kind of he’s researched everything, totally knows it knows it hard, knows it completely, and he knows that in this particular merger uh it’s uh the company is in is in uh Maryland instead of Delaware, and that doesn’t mean anything to anybody, but to him he knows what that means is if it’s Delaware, it’s very easy for the merger to go through, difficult to to stop, whereas in Maryland it’s just the opposite. Right. So yeah yeah yeah. So it’s edge of knowledge that he’s got through research. And uh uh you know, the musician like studying uh uh you know, also getting a lot of information from initially when he was doing the smaller cap stuff, he would uh know companies what the company’s financial situation was look or again going through 13D filings and find those companies that had deals where they were burning cash and then made unfavorable deals because just to survive, and like like selling convertible bonds that if the market went up would do more it would they would get the stock would get crushed. So he kind of knows that and uh and so he and then he waits for some sort of they always manipulate they always come up with some news story that moves the stock, and he knows when that news story is just a bunch of bunk, and that’s how he would go short, and that’s how he made his initial millions. But again, it was through a lot of study. So uh yeah, the research ends uh uh Kulmangi as I mentioned, the uh the security guard uh he uh ex-security guard, he uh he like, you know, I don’t know, he went over hundreds of thousands of joy. I think he’s at tens of thousands, but probably hundreds of thousands. Yeah, it it sounds like you got a mix of like fundamental and uh I suppose more technical price action kind of traders in there, which is great. Now, what about uh you mentioned journaling Uh do all of these traders use journaling software or some of them? That’s a lot of times typically their own just to keep their own notes and and in their own way and most of them do most of them do and it’s very critical. So uh the uh like literally you know one of them says and it comes up almost in every chapter one of them says you know doing the number of doing this every day and says it’s very important to do it on the same day while still fresh in your mind and they’ll review it daily weekly and sometimes quarterly and it becomes a very essential part of your process to drive into their mind the lessons they’ve learned from trading. Hey, if candlesticks still confuse you they’re costing you more than you think. My private mentor JJ’s decoded 25,000 hours of trading into one better candlestick. Click the link in the description or visit tradingnut.com to watch the free video and grab the free guide. All right, look Jack it’s been fantastic having you on I think I mean we could probably go on here and and find out all about the book but I think people should probably go and get it. What is the best way to find out more about you and what you do and the book and get your hands on it as well? The book is available at every every book seller on Amazon right now and I can easily be found. I I used to have a website but I I didn’t guys stop giving me your upset or I don’t have a particular website to drive people to. So basically I can say the book can be found anywhere. I do I do tweet like one of the things like quotes from the book and stuff from the books and stuff like that other things not a heavy tweeter but I do and that’s at Jack Schwager just at my name. And other than that I’m not putting out stuff. My co-author George Coyle does put out a lot more stuff and has a blog and his his stuff you you can just go through if you just but I guess put in his name George Coyle and she’ll come up. Coyle being C O Y L E. Brilliant. Well look folks, what we’ll do is we’ll hook some links up below in Jack’s show notes page there on Trading Nut. We’ll see you down there and subscribe, and the notifications bell and we’ll see you in the next video. Thanks for coming on Jack. Thank you. Have a good one.