The Hunt for New Market Wizards. Photo: Sandy Millar (Unsplash)

The Hunt for New Market Wizards

If you’re involved in trading in any shape or form you'll surely need no introduction to Jack Schwager’s Market Wizards books.

The series has become a staple for traders and others working in finance, with many traders citing it as a go-to publication for anyone starting out in trading.

Schwager's Market Wizards series has spanned four books so far (five if you include ‘The Little Book of Market Wizards’), beginning with ‘Market Wizards’ in 1989 before being followed by ‘The New Market Wizards’ (1992), 'Stock Market Wizards' (2001) and most recently, 2012's ‘Hedge Fund Market Wizards’.

Pod Chats: Jack Schwager on Market Wizards

The series features in-depth interviews with traders who have seen phenomenal financial success in the markets, with Schwager encouraging these financial titans to share their insights with the everyday trader. Legendary traders such as Ed Seykota, Ray Dalio, Edward Thorp and Paul Tudor Jones, to name but a few, have featured in previous releases.

And now, as revealed via his Twitter and LinkedIn feeds, Schwager has announced that he is on the hunt for new participants in the series' latest instalment:

Schwager tweeted the above to his 30,000 followers, encouraging them to get in touch if they are - or know of - a budding Market Wizard. In one of two LinkedIn posts (linked below), he revealed the following:

"I am writing a new Market Wizards book with a focus on traders with great track records who are unknown or relatively unknown. The interviews I have done so far have been with independent traders as opposed to traders managing assets. I am looking for additional traders that fit this description."

But before you start dreaming of the day Schwager calls up for a chat to talk through your top trading techniques, note that there are a number of criteria that applicants need to adhere to before you'll be considered.

  • Track Record – 10yrs or longer (7 yrs if results are exceptional)
  • Gain to Pain Ratio (Daily Data) – 0.30 or higher (The sum of all returns (daily or monthly, depending on data being used) divided by the absolute value of the sum of all negative returns. In essence, the GPR shows the ratio of net returns to the losses incurred in getting those returns.)
  • Gain to Pain Ratio (Monthly Data) – 2.0 or higher
  • Sortino Ratio/√2 – 2.0 or higher (The Sortino Ratio is a variation of the Sharpe ratio that uses only downside deviation to measure risk instead of the standard deviation, which is based on all returns.)
  • FundSeeder Score – Minimum of 60, but preferably 75 or higher (This metric uses a complex proprietary formula that is computed based on the time-series of daily returns. The core component of the Score is the Probabilistic Sharpe Ratio.)
  • Average Annual Compounded Return (This value is the return level than when compounded annually will yield the cumulative return.)

As well as the above benchmarks any new ‘Wizard’ should meet, Schwager also listed further points that would limit the trader’s chances of being included, saying:

  • I am not interested in traders who trade in illiquid markets or illiquid strategies.
  • I am not interested in traders whose methodology involves assuming tail risk (e.g. sellers of out-of-the-money options).

If you feel you tick the boxes above and have a good chance of meeting Schwager's criteria, then the good news is the process for entering is fairly straightforward. Through FundSeeder (set up by Schwager to discover and empower the next generation of asset managers) you can upload your trading history to be analysed and compared against other applicants. For more information, make sure to read Schwager's LinkedIn posts detailing the process in full:

Got what it takes to be a part of this prestigious series or know someone who does? Get entering and let us know about it!