January 29, 2018

Jack Shwager on risk management

Nithin: Talking about risk management, I have heard you say that you shouldn’t take more than one percent risk on a trade. I mean, if someone’s kind of working on a small-ish portfolio size, how does he ever get big by taking a 1% bet?

Jack Schwager: You know, the fact that the reality of limited resources doesn’t change the truth of the fact that bet size should be small. I mean, that’s a mathematical truism, and the mathematics and the markets don’t care about how much you could afford to...how much money you could afford to trade, or lose.

The reality is, if you want to be successful, your trade size should probably be 1% or infact less. As I’ve gotten older and I’ve read my original books, when I produced audios for them, and listened to the audio, I think it was New Markets Wizards, there was this chapter I was listening to, and I came across this line where somewhere I said in my conclusions in the summary of the book, that one of the things is you should limit your risks to very small levels to about, I think I might have used about 1 or 2 percent or less. And, what I thought was, after listening to the old book, in the book I would not have changed anything except 2 things. There were actually 2 things that struck me that I would have changed if I wrote the book now, which is more than 20 years later. In the whole book, there were like 2 things.

One was that line about 1 to 2 percent, now I would feel it should be one percent maximum and ideally half a percent or less.

Read complete interview at http://www.moneycontrol.com/news/business/markets/jack-schwager-interview-market-wisdom-from-the-wizard-himself-2492507.html

No comments:

Post a Comment