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The Little Book of Market Wizards: Lessons from the Greatest Traders by Jack D. Schwager

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Chapter Twenty-Two

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Off the Hook

A Unique Observation

Some items of trading advice, such as the importance of risk management and the need for discipline, albeit absolutely critical, were cited by many of the traders I interviewed. Occasionally, however, a trader offered an insight that no one else had mentioned before. I particularly like these unique observations.

A perfect example of this type of trading principle was Marty Schwartz’s dictum related to situations in which you are very worried about your position and the market lets you off the hook easily. Schwartz said, “If you’re ever very nervous about a position overnight, and especially over a weekend, and you’re able to get out at a much better price than you thought possible when the market trades, you’re usually better off staying with the position.”

If you’re ever very nervous about a position overnight, and especially over a weekend, and you’re able to get out at a much better price than you thought possible when the market trades, you’re usually better off staying with the position.

Marty Schwartz

On the Hook

An illustration of Schwartz’s observation came up in my interview with Bill Lipschutz when he described the first time in his trading career that he was truly scared. At the time, he traded a very large proprietary foreign exchange (FX) account for Salomon Brothers. It was the fall of 1988, and Lipschutz ...

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