Trader success not due to luck

By PAULA OLIVER

Successful Wall St traders can be high school dropouts or top college graduates, but the one thing they have in common is an excessive work ethic, says a visiting author.

Jack Schwager, the author of several trader books including Market Wizards, was here this week to address a futures conference.

After spending the past 15 years picking the brains of America's finest traders, he had come to the conclusion that luck had nothing to do with the success of those wanting to make money on the stockmarket.

"They end up using an approach that fits their personality, and some can be interested in technical analysis while others can be very aggressive," he said.

"These guys are dealing with billions of dollars, but they all have different ways of making it successful."

The best were more concerned with when to get out of a position, than when to enter into a new one. Risk control had the utmost importance.

Mr Schwager said the stereotype of a Wall St trader who barks out orders while holding three phones is true in some cases, but for every one of them, there are many who have a disciplined and methodical approach.

For any New Zealanders who are thinking about making a first attempt at the markets, Mr Schwager says now is probably not the best time to enter the US.

"It's a better time than a year ago, but from an investor standpoint I would be more inclined to be careful," he said.

"The markets went up too fast and too hard, and now they are swaying back and forward a bit."

The best time to jump in is when people are pessimistic rather than euphoric, but that requires a special kind of confidence.

"Once you've got confidence, money is made," he said.

"But which one comes first is a chicken and egg type of argument."

A "fair amount" of danger had come out of the sharply declining tech stocks, he said, making them safer now than they would have been.

All of the proceeds Mr Schwager has made from his books have been invested with the traders he has interviewed.