Jack Schwager’s interview with Blair Hull from The New Market Wizards was the third interview in the section on traders who use advanced computer systems. Much like the interview with Joe Ritchie, there was a good bit on technical conversation over the course of the interview, but as he always does, Schwager was able to key in on a few concepts that apply across all methods of trading. Hull’s blackjack background brought an interesting element to the interview, and that alone makes it worth reading.
Top Five Quotes From Market Wizard Blair Hull:
“In a sense, I owe everything I have to the state of Nevada. It not only provided me with my original trading stake, but the betting experience taught me a lot of things that allowed me to become a successful trader.” – Blair Hull
About the first third of the interview focused on Hull’s experience as a professional gambler and member of a blackjack team. Hull openly discussed how this experienced forced him to learn the discipline to stick to his system, even during severe losing streaks. He also learned the importance of careful money management.
We have seen quite a few Market Wizards reference some form of gambling and its parallels to trading. The root idea is always the same. The goal is to find an edge and attempt to exploit it with precise discipline and risk management. Whether dealing with stock options or a poker table, the most important thing is to make sure you are able to survive to play again tomorrow.
“The people who want to be recognized as the greatest traders are probably not the greatest traders. Egos get in the way of the process. In my opinion, you never want to be the largest player in the pit.” – Blair Hull
It is interesting that Hull got onto this topic by discussing the fatal flaw that brought down his blackjack team. Apparently big egos are as much a problem in the blackjack world as they are in trading. I have encountered plenty of these people in the trading world. I have a general rule that is similar to what Hull is saying. Anyone who has to tell me how successful he is, probably isn’t really that successful.
“Also, it’s not the mathematical skill that’s critical to winning, it’s the discipline of being able to stick to the system. There are very few people who can withstand the losses emotionally and still stick with the system. Probably only one in five hundred people has the necessary discipline to be successful.” – Blair Hull
This reminds me of the Market Wizards who have said that they could publish their systems for free to the general public and no worry at all because almost no one would have the discipline to actually follow the systems. This is a human flaw that we all struggle with. It is very hard to stick to your guns when you are in the midst of a bad losing streak. Every bear market feels like it is the bear market that changes everything and makes your system obsolete. Every losing streak will make you question if you’re really on the correct path.
“All you need is a mathematical advantage and the money management controls to assure that you stay in the game. Everything else takes care of itself.” – Blair Hull
Hull couldn’t spell this out any more clearly. The concept is simple. Find a proven mathematical advantage and apply it using proven money management controls. Stick to the plan. Granted, this is easier said than done.
“You can’t listen to the news. You have to go with the facts. You need to use a logical approach and have the discipline to apply it. You must be able to control your emotions.” – Blair Hull
I like to think that I have the news part of this down. I almost never watch financial news anymore because I know it isn’t relevant. I like to think I have a pretty logical approach, however I am still working on developing the discipline to stick to it. The emotional part is where I struggle the most. I still get far too excited about winning positions and far too depressed over losing positions. This is an area that I really need to focus on.