Market Wizard Charles Faulkner

The New Market Wizards

The New Market WizardsJack Schwager’s interview with Charles Faulkner in The New Market Wizards was one of the interviews that was more about the psychology of trading than actually trading. This is one of my favorite subjects to read about, so I found the interview extremely interesting. Faulkner is a staunch advocate of NLP, and spent most of the interview discussing various applications it has to trading.

Top Five Quotes From Market Wizard Charles Faulkner:


“By modeling successful people, we can learn from the experience of those who have already succeeded. If we can learn to use our brains in the same way as the exceptionally talented person, we can possess the essence of that talent.” – Faulkner

This is a concept that makes perfect sense when it is written in front of you, however it is also one that can easily get lost in the shuffle of a busy life. You have to make time to study successful people in order to learn from and model them.

This is exactly what I have been doing with the Market Wizards series for almost a year now. Every week I read about a wildly successful trader and discuss things I can learn from what they find important. I have recently taken this a step further into having ongoing discussions with some very accomplished traders.

“The different forms of market analysis can be seen as different maps of the same territory. Outstanding traders seek to have maps that most closely match the market territory in a way that is useful for them.” – Faulkner

I really like how Faulkner illustrates that there are many forms of market analysis, and any of them can be correct when applied the right way. This is something we have seen from a number of Market Wizards who have endorsed a number of different styles. It appears that any form of analysis can be correct as long as it fits with your personality.

This is something I have been dealing with as I am evolving into more of a system trader. I have found that making discretionary decisions does not fit well with my trading mentality as it forces me to second guess my analysis. Removing the need for the analysis and using backtesting to prove a system profitable will make a huge difference in the application of my trading map.

“One thing that really struck me was that not one of these people said they truly regretted anything they had actually done – what they regretted was what they hadn’t done.” – Faulkner

Once again, this is one of those concepts that is so obvious, yet so easy to forget about. Faulkner discusses this in the context of deciding what you really want out of life and then going after it. Many of us spend most of our time chasing things that we don’t really want after all. Faulkner is urging us to seriously contemplate the roads we are choosing to take.

“Trading actually tends to attract people who are ill suited to the task – those who are enamored with making lots of money; people who are willing to take high risks; individuals who seek excitement or who react to the world with emotional intensity.” – Faulkner

Know anyone like this?

What is scary is that I fall into every single one of those categories. Each one is something I have spent an enormous amount of time working on. I believe that moving to a systematic approach is going to remove a lot of the excitement from trading for me, however I am also the kind of person who is excited by large data sets, so if I can focus my excitement on backtesting and deelopment, then perhaps I will put less emphasis on the success of a given position. We will see….

“With NLP, you can direct your conscious mind to notice when you’re not where you want to be. What’s more important, you can use NLP techniques to effectively introduce new patterns into your unconscious mind to bring about the changes you desire, instead of complaining or making up any one of a thousand reasons why you aren’t where you want to be in your life.” – Faulkner

I had previously read about NLP from a bunch of books on how to get girls. Faulker’s application is a bit more sophisticated.

I believe that I could benefit a great deal from applying some of these NLP techniques to my life as well as my trading. I will put an NLP book on the upcoming reading list.