Jack Schwager談系統開發

"Jack Schwager on What Really Matters with Strategy Trading”

Interview with Jack Schwager

by Janette Perez

Jack Schwager, Co-Manager of Fortune Asset Managements Market Wizards Funds (a fund of hedge funds) and author of Market Wizards, The New Market Wizards, and Stock Market Wizards requires little introduction to the TradeStationWorld community. Based on his prior experience, which includes 22 years as the director of futures research for some of Wall Streets leading firms and ten years as the co-principal of a commodity trading advisory firm, and countless interviews with traders, wed like to share with you some of his thoughts on the world of strategy trading.

Janette: Jack, have you always been a believer in strategy trading?

Jack: No, I certainly haven’t always felt that way because when I first started out in my first five or six years in the business, I was purely a fundamental analyst and actually was very skeptical, if not cynical, about technical analysis. That attitude was based on biases rather than any actual evaluation. It wasn’t that I tried technical analysis and found it didn’t work; it just seemed to me intuitively that it wasn’t scientific.

Janette: How did your opinion change?

Jack: My perceptions about technical analysis changed through someone who worked for me by the name of Steve Chronowitz. At the time, I was a Research Director for a futures firm and Steve was my technical analyst. I noticed that Steve did pretty well with his calls, and I knew he was purely a technical analyst. So I asked him to show me what he was doing, and I showed him what I was doing fundamentally. We basically educated each other on our respective methodologies. Once I became exposed to technical analysis, I saw that maybe it might work because the market is just reflecting the input of all the participants. It’s not a matter of magic—it’s just basically a reflection of market psychology, which is human nature, and one could argue that human nature really doesn’t change, so there might very well be repeatable patterns.

Janette: Did you start using technical analysis in your own trading?

Jack: The transformation began when I started experimenting using technical analysis. I found it very appealing because I was also trading my own account and one problem I always had with fundamental analysis was that it never gave you entries or exits.

Janette: Can you give us an example?

Jack: Certainly. Fundamental analysis tells you if the market is over-priced or under-priced, given the known information, but you don’t always have all the inputs. For example, if your analysis tells you the wheat market is underpriced at $3.50, and it goes down to $3.00, it would be more underpriced as long as the fundamentals didn’t change. There is nothing that will get you out of the position, and there are a number of weaknesses in that. To begin, you have to be drastically wrong only one time to wipe out your account. Beyond that, the price weakness could develop because of fundamental changes that are clearly not predictable such as a drought or a huge export order from an unexpected source. Alternatively, you could have structural changes in the market that might not become evident until after the fact. In other words, once all the smoke cleared a year later you could say, “Ah, this is why prices went that way,” but there’s no way you could have seen it at that time. All of these problems relate to the fact that in fundamental analysis, the very approach is inherently in contradiction to money management control. I’m talking about fundamental analysis on futures or index markets here, not fundamental analysis on individual equities.

The nice thing about technical analysis is that by definition you’re using an approach in which the money management is built-in. If a market is going down, you’re not going to be buying more because it’s at a better price. On the contrary, you’re going to be getting out of the trade because you’re long and you lost money. In other words, if you’re losing money, the trends have changed and your stops are going to get activated. In short, I found it much easier to trade with technical analysis than with fundamental analysis.

Janette: Is there one specific trade you can point to?

Jack: Yes, one trade I will always remember as one of the best trades I ever made, was ironically a losing trade. It was a trade that occurred the first year I started using technical analysis in trading. The D-Mark was in a narrow basing pattern for many months, and I thought it was bottoming out. So, I went long, but I put a stop in right below the base. When the D-mark started to go down, I got stopped out and took a modest loss on the trade. The D-Mark then proceeded to go down and down, and I just knew that if I hadn’t been using technical analysis that the small loss could have been a huge loss. That’s just one example of a trade that helped to solidify my biases in favor of using technical analysis. I still used fundamental analysis sometimes to define my direction in the market, but I strictly used technical analysis for timing. That was the transition I underwent. Thus my attitudes about technical analysis going in, with no knowledge of the markets, were radically different than they were six years later and thereafter.

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