Market Wizards: The Art of Aggressive Trading
Jack D. Schwager interview, conducted 1987 — published 1989
The foundational text of the PTJ method. In Schwager's book-length interview — conducted in the months after the 1987 crash — Jones lays out his earliest systematic framework: the Eli Tullis apprenticeship on the cotton floor, the career-defining 1979 cotton loss that forged his defense-first creed, the 5:1 risk/reward filter, and the technical discipline behind the crash call. Every later PTJ interview cites or derives from this chapter.
“I am always thinking about losing money as opposed to making money. Don't focus on making money; focus on protecting what you have. At the end of the day, the most important thing is how good are you at risk control.”
Summary
Jack Schwager interviewed Paul Tudor Jones in the months after the October 1987 crash, when Tudor Investment Corporation had just produced the most famous single-month return in hedge fund history, and published the conversation in 1989 as the "Art of Aggressive Trading" chapter of Market Wizards. It is the foundational text of the PTJ method: the Eli Tullis apprenticeship on the New York cotton floor, the career-defining 1979 cotton loss that turned a brash young trader into a risk obsessive, the 5:1 risk/reward filter, the 200-day moving average rule, and the contrarian preference for trading market turns over riding the middle of trends.
Every later PTJ interview — from the 2009 Buckley commencement address to the 2026 Invest Like the Best conversation — restates ideas that appear here first. The chapter is copyrighted book text, so this page reproduces only short direct quotes that already circulate widely on trading and investing sites, each in its widely circulated form. Wording may differ slightly from the printed book; no narrative passage from the chapter is reproduced.
On the single most quoted line in all of trading literature:
"Losers average losers."
— Paul Tudor Jones, widely circulated from the 1989 Market Wizards interview
On the trading rules he lives by:
"Don't ever average losers. Decrease your trading volume when you are trading poorly; increase your volume when you are trading well. Never trade in situations where you don't have control. For example, I don't risk significant amounts of money in front of key reports, since that is gambling, not trading."
— Paul Tudor Jones, widely circulated from the 1989 Market Wizards interview
On defense as the whole game:
"I am always thinking about losing money as opposed to making money. Don't focus on making money; focus on protecting what you have. At the end of the day, the most important thing is how good are you at risk control."
— Paul Tudor Jones, widely circulated from the 1989 Market Wizards interview
On the asymmetry filter behind every position:
"I'm looking for 5:1 Risk / Reward ratio. Five to one means I'm risking one dollar to make five. What five to one does is allow you to have a hit ratio of 20%. I can actually be a complete imbecile. I can be wrong 80% of the time, and I'm still not going to lose."
— Paul Tudor Jones, widely circulated from the 1989 Market Wizards interview
On starting each day assuming he is wrong:
"Every day I assume every position I have is wrong. I know where my stop risk points are going to be. I do that so I can define my maximum possible drawdown. Hopefully, I spend the rest of the day enjoying positions that are going in my direction. If they are going against me, then I have a game plan for getting out. Don't be a hero. Don't have an ego. Always question yourself and your ability."
— Paul Tudor Jones, widely circulated from the 1989 Market Wizards interview
On the morning of Black Monday, October 19, 1987:
"When we came in on Monday, October 19, we knew that the market was going to crash that day. As the previous Friday was a record volume day on the downside. The same thing happened in 1929, two days before the crash."
— Paul Tudor Jones, widely circulated from the 1989 Market Wizards interview
Key Themes
The chapter is the origin text of losers average losers — the rule against adding to losing positions — and of the 5:1 risk/reward asymmetry filter that makes a low hit ratio survivable. Its defense-first creed is stated here more plainly than anywhere else: play great defense, protect what you have, assume every position is wrong. That creed anchors the defense first concept, and the exit discipline it implies later crystallized into the 200-day moving average rule. The Black Monday recollection is the trading floor expression of the analog model — the 1987-overlaid-on-1929 framework he built with Peter Borish — while the apprenticeship stories trace the whole system back to Eli Tullis on the cotton floor.
Context & Significance
Market Wizards made Jones the archetype of the modern macro trader: technical, contrarian, defense-obsessed, and willing to bet heavily when the asymmetry demanded it. The interview's timing matters — Schwager sat down with him weeks after the crash, so the book captures the 1987 call while the details were still fresh, years before memory could polish the story. Later retellings, including the Trader documentary narrative and the 2026 Invest Like the Best interview, consistently cite this chapter as the record of first resort.
For this knowledge base, the chapter is load-bearing: the concepts of risk control, asymmetry, and turn-trading that organize the entire archive are all stated here in their earliest form. Because the underlying book text is copyrighted, the KB handles the source through its widely circulated quotations only — a constraint that also keeps every excerpt on this page independently checkable against public circulation records.