Marty Schwartz graduated from Amherst College back in 1967 and went on to Columbia Business School however he quit and joined a U.S. Marine Corps reserve unit that was recruiting officers serving from 1967 to 1973 and then quit and had several jobs he didn't really care for, until he joined financial firm EF Hutton where he saved $100,000 and decided to embark on a trading career.
He became well known after being interviewed by Jack Schwager in the book Market Wizards. One of his biggest achievements was for his performance in the U.S. Trading Championships which lasted for 4 months. Contestants competed to see who could achieve the best return on investment in this period. He achieved staggering returns In nine of the ten championships, his average return was 210 percent non-annualized, making more profits than all the other contestants combined .
On Being a Technical Trader
I always laugh at people who say, “I’ve never met a rich technician.” I love that! It’s such an arrogant, nonsensical response. I used fundamentals for nine years and got rich as a technician”
There are many people who deride technical analysis and Jim Rogers is one of them but there are many different ways to make money trading the markets and for most traders a technical approach is best as its easy to learn to read charts. Don't ever underestimate the power of technical analysis,it can be simple but it can make you a lot of money.
On Market Sentiment
“I talked to my friend Bob Zoellner several times a day, and he taught me how to analyze market action. For example, when the market gets good news and goes down, it means the market is very weak; when it gets bad news and goes up, it means the market is healthy”
This is one of the simplest but most effective ways to judge if a bull or bear trend is strong however in my experience, traders never seem to watch the effect of the news because there to focused on the news itself and using it to justify their trading position. Keep in mind, that a strong up trend which fails to rally on bullish news or a strong down trend which fails to fall on bearish news is probably going to register a trend reversal. Remember - its not the news itself which is important, it's the reaction of price to it which is.
Worst Fears Don’t Come – The Trade Will Probably Win
“I have stated before that whenever your worst fears are not realized about a trade and the market is letting you out better than you expected, it is not just luck. Rather your position is most likely correct and should not only be held but perhaps added to”
I have experienced this and I am sure many other traders have to.I still have no idea why it happens but maybe, it's our sub conscious mind at work but whatever the reason, pay attention to this trading tip, I have only seen Shwartz give this view but think its one of his most unique and valuable trading tips I have ever read.
Your Ego & Trading A disastrous Combination
“When I was able to spate my ego needs from making money. When I was able to accept being wrong. Before, admitting I was wrong was more upsetting than losing the money. I used to try to will things to happen”
Many traders have losing positions and stay with them and will them to turn around. These traders, try to justify their position even though, the chart action is telling them their trading signal should be out the market. Hope is one of the worst traits, to have when trading currencies and traders who hope, a lose will turn around soon get wiped out.
“I’ve said it before, and I’m going to say it again, because it cannot be overemphasized: the most important change in my trading career occurred when I learned to divorce my ego from the trade. Trading is a psychological game. Most people think that they’re playing against the market, but the market doesn’t care. You’re really playing against yourself. You have to stop trying to will things to happen in order to prove that you’re right. Listen only to what the market is telling you now. Forget what you thought it was telling you five minutes ago. The sole objective of trading is not to prove you’re right, but to hear the cash register ring.”
The above quote is totally correct – don't have an ego and don't personalize the market – it simply doesn't care. Its not your enemy – you are your own worst enemy if your trading strategy is implemented with your ego in control. If you free your mind, forget your ego and see what the market is telling you without emotion you can become a winning trader but until you do this you will never win.
Great Tips on Forex Money Management
I think the quotes below on money management are fantastic and ANY trader can learn from them. If you learn the significance of the quotes below and make sure you implement them in your trading plan, you WILL make money so here they are with my comments.
“The most important thing is money management, money management, money management. Anybody who is successful will tell you the same thing.”
OK its obvious but there is no harm in re stating it because MOST traders fail to understand it and lose but every top trader in the world knows, you need to protect what you have above all else, so you are around when the profitable trades come around. Sure its basic trading advice but its the most important advice of all in achieving trading success.
On Patience and Being Selective on Trades
“Before putting on a position always ask, ‘Do I really want to have this position?’”
Are you trading because its a good trade set up you are confident in or trading just for the sake of trading? The fact is most traders will take to many trades for a thrill, they want revenge on the market which has just given them a loss. Patience as we have stated elsewhere on this site is one of the most valuable traits to develop to increase profit potential and also reduce risk – ONLY trade high odds trade set ups if you want to enjoy the biggest profit potential.
Clear Your Head – You Can Always Get Back in the Market
“No, I always take my losses quickly. That is probably the key to my success. You can always put the trade back on, but if you go flat, you see things differently”
One of the best pieces of trading advice I would give to novice traders is - “ if in doubt get out” and the above quote fits with this advice perfectly. If you are stuck in a losing trade your view of the market is one based on hope and non clarity but when you exit, you see things more clearly because you are on the sidelines and able to see price action as it is and not clouded with your emotions.
Beware of Streaks and Over Confidence
“My biggest losses have always followed my largest profits.”
When trader win they become over confident and thing they will continue winning – their ego comes into play and they start to take trading signals they shouldn't and risk more than they should and it leads to a big hit on account equity or even worse a wipe out. Always keep in mind winning and losing streaks always end so don't be to worried if your losing a number of trading signals and don't get over confident when your winning a number of trading signals – be disciplined and alert at all times.
Shwartz's Best Advice for New Traders
“Learn to take losses. The most important thing in making money is not letting your losses get out of hand. Also, don’t increase your position size until you have doubled or tripled your capital. Most people make the mistake of increasing their bets as soon as they start making money. That is a quick way to get wiped out.”
This really is a summary of the quotes we have just looked at but any beginner in currency trading, should read and re read the above quote because it really is one of the best quotes for achieving currency trading success you will read.
I like Marty Shwartz quotes because he can say it better than me especially on the importance of money management! On a serious note, If you read the quotes above and learn from them, you will have a head start in your quest for currency trading success. He is one of the true great trader and a trader, whoany trader can learn from - novice or pro. If you like this article, why not check out Martin Schwartz's book, "Pit Bull" which is a really fun and inspirational read, packed with essential trading advice for profit.