An Introduction to a Great Trader
Randy Mackay went on a tour in Vietnam and didn't even finish school so when he returned in 1970, he needed to finish his education and wanted a part time job. His brother Terry, was was a floor broker at the Chicago Mercantile Exchange (CME) and arranged for him to have a job as a rummer which took up the morning so Randy could continue with catching up on his education in the afternoon.
In 1972, the CME branched out into trading currencies and the International Monetary Market was opened up for business and the cost of a set on the exchange at the time was just $10,000 but existing members of the CME were given them for free so Terry simply gave it to Randy to use and gave him some seed capital to get him started:
Trading Performance – Mr Consistency
“He gave me the use of the seat and lent me $5,000. I put $3,000 in the bank to pay my living expenses, and used the $2,000 for my trading account" Randy McKay
Randy Mackay managed to turn the $2,000 into $70,000, in the first year of trading and first year of trading and went on to make tens of millions of dollars, although the exact amount is not known but not only are his gains impressive – so is his consistency being profitable on his own account in eighteen out of twenty years. McKay also acted as a discretionary fund manager for family and friends of which two started 1982 with a initial balance $10,000, each generated cumulative earnings in excess of $1 million.
Randy Mackay is a very private trader but became well known to the trading community, when he was interviewed by Jack Schwager in his classic book – The New Market Wizards. Below I have selected some of my favourite quotes from Randy who is acknowledged as one of the best traders of all time
Top Quotes and Comments
“Virtually every successful trader I know ultimately ended up with a trading style suited to his personality".
This quote is so true and something we stress to all traders who buy our course – you will never follow anyone else to success because you need to have a trading strategy which suits your personality – why? Because – you need to follow a strategy with discipline and you can only do that if it matches your risk tolerance and investment objectives.
“I never try to buy a bottom or sell a top. Even if you manage to pick the bottom, the market can end up sitting there for years and tying up your capital. You don’t want to have a position before a move has started. You want to wait until the move is already under way before you get into the market”
Prediction is not a way to make money – It's a sure fire way to lose money! Most novice traders try this method and lose because they want to sell the exact high or buy the exact low but it doesn't work. Sure you can be a contrary trader but you must, have confirmation of a trend change to get in before entering your trade in the market.
Also another point Randy makes is - you need to be trending volatile, trending markets. This is because to make money from your trading signals - you need prices to move! Many traders get frightened by the word volatility but you need it to make money and a non volatile market will never make you big profits.
“When the trade was easy, I wanted to be in, and when it wasn’t, I wanted to be out. In fact, that is part of my general philosophy on trading: I want to catch the easy part.”
The easy part for Randy is a trending market, he just wanted the middle bit of the trend and while he misses buying the bottom or selling the top it's no problem, because trends last a long time and there is plenty of profit in the middle of a trend. Always remember,if you managed to get just 50% of the big trends in terms of profits, you would be very rich.
“When I get hurt in the market, I get the hell out. It doesn’t matter at all where the market is trading. I just get out, because I believe that once you’re hurt in the market, your decisions are going to be far less objective than they are when you’re doing well.”
We have made this point many times – if you hold a loss for to long, your loss will be so big that your emotions will be in control of your trade and not you. This of course leads to disaster because - you are simply hoping the trade will recover and won't see the true reality which is it's probably a bad trade.
If you get out of a trade, you can always re-enter and while your out the market, you will see the chart formation objectively, rather than clouded by your emotions.
“You need to determine why the winners are winners and the losers are losers. Once you can figure that out, you can become more selective in your trading and avoid those trades that are more likely to be losers.”
Totally correct but most traders don't understand the above quote. You need to have an edge with your trading plan, know what it is and only, take the best trades in line with your edge. We say it all over this site, patience is a virtue and if you reduce the number of trades you take, you will make bigger profits and spend less time on your trading – PERIOD.
“Sometimes the reason people lose is that they're not sufficiently selective. Upon analysis, a trader may find that if he only concentrates on the trades that do well and lets go of the other types of trades, he might actually be successful.”
This quote leads on from the previous one and simply stresses, you need to be selective with your trading signals. This must be the simplest trading tip of all, in terms of how to make profits on your Forex trading signals but most traders, simply ignore it and want to trade as much as they can - rather than picking the best trade sets ups.
“Trading has not only become much harder, but it has also changed. In the 1970s, the price moves were so large that all you had to do was jump on the bandwagon. Timing was not that critical. Now it's no longer sufficient to assume that because you trade with the trend, you'll make money. Of course, you still need to be with the trend, because puts the percentages in your favor, but you also have to pay a lot more attention to where you're getting in and out.”
I have always maintained this - trading currencies is a lot harder today,than when I started trading back in the late seventies so why is this? The reason is simple – online trading has meant a huge increase in volatility which means, you must have to have better market timing today - so your stop is not hit to quickly and you are not stopped out to soon from your trading signal. Today, volatility is higher around important market turning points so when you enter a trade, stop loss placement is far more important than it was 20 or 30 years ago.
Randy Mackay is a trader I really like and admire not just because of his track record and consistency but because he explains what it takes to achieve Forex trading success simply and clearly and also, he stresses the value of patience and being selective when taking trades and the fact trading is more difficult today than in years gone by which are two points we always stress but of course – as we explain in other areas of this site both problems can be overcome.
Randy Mackay is one of the worlds top traders in our view and one of our favourite traders. We hope you enjoyed, out short intro to his thoughts and trading strategy and his insight into trading can help you achieve bigger currency trading profits.