Michael Marcus has an outstanding track record and the interview, with Jack Schawger in Market Wizards, should be required reading for all new traders. Below, we will look at some quotes from him and discuss his trading tips in more detail:
Following Your Own Path
“You also have to follow your own light. Because I have so many friends who are talented traders, I often have to remind myself that if I try to trade their way, or on their ideas, I am going to lose. Every trader has strengths and weaknesses. Some are good holders of winners, but may hold their losers a little too long. Others may cut their winners a little short, but are quick to take their losses. As long as you stick to your own style, you get the good and the bad in your own approach. When you try to incorporate someone else's style, you often wind up with the worst of both styles. I've done that a lot”
I have said this in numerous articles I have written myself and highlighted this point, in other profiles of the Market Wizard traders and other top traders. The above point, needs to be learned by any trader especially a beginner – you need to do follow your own path to achieve, the Forex trading profits you desire which leads me on the next point:
The Cult and Myth of the Expert
“I think the leading cause of financial disablement is the belief that you can rely on the experts to help you. Investing requires an intense personal involvement.”
I have outlined in numerous other articles that, social trading is leads to disaster. Following friends, people in forums on social net works and in the news is not going to make you money. Trading is intense and is personal because its not your method which will lead you to success but the way you control your emotions, when trading your signals and setting your stops. You simply have to get an education and of course, you learn proven ways to make money but you have to put this knowledge into action yourself – no one else can do it for you.
A Very Simple and Effective Trading Tip
“You absolutely want to put down a [short] bet when a market acts terribly relative to everything else. When the news is wonderful and a market can't go up, then you want to be sure to be short.”
One the the simplest tips you can use is to watch for a bearish market struggle to higher or even fall, on the realize of bullish news and look to trade the other way and vice versa in a bear market because the news is discounted by traders and there are high odds of a reversal which you can time with your trading charts.
See the Reality and Trade the Truth
“Objectivity A good trader can't be rigid. If you can find somebody who is really open to seeing anything, then you have found the raw ingredient of a good trader”
Most people see the market through a fog which clouded by news reports, other peoples opinions and their own emotions. One of the keys to trading success is to see the market action, as it is and trade the truth which is presented to you on the charts. You need to free you mind, be totally logical and objective, when looking at your charts and executing your trading signals.
Patience and 3 Key Ingredients of a Good Trading Signal
"I think the secret is cutting down the number of trades you make. The best trades are the ones in which you have all three things going for you: fundamentals, technicals, and market tone. First, the fundamentals should suggest that there is an imbalance of supply and demand, which could result in a major move. Second, the chart must show that the market is moving in the direction that the fundamentals suggest. Third, when news comes out, the market should act in a way that reflects the right psychological tone."
We have spoken about patience and how its essential to wait for the right trades and be patient with your trading strategy but he also makes other key points which I think traders can learn from. Some people swear by technical analysis, others by fundamental analysis but why not combine the two? After all, we all know the big trends respond to the fundamentals but in the short term greed and fear move prices to far either up or down. If you trade in the direction of the fundamentals long term and use your charts to generate high odds set ups, you gain an edge in your trading strategy.
Money Management Tips
Always use stops. I mean actually put them in, because that commits you to get out at a certain point"
How many times have we stressed this point in articles? Lot's of times but there is no hard in stressing it again – as soon as you place a trade in the market, decide your get out point and stick with it. Put the stop in the market and don't use a mental stop – why? Because if you miss it, you will let the loss run and this is one, of the most fatal trading errors you can make.
“The first thing I would say is always bet less than 5 percent of your money on any one idea. That way you can be wrong more than twenty times; it will take you a long time to lose your money. I would emphasize that the 5 percent applies to one idea. If you take a long position in two different related grain markets, that is still one idea."
He is talking about commodities but the same logic applies to currencies. Don't OVER commit yourself to a lot of trades, in correlated pairs which will move together - treat them as one idea so as not to blow up your account.
A philosophy for Life and Trading
“If trading is your life, it is a torturous kind of excitement. But if you are keeping your life in balance, then it is fun. All the successful traders I’ve seen that lasted in the business sooner or later got to that point. They have a balanced life; they have fun outside of trading. You can’t sustain it if you don’t have some other focus. Eventually, you wind up over-trading or getting excessively disturbed about temporary failures”
Trading is a job a fun one but it should not become all consuming and many of the great traders have said this and it's true. If you live for trading you will lose. You need balance, you need to trade with discipline and confidence and be able to walk away and enjoy your life.
Michael Marcus is obviously one of the top traders of all time and the evidence, was turning an amount $30,000 into $80M. any trader should get some good tips, from this article to help them improve the performance of their trading strategy. If you haven't got it go out and get the book Market Wizards. Read the full article with Michael Marcus and numerous other top traders and get insight from the real pro traders for success.