This week, in our series that of insights from Jack Schwager's original Market Wizards, we look at how Marty Schwartz turned from a losing trader into a winning trader. (Read our other pieces here.)
Marty Schwartz is a champion trader having won the U.S. Investing Championship in 1984. But for a long time, Schwartz was a struggling trader. He said that in 1976, a decade into his trading, he was "still almost broke because I consistently lost money in the market."
Then, something clicked.
Schwartz said that his outlook fundamentally shifted. With the help of his wife, he realized that his life was not - as he put it - a "dress rehearsal; it was the real thing and I had been screwing it up."
Like Ed Seykota, Schwartz believes that his failure was a "self-fufilling prophecy":
"People seem to know how to handle failure becasue they can produce it themselves. It almost becomes a negative cause and effect cycle, whereby they produce it, they know how to handle it, and they wallow in it."
Schwartz said he would no longer be a hamster on a wheel. That's when he made a few changes.
- He realized he wanted to make money - not necessarily be right. To do that, he said he had to take his ego out of the equation. "Before, admitting I was wrong was more upsetting than losing the money," he reflected.
- He stopped willing the market to move in his direction. His mentality changed from the idea that he was right to the idea that the market can do what it does - and if he's wrong, he has to get out.
- He thought about the number of winning trades ahead of him. "By living the philosophy that my winners are always in front of me, it is not so painful to take a loss. If I make a mistake, so what!"
The results spoke for themselves. He was able to make $600,000 in his first full year as an independent trader before amassing a $1.2 million fortune the following year.
Does something need to change in your trading? Share in the comments.