This week, in our series of insights from Jack Schwager's Market Wizards, we look at Tony Saliba, a trader who put together 70 consecutive months where he made more than $100,000 each month. (Read our last post about the trader who invented card counting.)
Tony Saliba is not a household name. In fact, even if you read Jack Schwager's Market Wizards, you probably don't remember him by name. But you can't argue with performance - and Saliba put together a streak of 70 consecutive months where he made more than $100,000 each month.
But before he did that, he nearly went bust. Then, a switch flipped.
We're looking to back talented futures traders with $30,000 to $150,000 in buying power.
Saliba got his start as a clerk on the Chicago Board Options Exchange (CBOE). As was common in those days, Saliba found someone who would stake him with a $50,000 trading account, and he transitioned to a trader. Within the first two weeks of getting his start, Saliba made 50% return on capital, bringing the account to $75,000. Like many traders who experience extreme success, Saliba thought he had trading figured out. He told Schwager that he thought, "'This is it!' I mean, I was a genius."
But Saliba was about to learn the importance of humility in trading. It only took him another six weeks before he lost all those gains AND $35,000 of his original funds - leaving him with just $15,000. During this time, he became depressed and felt like a total failure.
But in the midst of his agony, he started getting advice from more experienced brokers. One told him that if he was disciplined and did his homework, he could earn a good living. "You might not get rich, but you can make $300 a day, and at the end of the year that's $75,000," he was told.
So, Saliba made three changes that saved his trading career:
- He focused on base hits - making $300 daily and building up his trading skills.
- He moved to a less volatile product - Boeing options, which traded in a "tight, narrow range."
- After a few weeks of trading there, he moved back to a more volatile product, but made a critical change: he now only traded one lots at a time.
It wasn't long before Saliba put in the work to become a profitable trader. Then, the market gave him a huge opportunity when put options launched in 1980. Saliba studied up and became one of the few experts on the floor. That decision paid off - huge. A year later, the market gave him incredible opportunities. He had days where he would make $200,000.
But, in hindsight, it's easy to see that none of his success would have been possible if Saliba didn't make adjustments and slow his trading down. Those decisions from early in his career ended up making him millions.
What adjustments do you want to make in your trading? Have any questions or recommendations? Put them in the comments below.