How to Turn from a Losing Trader to a Winning Trader: Champion Trader Marty Schwartz

This week, in our series of insights from Jack Schwager’s original Market Wizards, we look at how Marty Schwartz turned from a losing trader into a winning trader.

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.

1. 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.
2. 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.
3. 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.