I found this book title in a different book I read about Market Analysis. This guy was one of the best and I wanted to read his story.
Marty Schwartz is the kind of guy that I think of when I imagine a stereotypical Wall Street Trader. High energy, high stress, aggressive, and married to the market. He’s been very successful over his career and his story is a good one. There are nuggets of wisdom scattered throughout the book, for this report I’m just going to list them.
Paper trading is good practice, but you’ll never know how good you are until you start trading with real money.
Money tends to be managed better when it is earned. The grubstake should be money that you’ve worked for.
Set goals and make a plan to get to where you want to be.
It is essential to know more than the other players in the game. Preparation pays.
If you have a plan that is working, stick to it.
Divorce your ego from the game.
When interest rates go up, stock prices come down because companies pay more for their capital and consumers slow down their buying on credit.
If Treasury Bonds go up in after hours trading, interest rates go down, and the market goes up. This made Schwartz a ton of money.
A losing streak can short circuit your intellect. He says you can’t go from 1st gear to reverse without first going through neutral. Stop the bleeding first, and don’t send good money after bad money.
Honor your stop loss. Exiting a losing trade quickly clears your head.
Look at put-call ratios. When extreme readings occur, the market usually corrects in the opposite direction. It’s a good indicator when used in conjunction with other data.
As commodities and interest rates drop, look to bonds to rise, and vice versa.
During Bear phases, traders buy early in the day, early in the week, and sell late in the day, late in the week.
It is your weakness that must dictate your trading style.
“The reason a lot of people do not recognize opportunity is because it usually goes around wearing overalls looking like hard work” -Thomas Edison.
When Schwartz wrote his book, the programs and tools that are available today had to be worked out by hand. It was a ton of work and preparation for each day. I realize even more now the importance of understanding technical indicators and working out a methodology suited to my personality and style. This will be my priority when I start trading in a simulator.