One of the most suicidal things you can do in trading is to keep adding to a losing position. I think I was long 40 contracts coming into that day, and I lost $315,000. I was real proud of that because it is very hard to pull the trigger on a loser. Usually a down Friday is followed by a down Monday. The only problem was that it was a Friday. It looked climatic to me, and I thought that was a buying opportunity. Why? Because on October 16, the market fell 108 points, which, at the time, was the biggest one-day point decline in the history of the stock exchange. I have thought about it, and I would do the same thing again. What was your experience during the week of the Octostock crash? ( in his book Pit Bull, Schwartz says that he is using a 10-period exponential moving average).
I try not to go against the moving averages it is self-destructive. Is the price above or below the moving average? That works better than any tool I have. I always check my charts and the moving averages prior to taking a position. I became a winning trader when I was able to say, “To hell with my ego, making money is more important.” What is the ultimate rationalization of a trader in a losing position? “I’ll get out when I’m even.” Why is getting out even so important? Because it protects the ego. Most people would rather lose money than admit they’re wrong. Most people make the mistake of increasing their bets as soon as they start making money. Also, don’t increase your position size until you have doubled or tripled your capital. The most important thing in making money is not letting your losses get out of hand. The pressure you feel when you are in a position that is not working puts you in a catatonic state. You can always put the trade back on, but if you go flat, you see things differently. His average return in these nine contests was 210 percent-nonannualized! (In the one remaining four-month contest he witnessed a near breakeven result.) In his single entry in a one-year contest, he scored a 781 percent return.ĥ notable quotes from Schwager’s interview with Schwartz: In nine of the ten four-month trading championships he entered (typically with a starting stake of $400,000), he made more money than all the other contestants combined. Here’s Jack Schwager’s description of Schwartz: He was featured in the first Market Wizards book. Marty Schwartz is an independent trader, who was a legend in the 1980s.
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