Famous Traders – Martin SchwartzPosted: September 29, 2012
Famous Traders – Martin Schwartz
Marty Schwartz is a Wall Street trader known as Buzzy. He started his career on the American Stock Exchange as an independent trader after he saved up $100,000. Schwartz became a terrifying trader who worked with options, futures as well as stocks. After 12 months of trading independently, he reported earnings of $600,000; a year later, it was twice that. Other traders soon began to notice the pace with which he changed positions and that he never held on long to any financial instrument. This earned him the nickname of “day trader.”
Martin Schwartz participated once in the U.S. Trading Championship that was organized by Stanford University and which consisted of nine matches. He made a spectacular show and won over other participants by earning more money than his competitors did together.
Book review of Pit Bull: Lessons From Wall Street’s Champion Trader by Martin “Buzzy” Schwartz. After working several years in what he considered to be a dead-end job as a financial analyst at E.F. Hutton, Schwartz quit the firm, accumulated a nest egg of $100,000 and on August 13, 1979, bought a seat on the American Stock Exchange where he began trading stocks, options and futures. He quickly became an expert at trading S&P futures, and in his first full year as an independent trader made $600,000 and a year later earned $1.2 million.
The stress of trading contributed to him developing pericarditis, which nearly killed him. Inadvertently, he has written a cautionary tale on the dangers of being addicted to making money. This is one of those rare autobiographies where the subject unintentionally portrays himself in an unfavorable light. Yes he had it all, house in the Hampton’s, Park Ave apartment, extravagant vacations and money. But reading the book I just kept feeling pity that he lived such a life. It seemed that he lurched from crisis to crisis, yelling and cursing his way to resolve the issue of his day. Yes he seemed like an honest man, but I could not help but thinking that he created many of his problems, with his life’s approach. He was very much a loner, control freak – he could not seem to build an organisation to manage money. It truly was a one man show with his endearing wife that supported him.
Obviously he was a true trader and was good at it. He goes into quite amount of detail at the end of his book about his methodology – though it did seem to lack certain elements. Mostly an EMA following and order fading strategy. I am not sure one could pick up this book easily and start trading like Martin Schwartz – communication most likely was not his strong suit. However if you do nothing else read in detail several times his methodology – there are some gems in the writing. The following is a list of take-aways I noted as I read the book:
- Your grubstake must be large enough to allow time for you to be successful and that no one trade can take you out.
- Martin, even on his honeymoon he was trading – unbalanced obsession.
- Show me a trader and I’ll show you someone that understands gambling. Vegas is good place to work on discipline.
- Change tables (i.e. take a break) after a winning streak.
- Confidence is part of trading, if your not convinced you can not win, you should not start.
- When its so bad you want to puke, you should double your position.
- When you loose your own money, you suck it up and move on, when its other people’s money its like the whole world is watching. The psychology is very different.
- The change in his career came when he learned to divorce his ego from the trade.
- As a trader you need to be a; gambler with good feel for numbers, know how to think, know what to think about, perform well under fire and the importance of money management.