Trading Tales: Michael Marcus Turns $30K into $80 Million

Trading stories are captivating and entertaining. Not only that, they teach. They can be a resource for both beginner and experienced traders. For beginners, they instill motivation and communicate that yes, it is possible to succeed. For experienced traders, they allow them to make a final prodigious leap in quality. This is because the most popular trading stories tell of journeys that are anything but regular, of defeats that precede victories, of willpower that triumphs against the adversities of an often overly competitive market. In short, they are stories that, in most cases, convey a message of redemption and revenge. Among the most well-known and appreciated trading stories, which serve as a reference point for traders around the world, Michael Marcus' story stands out. A few numbers would be enough to demonstrate the importance of his experience and its effectiveness in training young traders. In fact, Michael Marcus is the trader par excellence, the one who managed to transform - certainly not overnight - $30,000 into $80 million. From a sum that, with some difficulty, many manage to scrape together and is therefore within everyone's reach, he became extremely wealthy. Practically a record, even when compared to the performances of other world-renowned traders. How did he do it? To understand, we must tell his story.

Trading Stories: Michael Marcus

Michael Marcus' story begins with a small failure. He graduated in 1969 and was hired as a research analyst at a brokerage firm. A short time later, he met an individual who offered to manage his money, promising him a growth rate of 100% every two weeks. Michael Marcus was still a beginner, not at all experienced in trading, perhaps a bit naive. He accepted... And lost everything. However, this is where the fiber of this man emerges, that moral strength that would represent an invaluable resource for him in the years to come. He did not get discouraged. On the contrary, he started accumulating capital again, trained himself, and returned to investing... And began to earn. During this period, Michael Marcus made the acquaintance of another trader, one of a very different kind. A true guru (in a good sense). In fact, a legend: Ed Seykota of Commodities Group. He met him thanks to his wife, who worked as an analyst at Commodities Corp, the future Goldman Sachs. Seykota took Marcus under his wing and offered him teachings, guidance, advice, and suggestions. In short, he trained him and became his mentor. Thanks to Seykota, Marcus learned to manage risk. After his period as a "student," Marcus began to get serious, and the fruits were not long in coming. His race towards success and wealth began... With plywood futures. Marcus invested $700 in plywood futures. An almost perfect choice: in 1972, Nixon capped the prices of some commodities that were rising too rapidly. The consequence of this move was an increase in the price of plywood, a material that had not been included in Nixon's initiative. Marcus thus turned that $700 into $1,200. But it was just the beginning: with the same operation (with different assets), Marcus turned $24,000 into $64,000. After these successes, he was hired at Commodities Corp, thus becoming a colleague of his mentor. Within a few years, he would be able to look him in the eye, on his level. Also because it was precisely during his experience at Commodities Corp, which would soon become Goldman Sachs, that he transformed $30,000 into $80 million over the course of twenty years.

Michael Marcus' Philosophy

What lesson can be drawn from Michael Marcus' story? First, that one should stay away from those who promise the moon. If he had been just a little more yielding, after the first failed experience, he would have been burned and never set foot in the market again. Secondly, that a large initial loss, no matter how painful, does not prejudice anything. There is always the possibility of making more money and starting over. Third: training is an extremely important element, probably the most important. Michael Marcus studied a lot and learned as much as he could from his mentor Ed Sekyota. Just as Marcus learned from Sekyota, the retail trader can also learn from Marcus. How? By reading his interview in the Markets Wizard manual, for example. There, his entire philosophy is summarized. Here are a few nuggets, delivered through quotes and aphorisms. On the right mindset "I think that in the end, one loss leads to another. Losing, in fact, leads to pessimism, touches particular chords of your psychological sphere". "I am very open, I am willing to accept evidence that is difficult to sustain emotionally, but which I know to be true". "Feelings are important, I don't know any great professional trader who doesn't have them. For example, being a trader requires having courage: the courage to try, the courage to fail, the courage to win, the courage to keep going when the going gets tough". "Sometimes I thought I should quit trading: the losses cost me a lot of pain. In "Fiddler on the Roof" there is a scene where the protagonist looks up and talks to God. I would have liked to do the same, look up at the sky and ask God, "Am I really that stupid?". He probably would have answered me, "No, you're not stupid, you just have to persevere and keep doing what you're doing". "When you trade, you have to manage two types of capital: financial capital and psychological capital. If you lose the first, you fail. If you lose the second, you fail just the same. Protect them both with the same strength". On risk management "If you have doubts about a position and don't know what you're doing, get out. You can always come back if you want. The night has often brought me counsel in these cases. I often exited, and the next day everything was clearer". "My trading style at that time resembled that of a surfer. I tried to ride the wave at the right time. If it didn't work, I got out immediately. I did it continuously and each time I risked very little. In the end, I learned and won". "At key points of the intraday chart, I used to enter with much larger positions than I could afford. If it didn't work immediately, I got out right away. I could do it thanks to a stop loss very close to the price. Either the market took off and ran, or I was out of the game". On being a trader "Every trader has his strengths and weaknesses. Some are good at holding their positions when winning, others are good at getting out immediately when their positions are losing. In short, some are good at winning, others are good at losing". "The best traders are those where three things work for you: fundamentals, technicals, market tone. Fundamentals suggest the imbalance between supply and demand, technicals confirm the direction you intuited thanks to fundamentals, and market tone should reflect market news." "I think top-tier traders have a kind of innate ability, like a gift, like a great violinist. Being good and competent traders, however, is within everyone's reach: you can become one." "In the end, you have to have the courage to hold a position and take on the risk. But you must always be aware that the world is really complicated and ask yourself, "How many people are behaving like me?" You have to consider that the market has already discounted your idea." "I look for confirmation in the chart, in fundamental analysis, in the market. If you do that, you can trade anything in any way". "Commodity Corp taught me to identify the signals and recognize them as such, to follow them. If you follow your system, over time it will bear fruit and you will achieve success".