The world’s top 10 traders (2) — — Michael Marcos

Michael Marcos is a highly successfully trader, he has been called as ‘Genius trader’. However, between 1969 and 1973, he often lost all his money, in a formula of borrowing, losing, borrowing and losing. After 1973, he began to be successful on his road of trading. In August 1974, he joined a commodity company as a trader. The company gave him $30,000 as a trading fund. About ten years later, the fund’s yield became about 2,500 times, which expanded to $80 million.

At a young age, Michael Marcus began doing research for a brokerage firm, after which he joined Commodities Corporation to trade the company’s money. During his time at Commodities Corporation, his returns often exceeded the returns of all the other traders combined! In the space of a decade, Michael Marcus turned $30,000 into over $80 million.

In 1972, Michael Marcus, a graduate of Johns Hopkins in 1969, met a man who claimed he could double Marcus’ money every two weeks. Never having traded before, Marcus lost all his money on the man’s commodity tips. An academically gifted Marcus decided that with more time and practice, he could trade successfully too. Drawing funds from family, friends, and his own resources, Michael followed a market letter writer’s advice and made his first profit on a wheat trade. The market was bouncing back and forth between a range, so Michael Marcus bought every time the price hit the bottom of the range and sold when it hit the top, making more money. Over a summer, Michael Marcus put on various commodity trades, parlaying his initial capital into $30,000.

Instead of going back to school, Marcus quit and became a full time commodities trader. Following a market rumor that blight was going to strike crops, Marcus bought in, only to find out that blight never struck. Instead of selling out as fast as possible, Marcus felt paralyzed as he watched his entire stake and his family’s money disappear.

With no money left, Michael Marcus took a research analyst job at Reynolds Securities for commodities. Borrowing money from friends and family, Marcus still consistently lost because he had no grasp of trading rules. In October 1971, he met Ed Seykota, who would become one of the greatest trend followers of all time. Trading his own money and learning from Ed Seykota’s trend following approach, Michael Marcus made a small fortune. Part of his success was due to his grasp of fundamental trading rules such as riding profitable positions and cutting losses — the other part was attributed to the 1970s commodities bull market which was favorable to trend followers.

Joining Commodities Corporation and trading their money, Marcus traded an initial stake of $30,000 of the firm’s capital into $80 million in less than 2 decades.

Marcus was featured by the book The Predictors: How a Band of Maverick Physicists Used Chaos Theory to Trade Their Way to a Fortune on Wall Street. Additionally, Marcus was interviewed by Jack Schwager in the book Market Wizards. Marcus was described as a chartist who “keeps an eye on market penetration and resistance.”

Michael Marcos started out as a commodity research analyst at a broker. But his interest in trading eventually drove him to give up his well-paid position and focus on commodities. After a spell as a floor trader, he moved into Commodities Corporation services. Marcus went on to become one of the most successful traders at commodities, a firm that hired professional traders to run its funds. The profits he made over the years; Leap, even more than the sum of what other traders make. He has increased the company’s capital by an incredible two thousand five hundred times in ten years.

The trading philosophy from Marcos:

The most important aspect of trading, Marcos says, is patience.

Idea 1:

I will continue to lose money and lose all, if I am lack of patience, so as to ignore the trading principle, and rushed into the market without waiting until the main trend become clear.

Idea 2:

Nowadays, there are fewer and fewer profitable trading opportunities, so you have to be patient. Whenever the market moves completely against my prediction, I will say: I was hoping to make a big profit on this volatility, but the market does not move as expected, so I will simply exit.

Idea 3:

You must hold on to your good CARDS and quit your bad ones. If you cannot keep holding on the good cards in the hand, how to make up for the loss that bad card place causes? There are a lot of really good traders who end up giving up all their money because they are unwilling to stop trading when they lose money.

When I’m losing money, I say to myself: you can’t keep trading. And when you get a good card, it should be patient to hold. Otherwise, you can’t make up for the money you lost when you got a bad card.