Marty Schwartz’s Trading Rules From Market Wizards

When people ask what separates professionals from everyone else, the answer is almost never a secret indicator.

It is rules. Process. Discipline.

Marty Schwartz laid out his trading rules in Market Wizards, and they read like a blueprint for survival.

Start with the trend “I always check my charts and the moving averages before taking a position. Is the price above or below the moving average? That works better than any tool I have. I try not to go against the moving averages. It is self-destructive.”

If you fight the trend, the market eventually reminds you who is in control.

Look for relative strength “Has a stock held above its most recent low when the market has broken its own low? If so, that stock is much healthier than the market. Those are the divergences I always look for.”

Strength reveals where real demand exists.

Question every trade “Before putting on a position, always ask: Do I really want to have this position?”

If you cannot defend the trade before entering, you will not defend it when it goes against you.

Respect winning streaks “After a successful period, take a day off as a reward. I have found it difficult to sustain excellent trading for more than two weeks at a time. After a strong run of profits, I try to play smaller rather than larger. My biggest losses have always followed my largest profits.”

Euphoria is dangerous. Protect yourself from yourself.

Avoid bottom fishing “Bottom fishing is one of the most expensive forms of gambling.”

Sometimes it works, but only when it is planned, controlled, and risk-defined. Not emotional. Not impulsive.

Know your ‘uncle point’ before entering “Before taking a position, always know the amount you are willing to lose. Know your pain threshold and honor it.”

If you do not decide your exit in advance, the market will decide it for you.

Wait for confirmation “When different markets disagree with each other, have no position until one confirms the direction of the other.”

When signals conflict, cash is a position.

Do the work “Work, work, and more work.”

There are no shortcuts.

And above all: money management “The most important thing is money management, money management, money management. Anybody who is successful will tell you the same thing.”

Edge means nothing without risk control.

Even the best are still improving “The one area I am constantly trying to improve is letting my gains run. To my dying day, I will probably still be working on it.”

That is the real lesson.

Great traders are not finished products. They are craftsmen. Always refining. Always adjusting. Always learning.

Not chasing perfection. Just trying to get a little better every day.

That is how you last.