Michael Marcus: How the First Market Wizard Traded

Michael Marcus turned a $30,000 trading account at Commodities Corporation into $80 million in about ten years. This article is about the commodity trader of that name, not the many other people called Michael Marcus. The number appears in almost every text about him, and it explains very little. The more interesting part comes before it: he lost his first eight trades in a row, wiped out his account more than once and traded against his employer’s rules.

Marcus was the first trader Jack Schwager interviewed for his book Market Wizards, published in 1989. He stands at the start of a series that still shapes how people picture a successful trader. In this portrait you get his documented career instead of the usual legend: what he really traded, which three conditions he checked before a trade, how he limited his risk and where his success story stops being a model for you today.

Every number in this article comes from his own interview in Market Wizards or from another primary source. Where popular versions of his story differ from the book, this article says so and names the source. This article follows our editorial policy. It is for education, not investment advice, and past results do not predict future returns.

Michael Marcus in 30 seconds

• The first Market Wizard: Michael Marcus (1947 to 2023) is the first interview in Jack Schwager’s Market Wizards. His chapter is called “Blighting Never Strikes Twice”.
• $30,000 became $80 million: that was his company account at Commodities Corporation, started in August 1974, after about ten years, according to the book.
• A false start, not a natural talent: his first eight trades lost money. In 1971 he bet everything on a second corn blight that never came and lost his whole stake plus borrowed money.
• Three conditions before a trade: his best trades were those where fundamentals, technicals and market tone all pointed the same way.
• Link in a mentor chain: Marcus learned from Ed Seykota and later hired and trained Bruce Kovner, who went on to found Caxton Associates.

Who Michael Marcus was

Michael Marcus was an American commodity trader who became famous as the first trader interviewed in Jack Schwager’s book Market Wizards, where he described turning a $30,000 company account into $80 million.

His full name was Michael Phillips Marcus, and he was born in 1947. He grew up in Providence, Rhode Island. His son, the podcaster Aubrey Marcus, said in an episode published on March 30, 2023, that he had found out on Saturday, March 25, 2023 that his father had died. Marcus was 75.

His path started at university, not at the exchange. In the interview he says he graduated from Johns Hopkins in 1969 as a member of Phi Beta Kappa, near the top of his class, and had a Ph.D. fellowship in psychology at Clark University. He expected to become a professor. He dropped out in December 1970 because trading had taken over his life.

Market Wizards is a collection of interviews with exceptionally successful traders, written by Jack Schwager and first published in 1989. It became one of the best-known trading books of all time, and you will find it in our list of the best trading books. Schwager knew Marcus personally: he took over the research analyst job that Marcus had just left.

Marcus never wrote a book of his own. His fame rests on this one long interview, which he first declined because he wanted to stay anonymous. Schwager writes that a mutual friend changed his mind. You can read more about the series in our guide to Market Wizards.

Year	Event
1969	Graduates from Johns Hopkins, Phi Beta Kappa
1970	First trades, eight losers in a row; the summer corn blight lifts his account to $30,000
1971	Bets on a second blight and loses everything; research analyst at Reynolds Securities; meets Ed Seykota in October
1972	$700 in plywood futures grows to over $12,000; $24,000 at year end
1973	His account grows from $24,000 to $64,000
1974	Commodities Corporation gives him $30,000 to trade (August)
1979	His best year, with gold rising above $800
1983	Begins to trade less (“around 1983”)
1988	Interview with Schwager in May 1988
2023	Dies in March, aged 75

Sources: Jack D. Schwager, Market Wizards (1989), chapter on Michael Marcus; podcast of Aubrey Marcus, March 30, 2023.

Early years: eight losses and the corn blight

Marcus started with about $1,000 and a “trading advisor” who knew nothing. A fellow student named John claimed he could double the money every two weeks. Marcus paid him $30 a week. Their first trades in soybean meal, corn and wheat all lost, usually about $100 each, and a supposedly safe pork belly spread almost wiped him out.

His first eight trades, five with John and three on his own, were all losers. Marcus did not give up. He cashed in his father’s life insurance of $3,000, read Chester Keltner’s books on wheat and soybeans and followed the recommendations of Keltner’s market letter. His first winning trade made about $200.

Then came luck: in the summer of 1970 a blight devastated the US corn crop. Marcus held three contracts of December corn and added more corn, wheat and soybeans. By the end of that summer his account stood at about $30,000, a fortune for a student from a middle class family. This is a different $30,000 from the one at Commodities Corporation, and the two are often mixed up.

In the spring of 1971 he made the mistake that gave his chapter its name. A theory said the blight had survived the winter and would strike again. Marcus borrowed $20,000 from his mother, added his own $30,000 and bought the maximum number of corn and wheat contracts. When the market realized there was no new blight, corn fell limit down. He lost his $30,000 plus $12,000 of his mother’s money.

The title “Blighting Never Strikes Twice” sums up that error. An event does not repeat just because you are positioned for it. The bigger lesson for Marcus was about position size: he had bet his whole account on one idea, and that is the habit he later built his most important rule against.

Turning point: Ed Seykota and the plywood trade

After the blight disaster, Marcus took a job as a commodity research analyst at Reynolds Securities. Analysts there were strictly forbidden to trade. Marcus traded anyway, with money borrowed from his mother, his brother and his girlfriend, through an account at another firm. He used a code with his broker, for example talk about the weather, so that colleagues would not notice. He kept losing.

In October 1971 he met Ed Seykota in his broker’s office. Seykota had recently graduated from MIT and had built one of the first computer programs to test and trade technical systems. He invited Marcus to join a new research group at his firm. That firm’s research director first refused to hire Marcus, then gave in. You can read Seykota’s own story in our portrait of Ed Seykota.

Seykota was a trend follower, and he taught Marcus to cut losses and ride winners. Marcus remembers how Seykota stayed short silver while everyone else was bullish, simply because the trend was down. A second mentor, the semi-retired Shearson broker Amos Hostetter, taught him the same principles. Marcus still lost for a while, because he was not patient enough to wait for clear situations.

The breakthrough came in July 1972 with $700 in savings. Together with a friend who also put in $700, he opened a joint account. Under Nixon’s price controls, plywood was supposed to be frozen at $110 per 1,000 square feet. When the futures price traded above that ceiling and nobody stopped it, Marcus bought one contract and then pyramided the position. Plywood went to $200, and in a few months $700 became $12,000.

Then he repeated his old mistake once more. He bet everything on lumber, expecting the same shortage. After government warnings against speculators, lumber fell from about $130 to about $117, and his $12,000 shrank to under $4,000. He held on, the market recovered, and by the end of 1972 the account was worth $24,000. Marcus says he never bet everything on one trade again.

In 1973, when price controls were lifted, many commodities doubled. Marcus used the low margins and the trend following lessons from Seykota, and his account grew from $24,000 to $64,000. He admits that the markets of those years were so strong that he could make plenty of mistakes and still do well.

Commodities Corporation: $30,000 becomes $80 million

Commodities Corporation was a trading firm in Princeton, New Jersey, founded in 1969 by the economist Helmut Weymar, that let professional traders trade the company’s own capital. According to Goldman Sachs, which bought the firm in 1997, its backers included the investor Amos Hostetter and the Nobel laureate Paul Samuelson.

The firm wanted to hire econometricians, not chart readers. When Hostetter suggested Marcus, the first question was which journals he had published in. Marcus had a B.A. in liberal arts. The answer “He just trades” made the room laugh, but Hostetter convinced them. Marcus believed he was the first trader without a Ph.D. the firm ever hired.

The famous number comes from this account. In his words, Commodities Corporation started him with $30,000 in August 1974, and after about ten years he had turned it into $80 million. Schwager’s introduction puts it as a 2,500-fold increase of his company account over ten years.

Two details belong with that number. After the first few years the firm added another $100,000, and after that it was always taking money out, because it charged its traders 30% a year for expenses. Marcus told Schwager he made at least 100% a year “for years and years”. He did not give a year-by-year track record.

A widely shared infographic credits Marcus with 120% a year over ten years. That figure circulates without a primary source, so it is not a fact you should rely on. What is documented is his own rough statement of at least 100% a year and the account figures above. Our ranking of the best traders in the world explains why we leave such numbers out of the table.

Marcus named 1979 as his best year. He also recalled catching the gold rally that peaked above $800 in January 1980, and he bought 200,000 ounces of gold in Hong Kong after hearing on television about the Soviet invasion of Afghanistan, minutes before the market reacted. He also traded currencies heavily, at times up to 600 million Deutsche marks between his own and the company account.

One detail is almost always left out: Marcus traded the firm’s money with a salary behind him. He did not have to pay his living costs from his trading profits, and he could also trade a personal account alongside. If you aim for the same returns with a private account you live from, you trade under completely different conditions.

The mentor chain: Seykota, Marcus, Kovner

Trading knowledge is rarely learned from books alone; it is usually passed on. Marcus is the middle link in one of the best documented teacher and student chains in trading. He learned from Seykota and Hostetter, and he passed it on to Bruce Kovner.

Kovner tells the story himself in Market Wizards. He answered an ad for a trading assistant at Commodities Corporation and was interviewed by Marcus. A few weeks later Marcus told him the firm would not hire him as an assistant, but as a trader, with $35,000. Kovner says Marcus showed him that you really could make a million dollars if you applied yourself. In 1983 he founded Caxton Associates.

What was passed on were rules of behavior, not entry signals. The same ideas show up with all three: a defined risk per position, the patience to let winners run, and the discipline to follow your own rules. Marcus says he tried to convey to Kovner the principles that Seykota and Hostetter had taught him.

For you as a trader, there is a practical lesson in this. The core of a method can be passed on, the concrete execution cannot. Marcus himself warns that trading on the ideas of talented friends made him lose, because you end up with the worst of both styles. If you try to copy a successful trader’s setup one to one, you skip the step where it becomes your own method.

Marcus’ trading approach: fundamentals, technicals, market tone

Marcus looked for three signals that agreed before he took a big position. In the interview he says the best trades are the ones that have all three things going for you: fundamentals, technicals and market tone. He preferred to trade where several independent arguments pointed the same way.

He did not always stick to it, and he says so openly. He enjoyed the game too much and made plenty of other trades for fun. What saved him was that he took five to six times his normal position size when a trade met all his criteria. According to him, practically all his profits came from those trades, while the others broke even.

The first factor was fundamentals. Marcus traded commodities, markets with a real supply and demand side. A crop failure, a production cut or rising stocks change the price basis there. He looked for a real imbalance that could cause a major move, not just a piece of news.

The second factor was the chart. The price had to move in the direction the fundamentals suggested before he got in. If a market fell although supply pointed to higher prices, he stayed out. The chart served as confirmation and timing, not as a forecasting tool. He also used key intraday chart points, such as earlier daily highs, for entries with very close stops.

Market tone as the third test

Market tone describes how a market reacts to news, not which news it receives.

This third factor is the least understood. In Marcus’ words, a bull market should shrug off bearish news and respond strongly to bullish news. If a market falls despite good figures, demand is weaker than the headline suggests. Marcus read the real balance of forces from these reactions.

His best example is a soybean trade in the late 1970s. Bullish export figures had everyone expecting several limit up days. The market opened limit up as expected, then slipped off the limit. Marcus sold his whole long position at once and, in the excitement, sold too much, so he ended up short and bought back 40 to 50 cents lower.

He also used market tone to judge whether an idea was already priced in. He asked how many people were left to act on it, and checked momentum indicators, the number of days a market had moved in a row and sentiment readings. His rule from those years: when the news is wonderful and a market cannot go up, you want to be short.

Risk management: the rules that kept him in the game

Position sizing decides how much capital a trader risks on one idea and how large the position is as a result.

Marcus’ best-known rule is to bet less than 5% of your money on any one idea. He stresses that it applies to ideas, not single positions: a long position in two related grain markets is still one idea. By today’s standards that is a lot, since common advice is 1% to 2% of the account per trade, as in our guide to position sizing.

In his time, a firm limit was already a big step. Marcus had lost his account twice because he bet everything on one trade, first in corn and then nearly in lumber. The 5% limit is the direct answer to those disasters.

Several more rules run through the interview:

• Always use stops: he says you should actually place them, because that commits you to getting out at a certain point. Every entry order came with an exit order.
• Let winners run, cut losers: he calls both halves equally important. If you do not stay with your winners, you cannot pay for the losers.
• When in doubt, get out: if he became unsure about a position, he closed it and got a good night’s sleep. Often he went back in the next day with a clear head.
• Get out at extremes: in wild markets he became cautious on the third limit up day in a row and had a fixed rule to be out by the fifth.
• Cut back in losing streaks: after a run of losses he reduced his size quickly and sometimes stopped for three or four weeks. A falling equity curve was his sign to reevaluate.

The point I would sign most strongly after more than four decades in the market is the one about losing streaks. A trader who keeps fighting after losses usually makes them bigger. Marcus admits that he often tried to win it back with heavier trading and that he would mostly have been better off stopping. How to define your risk properly is covered in our guide to risk management, and tracking your equity curve is easiest with a trading journal.

What traders can learn from Michael Marcus today

Marcus traded commodity futures by phone in the 1970s and 1980s, and much of that cannot be transferred. He said himself in 1988 that his old surfing technique at intraday chart points no longer worked as well, because markets had become more professional and false breakouts more common. Three points have stood the test of time all the same.

The first is the idea of confluence. Whether you check fundamentals, technicals and market tone or three other independent criteria, trading only when they agree cuts the number of trades and raises their quality. For that you need written criteria in a trading plan.

The second is the separation of thesis and timing. Marcus waited until the price agreed with his analysis. A correct market opinion at the wrong moment is still a losing trade, and that sentence is as true today as it was then.

The third is cutting losses by getting out instead of sitting it out. His “when in doubt, get out” needs no experience. It protects beginners exactly where they lose the most money, and a well placed stop takes the decision off your hands. Even his doubts about trend following proved partly right: he pointed to Richard Dennis losing over 50% on his funds in 1988 as a sign that markets had changed.

Limits of the legend: what the numbers do not show

As impressive as his record is, it is only a limited model for your own account. Four points belong to an honest assessment, and they apply to almost every trading legend.

Survivorship bias is the error of looking only at the successful cases and overlooking the failures, because nobody writes about them.

First, Marcus was one of many traders at Commodities Corporation, and we mostly hear about those who made it. How many colleagues with similar ideas dropped out is in no book. Second, he traded in conditions that no longer exist: the commodity markets of the 1970s were less liquid, less analyzed and much more trend driven than today, as he said himself.

A drawdown is the decline of a trading account from its last peak to the lowest point of the losing phase.

Third, the headline number hides the setbacks. An account that grows 2,500-fold does not do so in a straight line. A full drawdown history was never published. The interview names single blows, such as a loss of about $2 million within minutes in a Deutsche mark position, and the near wipeout in lumber.

Fourth, the trading profits did not simply turn into lasting wealth. Marcus told Schwager that he lost a fairly large part of his profits on real estate, a plane charter service and other businesses, and estimated it at more than half. Later SEC filings from the 2000s list him as a private investor in Austin, Texas, holding stakes in small listed companies.

So for whom is Marcus a poor model? For traders with a small account who aim for quick multiplication. That exact expectation almost pushed Marcus himself out of the market at the start.

My verdict: what remains of Michael Marcus

Michael Marcus is remembered for the wrong number. The $80 million is the result, not the method. What really set him apart was how he rebuilt himself after failure: a beginner who traded with borrowed money against his employer’s rules and lost everything became a trader with clear rules for entry, risk and exit.

When I started trading in 1980, names like Marcus were practically unknown in Germany. Only Market Wizards showed how the top US traders really worked. What has impressed me most to this day is not the return but how soberly Marcus talked about his mistakes. I do not trade his method myself; I trade discretionary price action, and still I find his rule “when in doubt, get out” in my own practice.

If you take one sentence from this portrait, take this one: trade only when several independent arguments point the same way, and get out as soon as you become unsure. That sounds unspectacular, but it takes more discipline than any analysis technique.

Frequently asked questions about Michael Marcus

Who was Michael Marcus?

Michael Marcus was an American commodity trader and the first trader interviewed in Jack Schwager’s Market Wizards. He lived from 1947 to 2023. At Commodities Corporation he turned a $30,000 account into $80 million in about ten years.

How much money did Michael Marcus make?

The documented figure is his company account: $30,000 in August 1974 became $80 million after about ten years. The firm added $100,000 after a few years and took money out every year. Marcus also traded a personal account, but by his own account he lost more than half of what he made on bad investments.

What was Michael Marcus’ trading strategy?

Marcus looked for trades where three factors agreed: fundamentals, technicals and market tone. Market tone means how a market reacts to news. When a trade met all three conditions, he traded five to six times his normal size.

Who was Michael Marcus’ mentor?

Ed Seykota was his most important teacher. They met in October 1971 in a broker’s office. From Seykota, and from the broker Amos Hostetter, Marcus learned to cut losses and ride winners.

Did Michael Marcus write a book?

No, Michael Marcus never published a book of his own. He became known through his chapter in Market Wizards by Jack Schwager, titled “Blighting Never Strikes Twice”.

When did Michael Marcus die?

Michael Marcus died in March 2023 at the age of 75. His son Aubrey Marcus said in a podcast published on March 30, 2023, that he had found out on March 25 that his father had died.