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Marine Mindset - Market Wizard Marty Schwartz’s 6 Trading Rules

7ubbed a Market Wizard in Jack Schwager’s iconic series, Schwartz became famous for his extraordinary trading prowess and uncanny ability to generate returns that most traders can only dream about. At his peak, he was posting monthly returns of 20%—yes, 20% per month—numbers that are usually reserved for fantasy. But these weren’t lucky wins. Schwartz achieved them through relentless discipline, risk control, and psychological toughness—traits he credits to his time in the U.S. Marine Corps.

Over the years, Schwartz adapted his methods, trading actively in the futures markets and, more recently, shifting toward selling option premium—a move that surprised many who followed his more momentum-based approach. Yet this shift is classic Marty: adapting, evolving, always finding a way to stay profitable in changing market conditions. What truly makes him special, though, is not just his success, but his resilience. He’s faced losses like all traders, but he always bounced back. Why? Because he followed a core set of principles that kept him grounded, strategic, and prepared.

Let’s break down Marty Schwartz’s six key trading rules—and why they still matter today.

1. “I try not to go against the moving averages; it is self-destructive.”

Schwartz believed that going against the trend is a surefire way to bleed money. Moving averages, especially on the short- and medium-term timeframes, help define the direction of momentum. If the price is consistently above the moving average, it suggests strength; if it's below, it signals weakness. Fighting that trend out of ego or stubbornness often ends in losses. This rule is about respecting the market, not trying to outsmart it.

If you find yourself constantly trying to pick tops in uptrends or bottoms in downtrends, you’re not trading—you’re gambling.

2. “Before putting on a position always ask, ‘Do I really want to have this position?’”

This deceptively simple question is a gut check. Are you trading based on a valid signal from your system, or just reacting to a hunch, fear, or FOMO? Marty emphasized the importance of intentionality. Every trade should have a reason backed by your strategy, not emotion. If you can’t clearly articulate why you’re entering, you probably shouldn’t be.

This rule helps eliminate impulsive trades, which are one of the leading causes of inconsistent results for both new and experienced traders.

3. “After a successful period, take a day off as a reward.”

Trading is a mental game. Winning streaks can lead to overconfidence, and that can quickly spiral into recklessness. Schwartz understood that stepping back after success not only prevented burnout but helped him reset emotionally. That day off is more than a break—it’s a reward for discipline and a reset button to preserve peak performance.

Too many traders fall into the trap of pushing harder after wins, only to give it all back in a moment of overexposure or carelessness.

4. “My biggest losses have always followed my largest profits.”

This insight is critical. When you feel invincible, that’s when you're most vulnerable. Schwartz recognized that success can lead to overtrading, oversized positions, and the dangerous belief that you can't lose. This is when discipline matters most. Rather than chasing more profits, stick to what’s working. Don’t let recent success convince you to abandon your rules.

The takeaway? Stay humble. Let your system—not your emotions—guide your next move.

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

Many traders believe they’re “buying the dip,” when in reality, they’re trying to catch a falling knife. Schwartz warned against this. Unless you have a tested system that defines where a reversal is likely, bottom fishing is more guesswork than strategy. The difference between buying a pullback in an uptrend versus catching a collapsing asset is massive.

Discipline means waiting for confirmation—not trying to outguess where the bottom is.

6. “Before taking a position, always know the amount you are willing to lose.”

Risk management is everything. Schwartz always defined his downside before entering a trade. That meant knowing exactly how much he was willing to risk on any single position. It allowed him to survive drawdowns and stay in the game long enough to capitalize when the market turned. Never bet the farm. Never expose yourself to a loss you can’t recover from.

This rule is the cornerstone of longevity in trading. As Schwartz famously said: “The most important thing is to keep enough powder to make your comeback.”

Final Thoughts

Marty Schwartz’s rules are more than just clever quotes—they’re battle-tested principles forged through years of market experience and military discipline. His approach blended tactical precision with emotional control, something every trader can learn from. Whether you’re day trading futures or swing trading stocks, these six rules will help you stay focused, limit risk, and trade with purpose.

After all, anyone can win sometimes—but staying in the game long enough to win consistently? That’s what separates the pros from the rest.

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