Michael Marcus is one of the most remarkable performance records in the Market Wizards canon. Over a ten-year period he multiplied his company account by 2,500-fold. He turned an initial $30,000 into $80 million. Those numbers put him in the same conversation as Ed Seykota, who turned $5,000 into $15 million, and they share more than comparable returns — Seykota was Marcus’s mentor, the single person he credits most with teaching him to trade.
Meeting Ed Seykota: The Turning Point
Marcus has been one of the most successful traders. Over a ten-year period, he multiplied his company account by an incredible 2,500-fold! Consider this excerpt from an interview in Market Wizards by Jack Schwager:
Q. Did you know what you were doing wrong then?
A. Good question. Basically, I had no real grasp of trading principles; I was doing everything wrong. Then in October 1971, while at my broker’s office, I met one of the people to whom I attribute my success.
Q. Who is that?
A. Ed Seykota. He is a genius and a great trader who has been phenomenally successful. When I first met Ed he had recently graduated from MIT and had developed one of the first computer programs for testing and trading technical systems. I still don’t know how Ed amassed so much knowledge about trading at such an early age. Ed told me, I think you ought to work here. We are starting a research group and you can trade your own account. It sounded great; the only problem was that the firm’s research director refused to hire me.
That near-miss is worth dwelling on. The research director refused to hire Marcus, yet Seykota’s influence shaped his entire career all the same. What Marcus absorbed from that encounter — and from the relationship that followed — was the core principle that markets can be understood through systematic technical analysis, and that price signals, tested and followed with discipline, produce better results than intuition or fundamental guesswork. The firm’s bureaucracy said no. The idea got through anyway.
The Philosophy Behind His Trading
Every trader has strengths and weaknesses. Some are good holders of winners, but may hold their losers a little too long. Others may cut their winners a little short, but are quick to take their losses. As long as you stick to your own style, you get the good and bad in your own approach.
The best trades are the ones in which you have all three things going for you: fundamentals, technicals, and market tone.
First, the fundamentals should suggest that there is an imbalance of supply and demand, which could result in a major move. Second, the chart must show that the market is moving in the direction that the fundamentals suggest. Third, when news comes out, the market should act in a way that reflects the right psychological tone.
I think to be in the upper echelon of successful traders requires an innate skill, a gift. It’s just like being a great violinist. But to be a competent trader and make money is a skill you can learn.
In the final analysis, you need to have the courage to hold the position and take the risk. You need to be aware that the world is very sophisticated and always ask yourself: ‘How many people are left to act on this particular idea?’ You have to consider whether the market has already discounted your idea.
I look for confirmation from the chart, the fundamentals, and the market action. I think you can trade anything in the world that way.
Comm. Corp. taught me to see the signal, like the signal, follow the signal. If you follow your system /methodology then over time your edge will kick-in and you’ll end up ahead.
The Three-Confirmation Method: Why It Matters
Marcus’s three-confirmation framework — fundamentals, technicals, market tone — is one of the most practical filters in the Market Wizards literature. Each element does different work. Fundamentals identify the structural reason a move might happen. Technicals confirm that price is already moving in that direction. Market tone tests whether the crowd’s reaction to new information is consistent with the thesis. A trade that checks all three boxes is not guaranteed to work, but it carries a weight of evidence that a single-signal entry cannot match.
The overlap with trend following is clearest in the second element. Technical confirmation — the chart showing the market moving in the direction the fundamentals suggest — is what the TurtleTrader rules are built around. Price is the primary input. Everything else is context. Marcus uses fundamentals and market tone to pre-qualify opportunities, then waits for price to confirm before entering. That sequencing is disciplined in a way that pure fundamental investing is not, because price has to agree before capital is risked.
Signal, Signal, Signal: The Commodities Corporation Legacy
The line from Commodities Corporation — “see the signal, like the signal, follow the signal” — is a three-word philosophy of systematic trading. It contains the whole argument. You do not act on a market view. You do not act on a rumour or a feeling. You wait for a signal that your system or methodology recognises, you evaluate whether it meets your criteria, and then you follow it without hesitation. Hesitation is where edge goes to die.
Commodities Corporation was the training ground for an extraordinary concentration of trend following talent. Ed Seykota was there. Marcus was there. Bruce Kovner was there. The firm gave serious traders capital to trade and the freedom to develop systematic approaches. What came out the other side was a generation of traders who shared the same foundational belief: markets trend, trends can be identified through price signals, and discipline in following those signals produces returns that discretionary guesswork cannot match across time.
The Courage Argument
Marcus’s statement that courage is the final requirement — “you need to have the courage to hold the position and take the risk” — is the piece that most investment education skips. The technical analysis can be learned. The risk management rules can be codified. The position sizing can be calculated. None of it matters if the trader cannot hold through adverse movement when the thesis is intact, or cut the position without flinching when the signal reverses.
This is the central psychological challenge of trend following. Trends do not move in straight lines. Every position that produces a major gain in time first goes through periods of drawdown that look, at the time, like evidence the trade was wrong. The courage Marcus describes is not recklessness — it is the trained ability to distinguish between noise that should be ignored and signal that demands action. That distinction, applied across hundreds of trades over years, is where the 2,500-fold return comes from.
More on Marcus
- Michael Marcus was originally profiled in the Market Wizards
- Michael Marcus’s mentor was Ed Seykota
- Marcus is another in the long line of alumni from the legendary Commodities Corporation
Trend Following Systems
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