Name: Pit Bull: Lessons from Wall Street's Champion Day Trader
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Welcome to the world of Martin “Buzzy” Schwartz, Champion Trader–the man whose nerves of steel and killer instinct in the canyons of Wall Street earned him the well-deserved name “Pit Bull.” This is the true story of how Schwartz became the best of the best, of the people and places he discovered along the way and of the trader’s tricks and techniques he used to make his millions.

Author’s Introduction:

Hard work is the primary reason why I’ve become so successful, but hard work’s just part of the equation. By nature, I’m a gambler with a good feel for numbers, and, as I’ve mentioned before, Amherst taught me how to think, Columbia Business School taught me what to think about, the Marine Corps taught me how to perform under fire, and Audrey taught me the importance of money management. These are the five blocks that must serve as the foundation for constructing a trading methodology.

After nine years as a securities analyst, I decided to make a complete transition from fundamental analysis, the use of economic data to forecast individual stock prices, to technical analysis, the study of price and volume independent of the underlying economic data. Your trading methodology has to fit your personality. You have to understand your strengths and your weaknesses. It took me nine years to figure myself out.

My strengths are dedication to hard work, dogged persistence, ability to concentrate for prolonged periods, and a hatred of losing. My weaknesses are insecurity, fear of losing, and a need for constant reinforcement and frequent gratification. A trader, like a chain, is only as strong as his weakest link, and it’s your weaknesses that must dictate your trading style.

I’m a scalper. By that I mean that I’m in and out quickly, always, always, ALWAYS! I’m often in and out in five minutes or less, never more than a couple of hours. Initially, I adopted a short-term trading system because I had limited resources and needed a consistent string of small winners to build up my capital base, but as I became more successful, I discovered that short-term trading was what gave me the most reinforcement and gratification. I just love to hear the cash register ring. It’s the sound of the market telling me that I’m a winner, again and again and again.

Most books on trading say that you only have to be right three or four times out of ten if you cut your losses quickly and let your profits ride. That doesn’t work for me. I cut my losses quickly, but I take my winners just as quickly. I need to be right seven or eight times out of ten. I’m a boxer-counterpuncher. I spot an opening, jump in, score, and jump back out. In and out, in and out, a point here, a point there. I’m not going for the knockout, but at the same time, I’m making damn sure that I don’t get knocked out. That’s my style, and I tailored my technical analysis and my methodology to fit it.

Before you step into the ring, know exactly how you want to fight. Take my buddy Inside Skinny. While I’m at my desk crunching numbers, he’s out schmoozing it up over martinis, fishing for hot tips. Hard work is not one of Skinny’s strengths. And Skinny’s no boxer-counter-puncher; he goes for the knockout, all of the time, every time. He’ll go into ten trades, and be wrong on eight of them, and he won’t care, because he makes enough on the other two to end up way ahead. Or take Porky from the Bronx. He’s so huge, he’s got so much talent on the payroll, he’s ready for anything that comes along. His strengths are his size, his organization, and his appetite for any deal that will make him money. I tried to compete with Porky, and it nearly killed me.