The Best Trader In the World Worked for Bernie Madoff

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The night Bernie Madoff got caught for running a $60 billion Ponzi scheme I got a call from my friend “Eddie” (not his real name) who for many years worked for Madoff. I couldn’t tell if he was crying but he was very upset. “I can’t believe it,” he said, “Bernie was like a father to me. Mark Madoff was like a brother to me.” We spoke on and off all night as more news came in and he came to grips with the new world he was living in.

I called Eddie yesterday and said I wanted to write an article about him and how I thought he was maybe the best trader I ever knew. I’ve met and worked with over a thousand traders. I traded for hedge funds. I ran a fund of hedge funds. I’ve written five books on trading.

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He laughed. He laughed for two reasons. One is that he never thinks he’s a good trader. Two, he was afraid his name would be used. “I can’t have my name out there. I can’t be associated with Madoff at this point.”

Eddie lived right next door to me for years. We met  in 2004 or 2003. He always wanted to work with me because he had read my articles and books about trading. I always said no. I never told him the real reason I didn’t want to work with him. The real reason is I would’ve brought his results down. I wasn’t as good as him by a longshot. [See, 8 Reasons Not to Daytrade]

Every day he wanted to talk his trades with me. He’d stop by and we’d chat for an hour or so about his trades. Sometimes I avoided him for a few weeks at a time. Because that’s the moron I am. I don’t really know how to talk to people. My daughter, Josie, would see him in the street and say, “hey, there’s your friend, lets talk to him.” And I would be like, “Josie, shut the F up and keep walking so he doesn’t see us.” But 6 years olds don’t understand. “Why, Daddy, why?” And I wouldn’t explain, leaving a volcano sized hole in her brain about the way humans interact. Oh well, she’ll figure out shame eventually. And it won’t be a pretty lesson.

Eddie worked on the prop trading desk for Bernie Madoff. Not the hedge fund that was later exposed as a total Ponzi scheme. One time we were riding into the city together. He said, “James, what am I going to do? I want to move to the hedge fund side but Bernie won’t let me. He said, ‘you’re not ready for the hedge fund side’ and I can’t understand it. I’ve put up good results on the prop side. I’ve had 35 up months out of the past 36. I’m up a huge amount of money for him. Why won’t Bernie put me on the hedge fund side?”

Since I’m always thinking I came up with a brilliant idea right then and there. One that would not only solve Eddie’s problem but would benefit me immensely. That’s the way I think. “Why don’t you ask Bernie if you could set up a feeder fund into the hedge fund side. I can help you raise the money for it. With Bernie’s results I can raise over $100 million no problem.”

What a stupid stupid man I am. Thank god Eddie just laughed and said, “I don’t know, James. I just want to trade.”  Else maybe we’d all be in jail or suicided by now.

(this guy ran a feeder fund into madoff’s fund. He killed himself. His family traces its wealth back to the 1600s. Doesn’t matter.)

So, on Bernie’s advice, Eddie left the Madoff firm and went working for other hedge funds where he continued to rack up successful year after successful year, proving that it didn’t matter whether he was at Madoff or sitting at home, or sitting anywhere for that matter. He knew how to trade. I saw him trade everything from stocks to carbon credits, to electricity futures to fish oil futures over the years. He’s married to a beautiful wife. Has beautiful kids, lives on a farm with views in every direction. Collects beat up race cars and fixes them. He escaped the misery.

Some stories. One time Eddie brought me in to meet Madoff. I’ve written about this before and why they rejected me. But one thing Mark Madoff (R.I.P.) told me was, “See all these traders out there”, and he pointed out all the prop traders sitting on the desks outside his glass office. “Most of them are useless. Computers are better than them.” I think Mark Madoff was legit and didn’t know what was going on. Maybe he was also stupid and turned a blind eye, which one can argue makes him just as illegal. But he seemed focused on just building up the prop side, which I knew through Eddie was completely legit.

[See, 10 Reasons You Should Never Invest in Stocks again]

(Mark had it all. Then killed himself)

Another story: the night Madoff got caught Eddie was telling me, “oh man, if I had stayed there I probably would’ve lost a million dollar bonus. I can’t even imagine what all those guys are going to do.” A few weeks later I ran into “Meade” (not his real name). He had earned and then lost well over a million dollar bonus when the Ponzi scheme was revealed. I think there’s a trial still going on because he once ran Andrew Madoff in the street and beat the crap out of him. A lot of pain happened. Eddie was lucky. But there’s always a reason people are lucky.

One time a woman from Minnesota called me after I wrote an article about Madoff. She had lost her entire $800,000 savings. She was 57 years old and retired. She was crying on the phone. “What am I going to do now? I have no money.”

Its horrible. I told her. But let’s just focus for a second. Do you have any interests? “I used to love designing furniture,” she told me. Ok, I said, Do you believe in God? I do, she said. Ok, I said, now we have to get real for a second and you have to do what I tell you: put your house up for sale immediately and get the equity out of that. Then you’re going to have to work. You have to understand this. The world is different now. The money is gone. And all throughout this, you’re going to have to pray every day to God. He wants you to do well.

She was crying. But she agreed. She said, “And what is it with all the jews? They keep saying in the newspaper that the jews lost all their money with Madoff. They forget about all the Christians who lost money with Madoff also. We’re all good Christians in Minnesota.”

Another time I ran into “Howard J” (who I wrote about in “All You Have to Do is Ask”) and he said to me, “Jimmy, what are these people going to do? They’re 80 years old. They play golf every day. They thought they had $3 million with Bernie. Now they have $0. Their only choice is to kill themselves. You’re going to see non-stop suicides in the next few months.”

I followed Eddie’s trades almost every day for years. I can tell you what I thought made him a great trader.

A)     He’s probably the most humble trader I know. He never thinks he’s a good trader. He moved into the smallest house in the world, a thousand miles from the city, becacuse he assumed he was going to be fired any day for making a horrible trade. He still thinks this way. Humility is not something you can learn. As an example, the worst trader I know is always convinced he is right. He calls me up and says, “Why is the market doing this? Doesn’t everyone see that it’s being manipulated by the government and by the big funds?” My friend, the mad trader, never admits he’s wrong. And every day he loses money. If you’re Captain Ahab, there’s only one way this story ends: Moby Dick kills you. Every good trader I know is infinitely humble.


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B)     The Eddie Technique: I call it “news arbitrage” and I’ll demonstrate via example. Let’s say some data about oil reserves was going to come out at 10am. Eddie would pick a basket of relatively low volatile oil stocks. He’d have an idea of how the data was going to come out and how the stocks would react. He’d make his bet. If the data came out differently than he expected, he’d get out instantly. If the data came out as he expected but the stocks reacted differently than he thought they should, he’d be out within five seconds. He had no religion when it came to the markets. If they didn’t move the way he wanted he didn’t come up conspiracy theories to support his case. He was out. He didn’t lose money. That was his only religion.

“The market is too tough,” he told me. “if something happened different than I expected, I was out.” I was about to write that he said, “I’d get the hell out.” But Eddie didn’t say “Hell”. If the stocks reacted like he wanted them to, he’d stay in for about two minutes tops, because he knew eventually they’d reverse direction when the traders had their fill.

C)     The Eddie Technique, part 2. He always went into stocks that were low volatility. He didn’t want to take the chance he’d go to the bathroom,  potentially standing right next to Bernie Madoff in next urinal over, and then come back to his computer and a stock would be 10% against him. He’d get comfortable with a stock like HPQ. He’d learn how it works. He’d watch how the specialists on the floor of the NYSE would play the stock. He’d learn who the major players were in the stock. If someone was selling 3,000,000 shares he’d watch and wait for the selling to be over. Then he’d start buying. If the seller started again, he’d get out. Otherwise, he’d ride the stock for a few minutes and then get out. He had about five stocks like this and he told me it would take a few months to really learn the behavior of some stocks.

D)    The Eddie Technique, part 3. He studied his own statistics every night. For instance, one time he noticed that for several months he had basically broken even on Ford stock. Ford was one of the stocks he had spent months studying to get used to its behavior. He thought Ford was going to be a big money maker for him. But when he saw that over time he had broken even on Ford over a several month period, he dropped it. “I didn’t understand it like I thought I did,” he said.

E)     TET, part 4. He would take a basket of stocks, like all the natural gas stocks. They all traded together. If one of them was veering off, i.e. not trading with the rest, he’d look to see if there were big sellers or any big news. If there was no big news, he’d go long the stock. If he lost money on it after a few seconds, he’d get out of it. Otherwise, he’d wait for it to trade with the rest of the group.

You know how Eddie met Madoff? He was in Grand Central and found a wallet with a thousand dollars in it. It doesn’t matter if the wallet had a million dollars in it. He called up the number on the business card in the wallet and returned it. The owner of the wallet was a trader who worked right next to Mark Madoff. They hired Eddie on the spot when he came in.

This is not a story about Madoff, or suicide, or trading. This isn’t even a story about Eddie. Eddie wanted to read the article before I posted but I said no. This is a story about how being a humble, good person has its rewards. The reward is life.


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  • Kurt

    Day trading your entire portfolio is a fool’s game, agreed. I have done much better by sticking with a position for at least 2 years. My idea has a better chance to turn out positive. Otherwise, if I day trade I have to be right twice. Right idea. Right timing. Timing is way to hard to do consistently. It might work a couple of times per year at best. It took me many years to finally not only figure this out, but stick with the plan.  I looked at all my trades, going back 20 years, and son of a gun, I would have been so much better off holding for a much longer time frame. I nearly got sick seeing how much money I left on the table by selling too soon, taking a small profit or bailing out because I was impatient was a giant error.

    • http://twitter.com/txchick57 txchick57

      Yeah, I have a few of those too.  Ciena and XMSR, the money I left on the table on those . . . .  so now I split the account and have long term and daytrading buckets.

  • Kurt

    Day trading your entire portfolio is a fool’s game, agreed. I have done much better by sticking with a position for at least 2 years. My idea has a better chance to turn out positive. Otherwise, if I day trade I have to be right twice. Right idea. Right timing. Timing is way to hard to do consistently. It might work a couple of times per year at best. It took me many years to finally not only figure this out, but stick with the plan.  I looked at all my trades, going back 20 years, and son of a gun, I would have been so much better off holding for a much longer time frame. I nearly got sick seeing how much money I left on the table by selling too soon, taking a small profit or bailing out because I was impatient was a giant error.

  • http://twitter.com/TheAcsMan George Acs

    @jalthucher @stocksage1 Talk about burying the lead. Literally, not figuratively. No pun intended.

  • http://twitter.com/TheAcsMan George Acs

    @jalthucher @stocksage1 Talk about burying the lead. Literally, not figuratively. No pun intended.

  • http://www.awkwardengineer.com AwkwardEngineer

    with regards to the wallet story… be nice to everyone.  we’re all connected and it’s all coming back around.  good life motto.

  • http://www.awkwardengineer.com AwkwardEngineer

    with regards to the wallet story… be nice to everyone.  we’re all connected and it’s all coming back around.  good life motto.

    • http://jamesaltucher.com James Altucher

      Very true. 

    • http://jamesaltucher.com James Altucher

      Very true. 

  • Greystache

    My daughter is also named Josie.  I love that name.

  • Greystache

    My daughter is also named Josie.  I love that name.

  • http://profiles.google.com/jayzalowitz Jay Zalowitz

    Great article.

  • Anonymous

    The expected value and potential payoff of returning a wallet to someone that carries $1K on them is a much higher than taking the cash. Really enjoyed this post – although I disagree w/ your views on trading. :)

    • http://jamesaltucher.com James Altucher

      That’s ok. I could be wrong. I’m an old man now for trading. Its a young man’s game. Or a computer’s. 

    • Sam

      My 85 year old uncle carries 1K in cash around. He’s crazy, doesn’t understand keeping money in banks, and thinks Obama wants to take all of his money. He’s worth exactly 1k, and if you returned his money you’d get a tip for a lot less.

  • http://twitter.com/txchick57 txchick57

    I do one of those things.  I have 3 stocks I trade every single day.  Day in, day out.  That’s for money to live on.  I have watched them trade every day for years and years and years.  They’re low volatility, what we used to call “tick” stocks.  That’s interesting that your friend does that too.  I thought I was nuts.

    • https://jarvisapp.com/ Jay Shirley

      One of my first bosses pulled me into his office and showed me a stock. He said he traded it every day/week. He said it was his retirement (and laughed) and he studied for years to find it. Sounds just like what you are talking about. He could tell exactly when it would do certain things and what news headlines to follow for it.

      He showed me how to trade it and spoke about it frequently. He showed me 

      I was young and didn’t listen, unfortunately. Now that I’m getting older and more intrigued by the market (more about quant and tech analysis, the youthful generation treats the market like video games) I wish I paid more attention.

    • https://jarvisapp.com/ Jay Shirley

      One of my first bosses pulled me into his office and showed me a stock. He said he traded it every day/week. He said it was his retirement (and laughed) and he studied for years to find it. Sounds just like what you are talking about. He could tell exactly when it would do certain things and what news headlines to follow for it.

      He showed me how to trade it and spoke about it frequently. He showed me 

      I was young and didn’t listen, unfortunately. Now that I’m getting older and more intrigued by the market (more about quant and tech analysis, the youthful generation treats the market like video games) I wish I paid more attention.

  • http://www.timothysykes.com Anonymous

    Glad to see you’re finally writing about trading again!

    • http://www.hedgefundfx.com Ross Jaklik

      Bitter sweet, isn’t it. 

  • ZenPen

    Prince Jen made an enormous fishhook with a huge line, baited it with fifty bullocks, settled himself on top of Mount K’uai-chi, and cast with his pole into the eastern sea. Morning after morning he dropped the hook, but for a whole year he got nothing.
     At last a huge fish swallowed the bait and dived down, dragging the enormous hook. It plunged to the bottom in a fierce charge, rose up and shook its dorsal fins, until the white waves were like mountains and the sea waters lashed and churned.
     The noise was like that of gods and demons and it spread terror for a thousand li. When Prince Jen had landed his fish, he cut it up and dried it, and from Chih-ho east, from Ts’ang-wu north, there was no one who did not get his fill.
    Since then the men of later generations who have piddling talents and a penchant for odd stories all astound each other by repeating the tale.

    Now if you shoulder your pole and line, march to the ditches and gullies, and watch for minnows and perch, then you’ll have a hard time ever landing a big fish. If you parade your little theories and fish for the post of district magistrate, you will be far from the Great Understanding.
     So if a man has never heard of the style of Prince Jen, he’s a long way from being able to join with the men who run the world.
                                                                                                                    – Chuang Tzu

  • Coolah

    Fine and dandy to be all concerned about “the insanity” but we both know that not much you can do will change it.  The fix is in and has been in for a long time.  Did you see “Inside Job”, the Frontline “the Warning”? some of the richest, well connected and high end political people have been involved up to their eyeballs in this for a long time. 
    The more money involved the harder the problem is to fix.  The days of non-inside information died a long time ago, small investor are specks on the map now.  We may as well be pitching pennies in the alley.
    If I were king alot of those involved in the issues that have happened in the last two years would be sitting in a nice 8×10 cell now, Wall street and political and once they got out banned from any financial matter dealing with the public or private.
    scream and rant all you want, until we get some people in volved that actually have a spine or not some pansy political hack nothing will change.  Best we can do is get luck once in awhile with our investments

  • Alex

    It’s a beautiful post.  Which is really amazing – I never thought it would be possible to write a story revolving around Madoff and trading with so much compassion and light.  I like how the key to the story is revealed in the last two sentences.   A slight shift of focus – and suddenly a different, much deeper meaning.

  • Di

    I’ve just discovered you blog and find it interesting because you’re so different than me. Your philospophy, your skills, your careers – all different than mine. Some I agree with. Others bother me.

    Because I barely understand my 401K, this post about trading is way beyond me. However, I find it a bit disturbing that you guys throw around million dollar figures as if they’re five dollar bills. The idea that one person has so much dispensable income and others have so little is sad. Like, say, a family here in my hometown. The husband lost his job due to the economy and the wife came down with cancer. With no insurance, the husband joined the military so his wife could receive treatments. All very loyal indeed. But in doing so, he’s forced to leave her to fight her cancer and raise their children alone. 

    Imagine what one of those $1 million bonuses would mean to these people. Just one. 

  • Anonymous

    Great article! Loved reading it. Thanks for the insights. 

  • Jack

    Write more good and positive stories like this.

  • Ljnes1

    I don’t like to hope, but I like to entertain the idea that I will carry some kind of clout one day so that I can tell the world about how this blog changed my life.  Definitely does not get the recognition he should, but sometimes that’s a great position to be in.  The material is very original, helpful, informative, and entertaining.

  • Kenny

    Whats up with the jews in the last two posts, ?????

    • Ryan

      I thought the same thing.  But then if the stupid chick described above said that to me, I would have probably written it as well.  In some sense is showed extreme ignorance (Jews, Christians, what the hell difference does it make?) and when I read that, I suddenly felt little remorse for her. So I very much think it added to the story. 

  • http://twitter.com/johneday John Day

    I am curious if Eddie puts up the same #’s he did 5-10 yrs. ago, before Reg NMS. TET parts 2 & 4 must have been affected by market changes.  Specialists don’t play the role they used to. Orders are never on the book, most are crossed in ATS or run through algos that make it harder to wait for the selling to be over. Correlations have increased and it is rare to find a stock that is veering off before the boxes bring it back in line.

    That being said, not all of the asset classes have been taken over by the bots yet and I am mostly familiar with equities.

    “He’s married to a beautiful wife. Has beautiful kids, lives on a farm
    with views in every direction. Collects beat up race cars and fixes
    them.” – And is a honest, humble and successful trader. This guy is the man. 
     

  • http://www.hedgefundfx.com Ross Jaklik

    Thanks for writing this. Every so often I get into a groove and I lose all my humility, I’d prefer that I didn’t have to get shaken up before I was put back into order.

    One thing I have to think when I ponder Eddie’s humility, is the distinguishable between confidence and humility. I have to disagree with you on one thing, Eddie probably knew he was better than the average person — which is why he was baffled Bernie wouldn’t let him into the hedge fund side and touted his positive 35 out of 36 months. 

    But, in my opinion, Eddie knew how to distinguish that confidence when he was trading. He knew how to let the market prove him wrong. It didn’t mean he thought he wasn’t a great trader. Anyone trading understands statistics of the average trader and what their trading account reads YTD. He knew.

    See most people go around battling the market, this gigantic living organism bigger than us. I’ve found what is really developmental is 1. Being confident in your system and 2. Being confident the market can always prove you wrong – and accepting that when it happens, not crying about it.

    In the end, there are very big differences between thinking you are an alright trader or thinking you are smarter than the market. Is it possible for me tol be a confident trader but also realize the market is much smarter than me?

    In school I knew people were better test takers than me, so I had to study more.

    In the markets, same concept, and I luckily made it through difficult times with decent risk to reward ratios.

    • http://jamesaltucher.com James Altucher

      And I think you are right.

      • 0cathy

        Preparedness yes. But also humility in that he didn’t take his success for granted. He kept working at it.
        Great post.

  • Renée

    Having too much money to lose and a lost reputation is what leads people to suicide in cases like this.  The answer is not to care so much about the money and to live life like “old money” as if it doesn’t matter.  Because really, there are so many more important things in life.  And as much money as one can lose one can make again.  People who suspect you and turn their backs on you are not worth it anyway.  All is never lost.  It’s when you lose sight of that that you lose your will to live.  You can’t give up even under those circumstances.

    I say that as someone who was a close childhood friend of Ephraim Karpel’s.  I also say that as someone who is only a couple of weeks away from having no income at all and is still unable to find a job.  Knowing a bit about the financial world and how to make money in it would definitely come in handy right about now…..*sigh*

    Coincidentally, I had just read my first blog post of yours a day before I randomly Googled Ephraim’s name for the first time after thinking about how sweet he was to me when I was little only to find out about his suicide only several days before, and to see you refer to him in an article.  Pretty freaky as I’d never heard of you before last week!

    I don’t know what that’s all supposed to mean but I do know how senseless his death feels to me.  I had wanted to Facebook him or something just to say hi and to thank him for supporting me when I was 10 and the target of bullies.

    Interesting that I should find you here writing stuff like this….Like I said, I don’t know what that’s all supposed to mean but I sure do think there’s a big lesson here, and maybe it’s no coincidence that this is all happening (and I usually don’t think stuff like that).

    • http://jamesaltucher.com James Altucher

      I thought the witch hunt that he got dragged into was disgraceful to the country. When guys like Madoff were getting away with literally murder for years right under the auspices of the government. Horrible. I’m sorry you experienced his loss in a personal way.

      • http://www.facebook.com/renee.rothbardmackey Renee E. Rothbard Mackey

        Thank you, James, that means a lot to me.  And I agree with you about the witch hunt.  Thanks for mentioning Ephraim in your writing.

  • joanie

    wow! amazing!!!!!!!!!!!!!!!!!!

  • http://bestresearchpaper.com/ research paper

    very interesting and thought-provoking) thanks1!!

  • http://www.Twitter.com/ThomHolland Thom Holland

    The George Washington comparison has me cracking up. haha

  • Stein Mandelbrot

    Altoucher. Please quit writting about trading because you have absolutely no idea about that. Ever heard of money management? Dr Van Tharp? Risk to reward ratio?

    • Anonymous

      Haters gonna hate.
      This is one of my favourite posts James, please keep it up.

      • http://jamesaltucher.com James Altucher

        Yeah, I ignore. i did it professionally and quite well for years. But trading has a lot of psychology attached to it. People aren’t loved as kids and first they take it out on the markets and when that doesnt work out they take it out on comments boards. 

        • Stein Mandelbrot

          Yea, right. If you were more communicative and answered any of my mails I wouldn’t have posted here. You hurt people with these obnoxious posts because some of them will gain fake hope and then simply lose money. That’s all about statistics and psychology (here you are right).

          And Altucher, seriuosly, come on. Reward to risk ratio. Volatility. Even heard of? ‘Quite well for years’… says nothing. Black swan. Rings a bell? You were doing it wrong. Just accept that.

          To your fanboy Sergey: I don’t have to prove anything, very silly try with that 1K. And that 10% over 3 months also says much about you.

        • kyle eschen

          James whythe fuck aren’t you catering to my immediate blog consuming needs!? I demand you write only about what I believe you are qualified to write about. Where the fuck do you think you are? YOUR blog!?

        • kyle eschen

          James whythe fuck aren’t you catering to my immediate blog consuming needs!? I demand you write only about what I believe you are qualified to write about. Where the fuck do you think you are? YOUR blog!?

    • Sergey Gorsh

      Prove you know how to trade, dear. Register your portfolio in any of
      free services (e.g. prognolic.com) . If your profit will be more then  10% in ,say, 3 month, I
      owe you $1K. Agree ?

    • Sergey Gorsh

      Prove you know how to trade, dear. Register your portfolio in any of
      free services (e.g. prognolic.com) . If your profit will be more then  10% in ,say, 3 month, I
      owe you $1K. Agree ?

  • http://www.736hundred.tumblr.com 736hundred

    What drives privileged and educated people to lie, cheat and steal from others in order to obtain more money then they could ever spend in a lifetime?  

    • http://jamesaltucher.com James Altucher

      I think those people were, in general, not loved as children so money becomes their replacement. It doesn’t mean making money is bad. Making money creates jobs, funds charities, etc. But stealing for it is very bad since it takes from those who earned it the right way. 

      • https://jarvisapp.com/ Jay Shirley

        I always try to look at why people want to make it.

        I think the thing that motivates me to get a business off the ground is to hire people and contribute more.

        Years ago I was in a restaurant and I noticed a bus boy who was remarkably attentive. If I had a company I would have hired him on the spot. He just had an attitude that you want on your team. That was probably 5 years ago. I remember his name. I still wonder what he wanted to “be” but I’m sure he’s successful at it. I wish I could have helped him.

      • http://www.736hundred.tumblr.com 736hundred

        I know people like that, but I still believe that even with the worst of childhoods a person has the power and the ability to change themselves into a person who can love and be loved.

        It’s a choice.

      • http://www.736hundred.tumblr.com 736hundred

        I know people like that, but I still believe that even with the worst of childhoods a person has the power and the ability to change themselves into a person who can love and be loved.

        It’s a choice.

        • http://jamesaltucher.com James Altucher

          I Agree. Being unloved is not an excuse for criminal behavior

  • Anonymous

    You mentioned: “…he assumed he was going to be fired any day for making a horrible trade. He still thinks this way.”  Is it difficult for Eddie to be happy if he is always worried about being fired?  Or does he have some other perspective?  How does he cope with the stressful life of a trader?

    • http://jamesaltucher.com James Altucher

      I’ll ask him.

      • radarthreat

        What did he say?

  • Anonymous

    You mentioned: “…he assumed he was going to be fired any day for making a horrible trade. He still thinks this way.”  Is it difficult for Eddie to be happy if he is always worried about being fired?  Or does he have some other perspective?  How does he cope with the stressful life of a trader?

  • Moayad

    Brilliant! Being humble and good is good. But Eddie’s trade technique is brilliant.  He has a something of a what I call a “debugger brain”. In short a good debugger  finds out  exactly what is going on and knows exactly how to react to it. Stocks charts are full of zigzags and it takes a mind like Eddie’s to know when to take a  ride and when to get off. Thank you, thank you , thank you, James, you always inspire me, and the clues you provide everyday are priceless !

  • Moayad

    Brilliant! Being humble and good is good. But Eddie’s trade technique is brilliant.  He has a something of a what I call a “debugger brain”. In short a good debugger  finds out  exactly what is going on and knows exactly how to react to it. Stocks charts are full of zigzags and it takes a mind like Eddie’s to know when to take a  ride and when to get off. Thank you, thank you , thank you, James, you always inspire me, and the clues you provide everyday are priceless !

  • Guitars

    my lovely wife think I am odd in that I generally think we are two steps away from the poor house. we are not but, the thought, the feeling, keeps me from making stupid mistakes

    • http://jamesaltucher.com James Altucher

      I hear ya. The only thing that stopped my slide into starvation in 2001 was that exact thought.

    • AK

      AMEN.

  • http://twitter.com/StudioRua Padraig Mannion

    this is great.
    Ive only come across you lately and its had a deep impact. I saw your interview on Mixergy and came away with the feeling that the most important thing for me to do is take care of my heart, soul, health, head and spirituality. not many business blogs do that!
    this one emphasizes another great value, humbleness, and the role it plays in saving people even in environments that seem to reward the complete opposite.
    “the race is not for the swift, but for those who can endure it”

  • http://twitter.com/chaumpy Nathan

    I like how you are starting to tie your articles together at the end. This makes a more enjoyable read.

    “Treat everyone you meet as if they will be your friend for the next 50 years.”

  • Alex

    James, have you seen this article by Bill Gross?  The first line:

    “​A mind is a precious thing to waste, so why are millions of America’s students wasting theirs by going to college?”

    Here it is, your view on college is going mainstream.

    The article:

    http://www.pimco.com/EN/Insights/Pages/School-Daze-School-Daze-Good-Old-Golden-Rule-Days.aspx

  • http://twitter.com/amcno03 J. Restrepo

    Great article.     

  • http://twitter.com/amcno03 J. Restrepo

    Great article.     

  • Sergey Gorsh

    Your posts are so supporting for all of us , you know. Thanks James

  • Kevin M

    One of my favorite blogs you’ve written. Last paragraph is fantastic.

  • charity

    OMG.  it has been a long time since I have read anything so profound.  This blog post is second only to my run today (4 Rules to be Happy)  by a beautiful creek where I saw the house of my dreams, humble and beautiful and I thought something amazing will happen today.   And then I read your post.  This writing/truth is the amazing thing for today.  Can I quote it in a speech, word for word? 

  • Mahesh

    Nice Article James, ending  is great  and the resemblance :) , who would have thought of that?

     I really think if you had made different choices u might have been the second steve jobs :) … same creativity… 

    Also, I wish I could be a reader like you. I have less patience for reading thick books.

  • http://twitter.com/chartop John The Baptist

    Is Eddie a fictional character?

    • http://jamesaltucher.com James Altucher

      I don’t write fiction.

  • http://twitter.com/godyxz Raul Gallardo

    James, 

    Great article, this is definitely one of my favorites. There is so much hate out there against traders, but there are other guys like Eddie, who are humble, good people. I just hope the media will focus more on this stories, instead of all the tragedies. 

  • Hani

    I effing love your blog…keep up the good work ma’ man.

  • http://twitter.com/air_hadoken Bradley Momberger

    James, I think that your first point there describes the Dunning-Krueger Effect to a T.

    • http://jamesaltucher.com James Altucher

      I will look that up. Thanks.

  • metropool

    the reawrd is a durable peaceful existence

    • http://jamesaltucher.com James Altucher

      Yes

  • Js

    WHO CARES. 

  • http://twitter.com/nelson3748 Nelson Hill

    i am touched. brilliant work once again James, thanks

  • Derek

    I’m addicted to this blog, i can’t believe it only found it 4 days ago, so refreshing, really funny, I love your writing style

  • http://twitter.com/neoalvaro Alvaro Salazar

    I started my trading career a couple years ago, won’t stop till I have my own trading shop. I will remember this post, I’m pretty sure it will be helpfull for my career, thanx oh and you just got youlself another reader my friend.
    Alvaro

  • Pokerracunsu

    you are a idiot.

  • kyle eschen

    You’re blog is an inspiration in a very Marc Maron kind of way. I can thank you enough for having the balls to get personal, to reveal the bullshit thattakes place in the mind at all kinds of places in life

    When you talk about Eddie getting out in “seconds” are you being literal? Nobody can time something to he second. Was that really his rule?

    • http://jamesaltucher.com James Altucher

      Yeah, seconds. I used to watch Marc Maron do his thing back in the 90s on Ludlow St. Then when he shot a pilot for Comedy Central I got ahold of it. He was nervous but I felt he did a good enough job they should’ve given it a shot. 

  • kyle eschen

    You’re blog is an inspiration in a very Marc Maron kind of way. I can thank you enough for having the balls to get personal, to reveal the bullshit thattakes place in the mind at all kinds of places in life

    When you talk about Eddie getting out in “seconds” are you being literal? Nobody can time something to he second. Was that really his rule?

  • Anonymous

    “One of the painful things about our time is that those who feel
    certainty are stupid, and those with any imagination and understanding are
    filled with doubt and indecision.” –Bertrand Russell
     

    The post reminds me of the above quote…fear of failure is a great motivator and mind sharpener.

  • http://HireHassan.com Hassan

    I think this may be my favorite of all your posts James : ) 

  • Chonah

    Timely article what with KCG blowing up I have come to realize after learning these valuable lessons from you and most of the core contributors to StockTwits over the years that as of recently I am certain once one integrates these rules into their trading that High Frequency trading firms and their grimy money grubbing algo robots dont mean shit to the type trader you describe.

    I feel after three years training and educating my self from StockTwits I have reached this trader nirvana such that bullshit algo driven markets are easy to detect and yes if a trade doesnt go my way within seconds I pull out based on the premise I was wrong at execution same as I always expect to be wrong when putting on a trade but im still alive.

    So its no magic suddenly the rewards are rolling in in ridiculous amounts while I make so many bad trades including one i exit that still go my way I feel nothing. Not even the regret of missing out on the 5000 a week i left on the table for various reasons the comfort being I am secure in this game and volatility like Simon & Garfunkles silent loneliness, well volatility is my only friend who I meet occasionally along with other fine traders who meet your guidelines on StockTwits each Thursday of the week.

    It’s like a study made with rats given alcohol and their own happy hour meeting place they like getting drunk socially.

  • http://twitter.com/soyroberto roberto シ

    Lying = no good, I had my reality check recently about this. It was what I thought an innocent lie, turned out it wasn’t. I had to learn it the hard way, always tell the truth

  • Steven

    Funniest part of this post ” was a terrible ” trader thinks he is always right and the market was wrong , it’s a right statement in a way , but I know this kid who is just in his early 20’s I think he just turned 20 this year , doesn’t sound smart at all , is a clown and a complete idiot , therefore whenever he’s wrong he complains that he is right and the market was wrong , but then changes his opinion quickly enough … the last time he had a line of shorts during “Fiscal Cliff” and called me during Friday , when I was speculating that the market will turn around , he said , man this market is completely brain dead , don’t they realize what the heck is happening ? They have to sell ! sell ! sell! Then he said how he was shorting global stock index futures markets , betting that the agreement won’t hold , since he has a wildest theory about republicans and democrats being opposing forces and if he can get a chance to take a position betting against them succeeding at anything , he will most likely do so and he did just that and won quite big and then on Friday … market rallied against him , fortunately for the kid he didn’t give everything back he had won and through out the weekend he realized what’s happening and was ready to buy everything he could get his stupid hands on during the next opening … however a kid probably made a killing and continues to do so , I talk to him per time to time , last time he said he’s betting big time against gold , eur/usd and crude oil , I don’t invest in anything else then stocks so I can’t tell , but as I understood that in futures markets , due to the leverage those trades were probably worth well into 5-6 figures for the kid , I still think he’s one lucky bastard , he somehow manages to get away with the stupid stuff he does . The other funny guy I know is a trader who is not an idiot … almost a retard in a way … yet he is worth $15 mln … as a private trader who worked I think just for 2 years in a bank as a trader , quit his job and went 100% on his own… there are these strange people out there who might seem idiotic , retarded , stupid as heck and some of their theories amaze me .
    The other guy I know seems very intelligent , sophisticated , well educated person , he was an options trader , therefore 3 months ago he lost his whole capital … This is a very interesting game due to the fact , that some random kid can swing around quite big trades and make probably more money then his professors and another guy who is well into his 30’s lose everything at the same time .

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  • price action

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