Simon Russo: $40,000 to $500 Million, and the Trades That Nearly Ended It

Last reviewed: September 2026. Every figure below is drawn from chapter three of Market Wizards: The Next Generation unless it is explicitly labelled as our own arithmetic. Simon Russo is a pseudonym. We have not tried to identify him and do not speculate about who he is.

Read Russo in his own words

Market Wizards: The Next Generation

Jack Schwager & George Coyle · 2026 · Chapter 3: “The Fifth Time Is the Charm”

Everything below is our own analysis of the published record. The interview itself, the letter Russo wrote to his parents, the three annotated charts, his postscript and the closing notes from both authors are only in the book.

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Simon Russo turned a $40,000 account, started in late 2015, into more than $500 million of cumulative trading profits over the following decade. Jack Schwager says he may well be the most successful trader he has ever interviewed. Before that account, Russo blew up four times, once losing $550,000 on a trade meant to make $2,000. And he is the first trader in the history of the Market Wizards series to be profiled under a false name, on the condition of an eight-page non-disclosure agreement.

The chapter is worth reading for three reasons that have nothing to do with the size of the number. It contains the clearest short-selection checklist in the book. It contains the idea of the broken short, the trade where a stock he expected to fall refuses to, and becomes his best long. And it ends with a postscript in which Russo, already worth hundreds of millions, describes turning a $2 million risk into a $120 million drawdown in three days, using the same mistakes that wiped him out as a teenager. Almost nobody at that level volunteers a story like that.

Who is Simon Russo?

Nobody outside the authors knows, and that is the point. The chapter opens with a note from Schwager explaining that, apart from a two-page excerpt in The New Market Wizards, this is the first time a full Market Wizards chapter has been built around an anonymous subject. Russo agreed to tell his story only if he could not be identified, and he had the authors sign an eight-page NDA committing them not to reveal anything that might expose him.

Schwager says the decision to include him anyway was easy, because the story and the lessons are what matter, not the name. He is equally clear on the part that matters most for a reader: they verified Russo’s results in the same way as every other trader in the book, and he calls that especially important here because the numbers are hard to believe.

Two practical consequences follow. First, any person called Simon Russo you find online is not, as far as the chapter tells us, this trader; the name was chosen to be anonymous. The chapter does note that Russo intends to maintain a public persona under the pseudonym, with comments and media links, at a website bearing the name. Second, you will not find a portrait of him on this page, because we will not invent a face for someone who went to this much trouble not to have one.

Why stay hidden with a record like that? Russo’s answer is about what the money is for. His main focus now is a philanthropic foundation working in two areas, climate and the environment, and education, and it gives anonymously. His view is that anonymity removes the need to be seen as virtuous and lets the work stand on its own. He wants his story to show that there are very wealthy people who are not about private jets, yachts and expensive cars, and that financial success can carry a greater calling than self-indulgence.

The Simon Russo record, and what it means

Our arithmetic on the headline number

Our arithmetic, not the book’s. $500 million from $40,000 is a multiple of 12,500. A 159.7% annual compound return multiplies capital about 5,400 times over nine years and about 14,000 times over ten. So the two headline figures are broadly consistent with a record of a little under ten years, which is what the chapter describes. The fit is not exact because cumulative profits include money he withdrew along the way, and a compound return is a time-weighted measure that ignores the timing of withdrawals.

The two risk ratios deserve a plain-English translation, because they say more about the quality of the record than the return does. The gain-to-pain ratio divides the sum of all monthly returns by the sum of the losing months. The S&P 500 scored 0.9 over the period, meaning its total losing months roughly cancelled its gains; Russo scored 7.0, meaning his gains were seven times the size of his losing months combined. The Sortino ratio measures return per unit of downside volatility only, which suits a trader like Russo whose volatility is mostly upside. His 8.1 against the index’s 1.0 is an extraordinary figure for any trader, let alone one running this much money. If you want the mechanics, our guide to the Sharpe ratio and why it punishes your best months explains the difference.

Music first

Russo grew up in a small town, in what he describes as an upper-middle-class neighbourhood where everything was perfect, so perfect that he only realised later he had grown up in a bubble. His parents, both born in the Midwest, are down-to-earth and kind. He was quiet, introspective and curious.

At twelve he started music lessons, and outside his parents his teacher became the most important influence of his life. The teacher looked, in Russo’s description, like a long-haired hippie who could easily be written off, and was in fact a humble master of his craft who would go deep into one style after another. When he explored bluegrass he learned the banjo. Russo studied with him for six years, and the thirty-minute Saturday lessons were the highlight of his week. He moved from 1980s rock to classical to jazz, which dominated the next five years. His tastes run from Frank Zappa to the minimalist composers Philip Glass and Steve Reich, whose repeated, slowly shifting motifs he says can put him into a trance-like state.

His parents pushed him towards engineering and mathematics, because he was good at both. He wanted music. An older student from his school had gone to the USC Thornton School of Music and dropped out to tour, and Russo decided he would go there too. He studied for it rigorously, pre-ordering the school’s theory books so he could test out of classes. Once there, he chose composition and arranging rather than performance, a purely practical decision because performers rarely make a living. He spent two years there before dropping out to trade.

A classroom contest, then a pump-and-dump education

His first taste of trading came in an economics class in his senior year of high school, in a contest where each student managed $100,000 of virtual money. Russo and two friends became obsessed and spent their lunch breaks in the library building strategies. His was simple: look up the day’s biggest gainers on Yahoo Finance, do some basic research, and short them. It is, he notes, recognisably a trade he still does. He won by a ridiculous margin, and the teacher refused to award him the win because he assumed Russo had cheated.

Soon afterwards he opened a real account with $3,000 he had saved since he was ten, keeping his birthday money rather than spending it. He went looking for the biggest daily winners again, and in that world the biggest winners were junk penny stocks, fraud and pump-and-dump schemes. He joined the chat rooms to understand how the schemes worked and tried a time-arbitrage strategy: when a moderator emailed a buy alert, most subscribers read it at work and entered late, so he would buy first and sell to them. The trades lasted two to fifteen minutes. There was no process beyond taking a quick $100 when it appeared.

He lost his life savings. The strategy worked just enough to draw him in, and then greed took over: instead of taking the easy money he started holding for an hour in the hope of more, and was left holding stock after the pump. He also had not realised that only a few moderators generated enough buying to matter. For the others, nobody followed through.

Four blow-ups, and a father who kept saying yes

Broke, he proposed a test to his father. Every morning before school he would write the ticker of what he thought was the best short on a sticky note, and they would check it in the evening. If the picks worked over a few weeks, would his father lend him money? They did, and his father let him trade his own account, roughly $10,000 at Fidelity.

The plan was the same mean-reversion idea: short the biggest pre-market gainers, stocks up 50% or more. Reality intervened at once. Fidelity had poor borrow on these names, so he could not execute more than half the shorts he wanted, and the ones he could short either did not revert much or were genuinely strong stocks. In late 2012 a wave of marijuana legalisation turned over-the-counter cannabis stocks into a high-liquidity, fast-moving market, and he adapted. In January 2013 he found that stocks with a strong close almost always gapped higher the next morning, and made $20,000 or $30,000 that month buying the close and selling the open. He added a breakout approach, buying high-volume breakouts above consolidations that closed strongly, and became more selective about shorts: out of five stocks with big moves, he would short the one with the stupidest, most meaningless news.

When he had asked his father for his own account if he hit a target, his father had told him not to be ridiculous. Russo set out to prove him wrong. By the end of 2013 his father’s account was up about $300,000. At the end of that year his father gave him $50,000 of his own, at a broker that allowed the shorts he wanted.

What followed is the reason the chapter is called what it is.

The early-2015 account is the famous one. Biotechs were making absurd moves on absurd news, prime territory for his shorting strategy, and he ran $50,000 to $550,000 in the first four months of the year. Then, in the last hour of a quiet day, bored, he shorted 10,000 shares of a biomed stock that was up on the day, planning to cover on a twenty-cent dip for $2,000. It did not dip. He added. It closed higher, rose after hours and opened higher again. He decided to wait for it to turn. It never did, and a few days later the broker liquidated him on a margin call. Schwager’s summary is exact: half a million dollars gone on a trade with a $2,000 objective.

The fourth blow-up, in August 2015, came after he had rebuilt $35,000 into $120,000. He shorted a biotech called AQXP at around $2 or $3, watched it run to $8 the same day, and blew up at $7. The next day a well-known biotech investor announced it had been accumulating the stock, which eventually reached $50. This time his amateur broker did not stop him out until the account was $10,000 negative. He sat in shock, owing money he did not have, then noticed the platform still showed buying power, went long the same stock, and sold a little over 50 cents higher to end near zero. He calls it luck, and wonders what would have happened if the buying power had not been there.

The comfort-zone experiment

After losing the $550,000, Russo decided his real problem was fear of discomfort, which in trading meant fear of stopping out and locking in a loss. His response was unusual. He set out to break his comfort zone everywhere: a picky eater, he began ordering the strangest items on menus; scrawny, he started working out; shy, he started socialising.

He also made a promise. The $35,000 would be the last money he ever took from his father, because he wanted to take full responsibility for the cost of his college, which his parents had paid. He counted the $300,000 he had made in his father’s account in 2013 as repayment of his seed money and his tuition. Along the way he took a semester off, telling his parents it was to compose music for a scholarship renewal while really committing to trading, went back reluctantly because he had promised to, and dropped out within weeks. He wrote his parents a letter explaining the decision, which the book reproduces in part. It is worth reading in the original; in short, it says trading was never about money but about the path to mastery, and that he refused to live with fear of failure as the deciding factor in his life.

Selection and execution: the diagnosis that fixed it

Russo gives two layers of explanation for the blow-ups, and the second is the more useful.

The surface layer is sizing and stops. His position size was arbitrary, set by how much money he wanted to make rather than how much he could afford to lose, which produced what he calls negatively asymmetric trades: the possible loss was far larger than the profit target. And he had no stop discipline. He is candid that even today he is not always good at it; he is better, but there are still times he gets stubborn and rides a move against him until it comes back.

The deeper layer is that the trades which blew him up should never have been taken at all. He now thinks of trading as two processes, selection and execution, and says that without realising it at the time he was already building his selection process. It was not luck that took $50,000 to $550,000 and $35,000 to $120,000; there were rules behind those gains. In every blow-up, he was breaking them. The trades did not fit his criteria. He took them because he had grown complacent after a hot run, shorting stocks simply because they were up a lot, not because there was a fundamental reason.

Schwager, in his closing note, reaches the same verdict from the outside. Every blow-up and every one of Russo’s worst trades shared a total absence of risk control, and they shared a deviation from his own rules: they failed his selection criteria before they failed his risk limits. Russo had a risk strategy; what he lacked was the discipline to follow it. Coyle puts it through Jesse Livermore, whose biographer argued that Livermore’s famous emphasis on sitting was really about waiting for a setup that met every condition. Had Russo simply refused to take trades that failed his own checklist, Coyle suggests, he would have avoided all his worst losses. Our profile of Jesse Livermore covers where that idea came from.

The short-selection checklist

This is the part of the chapter most traders will want, and it is specific. Russo describes what he calls the weak, ugly ducklings among stocks with big up-moves. The criteria, as he lays them out:

His illustration of the capital-structure point is precise. Suppose a company has $20 million of convertible debt convertible at $3, and the stock gaps up from $2 to $5 on tens of millions of shares of volume. The holders of that debt will very likely convert at $3 and sell in the open market. He describes seeing the same funds buy an offering at $3, then watching the company release news two days later about preclinical data in mice, and the stock double to $6. At that point he knows who is selling, and he wants to be an aggressive seller alongside them. Schwager observes that the company gets its money, the fund makes its profit and the banker earns fees. Russo adds the one party who does not win: the retail investor who bought.

Three habits sat around the checklist. Setups came along two or three times a week, and he describes himself as a sniper: quality over quantity, one or two trades a day at most. When he was trading actively, seven to nine in the morning was a fixed research ritual, and he considered waking up at nine and clicking buttons disrespectful to the market and to the craft. And he would rather miss a trade than take it without finishing the research, in case something in the filings turned a short into an avoid, or even a long.

MGT, May 2016: the trade that proved the process

The early months of 2016 are a useful corrective for anyone who thinks a good process pays off quickly. Russo was working eight hours a day on Skype with a trading partner, the two of them combining work on mindset and beliefs with research into past instances of their setups, and taking most of the same trades. About four months into the year his partner was up around $200,000. Russo was up $30,000. He was focused on doing the right thing and trusting that it would work in the long run, and the gap was eating at him.

The difference, he later concluded, was selection again. He no longer blew up, but he still took trades his partner rejected, and they cost him $10,000 or $15,000 at a time.

Then came what he calls one of the most perfect trades of his career: a short in MGT Capital Investments during a multi-day parabolic move in May 2016. His trigger for a parabolic short is total capitulation, volume and price accelerating to extreme levels, a rubber band stretched until it has to snap back. The aim is not to pick the exact top but to get short in its rough vicinity and let risk management handle the rest. He was stopped out for an acceptable loss the day before the top. He shorted again the next day. The stock came within twenty cents of his stop, then started to fall, slowly and then faster. He added, moving his stop down to the day’s high as he did. When the stock turned negative on the day he added again, and it collapsed.

He made about $30,000 on that one trade, roughly as much as he had made all year. The money mattered less than the proof. From that trade into the fourth quarter he made more than $300,000, and in the last sixty days of 2016 the account went from $400,000 to $1 million. He describes being in a flow state and thinking, for the first time, that he had got it.

Broken shorts: when the best short becomes the best long

At the start of 2020 Russo made his first expansion beyond short selling. By then he had mastered the short side and, from 2018, was working with a different trading partner. They agreed they were leaving money on the table on the long side, and put it to themselves this way: shorts are base hits, longs can be home runs.

The best long trades turned out to be what he calls broken shorts: stocks that looked like shorts on the news and the filings, which they either avoided or were stopped out of, and which kept going up and trapped the shorts. He knows the short setup so well, he says, that he has a strong sense of where a stock should and should not go. When it goes where it should not, there is one likely ending: an upside acceleration and a capitulation move by the shorts. The short candidate has become a long candidate.

That change required him to drop an identity. Until then he had thought of himself as a short seller, and he now calls the choice between being a short or a long trader a false dichotomy held up by ego and pride. He became agnostic about direction. A few months later Covid hit, and momentum dominated markets for the next eighteen months. He says he was in the right place at the right time.

How he tells the difference

A genuine short candidate goes parabolic. A broken short does not: it trends up gradually, no phase of the rally looks like capitulation, and any break that seems to mark a top is followed by a rebound. The specific signal to go long is a tight intraday consolidation followed by a breakout to a new high for the day.

His best heuristic is worth borrowing whatever you trade. He imagines himself as a competent, mid-tier short seller and asks where that person would place their stop. If that level is breached, particularly later in the day, everyone short is underwater, and their stops and forced liquidations become buying pressure. At that point he asks himself where he would like to go short. If the honest answer is not here and not today, it is probably a solid long.

His example is Virpax Pharmaceuticals in August 2021. The stock rallied sharply before the open on positive comments from the FDA about a preclinical drug intended to prevent transmission of viruses such as Covid. Given how sensitive the market then was to Covid treatments, he judged that this news could have a lasting effect, and the small float and clean capital structure, with no threat of dilution, made him more bullish. He went long, the stock failed, and he was stopped out. Then it rebounded to a new high, which he calls an incredible buy signal. When a market that looks very bullish first fails and stops out the longs, then reverses to new highs and traps the shorts, he reads it as the market saying go. The book’s five-minute chart marks his trades through the move.

He uses one-minute and five-minute bars for these decisions. Shorts typically last one to three days, and he treats anything longer as a warning sign. Longs are less predictable and take the time they take. His favourite trades combine both directions: ride the broken short up, liquidate, reassess, flip short once it looks like a short again, and ride it back down.

Three thousand trades, reviewed

How do you learn to see these distinctions? From the end of 2019 through 2020 and 2021, Russo and his partner analysed every trade they took and every trade they missed, including how each setup behaved at different times of day. Over those years they catalogued more than 3,000 separate trades. For each one they tried to define how it should have been traded, doing their best to ignore hindsight. They reviewed the most important trades every weekend and at the end of every month, capturing what they learned and adjusting the method. He describes the process as extremely rigorous and critical to their success. For a lighter version of the same discipline, our trading journal system is a practical starting point.

Pyramiding without adding risk

Also in 2020, Russo added pyramiding, and his version is built so that it never increases the money at risk.

On a short, after the initial entry he waits for price action that justifies lowering his stop. Most traders would use the lower stop to reduce their risk. Russo instead uses it to add to the position while keeping the total risk the same, say at 1% of the account. He repeats the process, lowering the stop and adding, until he either takes profits or is stopped out. He says it significantly increased the size of his average win relative to his average loss, and describes it as a relaxed, reactive way to trade: waiting for the market to give a signal, moving the stop, calculating how many shares he can add, and waiting again.

Our worked example, not the book’s. Take a $1 million account risking 1%, or $10,000. You short 10,000 shares at $10 with a stop at $11. The stock falls to $8.50 and the price action lets you move the stop to $9.50. At that stop your original shares would now lock in a $5,000 profit, so the trade’s risk has turned into a cushion. Keeping total risk at $10,000 means the new shares may lose $15,000 between $8.50 and $9.50, which is 15,000 shares. You now hold 25,000 shares. If the stop is hit, the trade still loses only the original $10,000. If the stock falls to $6, it makes $77,500.

Schwager calls pyramiding a controversial and often inadvisable technique that can magnify losses and turn winners into losers, and explains why it worked for Russo. He only adds once the market has let him lower the stop, so the reduction in risk funds the addition. And the particular stocks Russo shorts tend to follow through once they begin to break, which is not true of stocks in general. The second point is the one most imitators miss. Constant-risk pyramiding needs a setup that tends to trend once it starts; in a choppy market it simply buys you a larger position right before the stop.

Compare it with Lukas Fröhlich’s rule in the same book, which we cover in our Fröhlich profile. Fröhlich adds only on an independent new setup and sizes the addition to risk his open profit. Russo adds whenever the market allows a lower stop and holds total risk constant. Both rules share the core idea that an addition must be paid for by the market, not by fresh risk.

From small caps to large caps, and the meme-stock year

The next change was about capacity. His partner noticed that large-cap momentum stocks such as Tesla had started to behave like small caps. By 2021, as their size grew, they were hitting liquidity limits in small caps. Russo estimates you could make $10 million to $20 million a year there, and beyond that it was like squeezing the last drops out of a lemon.

Large caps change the work. For a stock like Tesla, SEC filings are irrelevant and there is no identifiable seller, so decisions come down to the news and the chart. That makes the analysis simpler and the trade harder. He describes the trade-off directly: small caps offer higher-probability trades but limited capacity, while large caps can absorb size but offer less edge. In large caps he waits for an obvious parabolic move triggered by a news item, then assesses the news and the technical character of the rally. Long trades are the mirror image, a capitulation: after President Trump’s tariff announcement on 2 April 2025, he points out, the market opened sharply lower on rising volume for three straight days, and after a selloff like that it is reasonable to expect at least some mean reversion. If he is early, his stop protects him and he can try again. Capitulation buys, he says, are few and far between; capitulation shorts are much more common.

His biggest trades of 2021 were shorts in meme stocks, the parabolic names popularised by retail traders on social media.

The GameStop short is instructive because he says plainly that he broke his own rules to make it work. Any reasonable stop from a short at around 350 would have been hit well before the stock reached its high. He held on, deeply uncomfortable, believing a collapse was around the corner. He tells Schwager it was one of those times you have to know when to break the rules, and Schwager points out that Ed Seykota said something similar in the original Market Wizards. Russo is honest about the rest: he would not recommend his actions as a guideline and would not do it the same way again. It was a grey area, and it worked. A trader who reads that passage as permission to hold a losing short through the stratosphere has missed the more important sentence.

$50 million, twice

Schwager notes that Russo’s equity curve has risen remarkably smoothly since late 2015, with one glaring exception: a drawdown between late 2023 and early 2024. It came from two trades, each of which cost about $50 million.

The SPY short

The first was a short in SPY, the broad US index, which is not the kind of trade he normally does. When the market panicked to new lows in October 2023 he went long for a mean reversion and did very well on the rebound. When the rebound carried almost back to the previous high, he thought he could get another mean reversion the other way and went short. By his own account it was not a strategy-based trade but a stupid trade born of overconfidence. He had been up about $50 million for the year. He was very heavily leveraged, thinking about his profit and loss rather than the chart, and never asked whether he should even be in the trade. He stayed short as the market ground higher, and got out when the S&P 500 made new highs for the year, by which point it was obviously a broken short. The loss was about $50 million, roughly his profit for the year.

The Carvana short

The second was a short in Carvana, a typical parabolic short in a mid-cap stock of the kind he does often. He went short one stage too early and rode it all the way up, until the moment he told himself he did not care that he was down and it was time to add. That was the top. He got out at breakeven three months later, after being down $30 million at the worst point.

Then the stock rebounded and he shorted it again without checking whether it met his criteria. Worse, he did not set a risk budget, which would have held the loss to about 1%. His diagnosis is that he had become attached to the ticker. Carvana reported earnings after the close; the stock, which had closed at $52, gapped up to $67 after hours. He was short two million shares and was down another $30 million within minutes. The next morning he bought 250,000 shares at a time until he was out. He locked in a loss of around $50 million, and says it felt liberating.

Our arithmetic, not the book’s. Two million shares multiplied by the $15 gap from $52 to $67 is $30 million, which matches the figure Russo gives. The book adds an editorial note that Carvana kept rising after he covered, reaching a high of $292 a year later, and that holding the position would have wiped him out. On the same two million shares, the move from the $52 close to $292 is another $480 million, more than his account was worth.

He mentions that a family health issue at the time may have affected his trading. Schwager draws the obvious parallel. Both losses look exactly like the blow-ups of his early career, shorts that kept going up and that he did not get out of. The difference this time was only that his account was big enough to survive them.

Stepping back, and the paradox that followed

In May 2022 Russo had what he calls a profound realisation that his heart was no longer in trading, and that his real work was still ahead of him. He went on a sabbatical to look for it, and since then trading has taken about 10% of his time. He hired an analyst who shares his understanding of markets and hates trading because it is stressful, but loves research, and who alerts him when a trade needs his attention. Russo comes in when there is easy money.

The catalyst was personal. In 2021 he and his partner had been doing extremely well, working from early morning until night, and the hours took a heavier toll on his partner than on Russo, who describes himself as a workaholic who is energised by working nonstop. They had a bitter falling-out. For about a year afterwards he researched and traded alone and found it joyless. He had taken more money out of the market in the previous eighteen months than he had ever imagined, and remembers thinking that he had just made $150 million and was not even enjoying it. He was also in a four-year relationship that was not good for him, and he felt the same weight in both. On a retreat he asked himself what brought him joy, and the answer was no longer the market, or the relationship.

Hubris, and then the best fourteen months of his career

Russo connects the two $50 million losses to the step back. In the first eighteen months after reducing his hours, from 2022 to mid-2023, he did extremely well. His assumption had been that putting in 10% of the time and making 50% less would be a good trade for getting 90% of his time back. By mid-2023 he had made more than he did when trading full-time, and it bred overconfidence and hubris. His description of the result is blunt: strategy drift, overconfidence, and trades outside his expertise.

Then the paradox. The fourteen months before the interview were the best of his career: well over $200 million, doubling his cumulative career profits, while he was largely removed from the market except when his analyst flagged something. On our arithmetic, that means roughly half of everything he had made in about nine years arrived in just over one, so the average annual return describes the whole arc rather than a typical year, much as with Lance Breitstein’s record. He offers three explanations, and they are more honest than most traders would give.

First, luck. The market has been extremely favourable to his strategies, and in another version of events opportunities could have been scarce, leaving him with, say, $10 million instead of $200 million. Second, arithmetic. He sizes risk as a percentage, between 0.5% and 2% per trade, so the dollars grow with the account. At $100 million, risking 1% means $1 million at risk and roughly $2 million on a typical winner; at $300 million the same trade risks $3 million and makes roughly $6 million. Third, what he describes as the Buddhist idea of non-attachment. He has arranged his life so that he does not care whether the market offers opportunities. He gets on with other interests, and only when his analyst raises the alarm about an obvious opportunity does he step in, a habit he links to a remark by Jim Rogers in the first Market Wizards about waiting until the money is lying in the corner. He admits he still looks at the market almost every day, which he finds annoying given the businesses and staff he manages, and that the months after the November 2024 US election were so busy that he looked more than usual.

The $120 million postscript

After the chapter was written, Russo contacted the authors to say he had just been through the largest drawdown of his career, and that he wanted to be transparent because he did not want to give the impression that he never makes mistakes. His account of it is the most valuable page in the chapter, because every mistake in it is one he had already paid for as a teenager.

It was an extended mean-reversion short, the kind of trade he often does, but not an A+ setup, so he took less risk: 0.5% of his equity, a little over $2 million. For the first few days it moved modestly his way. Then it rebounded and hit the stops on three-quarters of the position.

At the peak he began to panic, imagining a GameStop-style 100% gap that would bankrupt him, and realised he should never have allowed himself anywhere near that possibility. Then the stock began to break. The next day, with about $60 million of unrealised loss still on the books, he felt the high was in and that he was back in control. He held the short a few more days and covered for a $15 million loss, which felt like enormous relief. Over the next few weeks some A+ setups produced large wins and his equity reached a new high.

Our arithmetic, not the book’s. If 0.5% of equity was a little over $2 million, the account was a little over $400 million. The final $15 million loss was roughly seven times the risk he had budgeted. The $120 million peak was roughly sixty times it, and something like a quarter to 30% of the whole account, on a single position that he had sized as a lower-conviction trade.

His own reflection is unsparing. Luck and randomness played a huge role; had he been more stubborn on some other losing trades, or had this stock kept accelerating, his career could have been over. He compares himself to a climber scaling a cliff without ropes who, in some parallel universe, either fell to his death or survived with both legs shattered; either way the climbing career was finished. He chose the thrill over the rope, speed over stops, and ego over exits. The whole thing, he notes, began with one small decision, and snowballed.

The new rules

This time the drawdown did change his risk process. It was his biggest ever in dollar terms, and he asked himself why he was allowing himself to get even a tenth of the way to endangering his account. His conclusion is that relying on willpower in trading is like a recovering alcoholic keeping a bottle of whiskey on the kitchen counter to test his discipline. The smart solution is not to fight temptation but to design systems that remove it. For a long time he had relied on mental stops. No more.

The design is worth copying at any account size, because it answers the one question every blow-up in this chapter raises: what happens when the trader is the problem? Each layer assumes the one before it may fail. The tiered cuts assume the trader will not act. The alert assumes the order may not fill. The panic override assumes a gap may skip the stop entirely. You do not need Russo’s platform to borrow the idea: decide in advance at what multiple of planned risk you will cut half, and at what multiple you will cut the rest, and set those orders when you enter. Our position sizing guide and our piece on managing drawdowns professionally cover how to set the numbers.

What he thinks made the difference

Asked what separates him from most people, Russo names three traits and credits himself with none of them. The first is an unusual ability to stay calm; from a young age he has handled stressful situations without getting stressed, and he says he did nothing to deserve it. The second is focus, not just on a task for three hours but on large goals for months and years without being pulled off course. The third is a genuine love of the craft. Reading SEC filings was never a slog for him; finding a small nugget in a filing fired him up. He thinks these traits are largely genetic, and cites James Clear on the idea that the greatest genetic advantage may be the temperament to compete, to focus and to enjoy practice.

He does not believe hard work is enough. Someone grinding out ten-hour days can easily fail without the other ingredients, and he thinks there is wisdom in knowing when to quit; he has seen traders who would have saved themselves years of pain by setting a deadline for full-time trading and stopping if they had not worked it out. His estimate is that fewer than 5%, perhaps as few as 1%, of people who try trading achieve long-term profitability, and he asks what makes a reader think they are in that minority. That figure is his, not a statistic the chapter sources, but the question stands regardless. He calls the idea that anyone can do what he did nonsense, adding that if you are short you will not play in the NBA, and describes himself as a complete anomaly whose success owes a great deal to biology and environment.

His advice, in short

Russo’s closing advice runs to six points. Be reactive rather than predictive: surfers do not force waves, they wait for the right one. The best trades show up in front of you and look almost too good to be true; if you know your strategy, there is no catch. Build your own method: in 2016 he did an exercise he calls, with some embarrassment, Robo-trader, listing the traders he admired and the traits that made them good, and assembling a composite role model from the ideas that suited him rather than copying anyone’s whole method. His warning to readers is that they are not him, and should take elements and find their own path. Trading is probabilities and tail risk is always close by; he recommends Nassim Taleb’s The Black Swan and Fooled by Randomness. Trading is fragile: every blow-up and every large drawdown he has had began with one small, apparently meaningless decision that compounded. And strive for the best outcome while keeping your identity and happiness separate from what happens, a principle he draws from Buddhist, Stoic and Hindu traditions.

Mind, Method, Money

Russo is the clearest case in the book of a trader whose Method was sound long before his Money discipline caught up, and whose Mind explains both.

The pattern is identical to what we saw with Breitstein and Fröhlich: the rules were known, and something in the trader overrode them. Russo’s answer is the most mechanical of the three, to take the decision away from himself entirely. Our overview of the three pillars explains why the pillars fail together.

◆ Further reading

Greatest Traders

Eighty-six lives read through Mind · Method · Money, from Livermore reading a chalkboard in 1892 to the traders still working from those ideas today. Told as they happened, with the losses left in, and every quotation traced to a source.

Read the Book Page →Buy on Amazon →

The counterweight

Four things belong beside the record.

Only the authors can vouch for it. Schwager says the results were verified in the same way as every other trader in the book, and we have no reason to doubt that. But anonymity means nobody else can check anything: not the record, not the history, not the details of the trades. For other traders in this series, public records, interviews and filings provide some independent cross-reference. For Russo, the chapter is the whole of the evidence. Read it with the trust you give the authors, because there is nothing else to give it to.

He had a safety net most traders do not. His father funded or lent him trading capital four times, allowed him to trade his own account, and paid for two years of college. Russo repaid it, and his discipline in doing so is admirable. But four blow-ups are survivable when there is a family behind you; for most people the first one is the end. The chapter’s title is inspiring. Its arithmetic depends on a runway most readers do not have.

The early edge belonged to its era. By his own account, he and his partner were among the first traders to understand how dilution sets up selling in small caps, and the information is now far more widely available. He insists the strategy still works, citing a trader he mentors who trades his money with it, and his point that few people will understand it and fewer have the temperament to run it is well taken. But he also stopped trading small caps two years ago because a successful trade there is now worth perhaps $500,000 to him. It is still an edge, but no longer one that could produce his record.

The discipline problem was never fully solved by discipline. This is the most important counterweight, and Russo supplies it himself. The same pattern of a short going against him, a refusal to exit and additions to a loser appears in 2014, in 2015, in late 2023 and again in the postscript, with a $400 million account and a decade of success behind him. It took a $120 million drawdown to make him hand the decision to software. If it took that long for someone with his temperament, a reader should not expect willpower to do the job for them.

What actually transfers

Separate selection from execution. Russo’s blow-ups were rarely bad executions of good trades. They were trades that should never have been selected. Write your selection criteria down, and treat a trade that fails them as a mistake even if it wins.

Find the minute the move began. His first question on any mover is why, answered by finding the exact minute the rally started and whatever was released at that moment. If you cannot explain a move, you do not understand the trade.

Learn to recognise a broken setup. When a trade you expected to fail refuses to fail, the trapped traders on the other side may be your best signal. Ask where a competent opponent would have their stop, and what happens when it is hit.

Pyramid only with the market’s money. Add only after the market lets you move your stop, and keep total risk where it started. If a stop cannot be moved, there is nothing to add.

Be most careful after your best stretch. Almost every large loss in this chapter followed a period of exceptional results: the $550,000 run, the complacency before the 2014 losses, the hubris of 2023. Schwager’s lesson is simple: beware of getting overconfident and sloppy after exceptional performance.

Automate the exit you know you will not take. Decide the multiple of planned risk at which half the position goes, and the multiple at which the rest goes, and let orders do it. Russo’s whiskey-on-the-counter line is the whole argument.

Frequently asked questions

Who is Simon Russo?

Simon Russo is the pseudonym of the trader profiled in chapter three of Market Wizards: The Next Generation (2026) by Jack Schwager and George Coyle. A musician who studied composition before dropping out to trade, he blew up four accounts before starting again in late 2015 with $40,000, which he turned into more than $500 million of cumulative profits over the following decade. His real identity is protected by an eight-page non-disclosure agreement with the authors.

Is Simon Russo a real person?

Yes, but it is not his real name. The authors say they verified his trading results in the same way as every other trader in the book, and describe this as the first full Market Wizards chapter built around an anonymous subject. Other people online with the same name are not, as far as the chapter tells us, the trader in the book.

What is Simon Russo’s net worth?

No figure exists, and because he is anonymous none can be checked. The chapter documents over $500 million of cumulative trading profits since late 2015. From a sizing detail in his postscript, our own arithmetic puts his trading account at a little over $400 million at one point. He directs much of his wealth to an anonymous philanthropic foundation working on climate, the environment and education.

What is Simon Russo’s trading strategy?

He began by shorting small-cap stocks that rallied on meaningless news while facing likely dilution, identified from SEC filings, cash positions and capital structures. From 2020 he added broken shorts, stocks that looked like shorts but kept rising, as long trades; constant-risk pyramiding; and large-cap momentum stocks, where he trades parabolic moves and capitulations on the news and the chart. He risks 0.5% to 2% of equity per trade depending on setup quality.

What were Simon Russo’s biggest losses?

Early on, he lost $550,000 in 2015 on a short meant to make $2,000. Later, two trades between late 2023 and early 2024 each cost about $50 million: a short in the S&P 500 ETF and a short in Carvana. In a postscript to the chapter he describes his largest drawdown ever, a peak of $120 million on a short where he had budgeted a little over $2 million of risk, finally covered for a $15 million loss.

Which Market Wizards book is Simon Russo in?

Market Wizards: The Next Generation (Harriman House, 2026), chapter three, “The Fifth Time Is the Charm”. The book also profiles Kristjan Kullamägi, Lance Breitstein, Lukas Fröhlich and Kelvin Chiu. Our review of the book covers the full cohort.

Sources and further reading

Primary source: Jack D. Schwager and George Coyle, Market Wizards: The Next Generation (Harriman House, 2026), chapter three, “The Fifth Time Is the Charm”, including Russo’s postscript and the closing notes from both authors. All figures, trades and dates above are drawn from that chapter. Calculations and worked examples explicitly labelled as ours are our own derivations or illustrations, not figures the book publishes. Simon Russo is a pseudonym; Complete Trader’s Edge has not attempted to identify him and has not audited any of the underlying trading statements.

Continue Learning

• Lukas Fröhlich: An Audited 1,132,045% Year, Then Three Different Strategies
• Lance Breitstein: $46 Million at Trillium, $71 Million on His Own
• Kristjan Kullamägi (Qullamaggie): The $105 Million That Lasted a Few Days
• Kelvin Chiu: The Commodities Trader Who Made Asymmetry His Edge
• Market Wizards: The Next Generation Book Review (2026)
• Jesse Livermore: The Greatest Speculator Who Ever Lived
• Risk of Ruin: The Mathematics Every Trader Must Understand
• The Psychology of Losing
• Position Sizing: The Most Important Decision in Every Trade
• The Three Pillars: Mind, Method, Money
• The Complete Trader’s Edge – The Book

Keep Reading

The Complete Trader's Edge The full Mind · Method · Money framework. 70 chapters. View on Amazon → Market Mayhem 400 years of bubbles, crashes, and the pattern that keeps repeating. Buy on Amazon → Greatest Companies How the world's greatest companies were built — and what traders learn from them. View on Amazon → Greatest Traders Eighty-six lives that explain the markets — Livermore to Madoff, told with the losses left in. View on Amazon →

Written by

Louw van Riet

Author · Trader · Coach

Louw is the author of The Complete Trader's Edge — a 70-chapter trading framework covering psychology, technical analysis, ICT concepts, and professional risk management. He has spent years studying institutional price action across forex, indices, and crypto, and built this platform to provide the complete, honest trading education he wished existed when he started.

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