Randy McKay: The Veteran Who Made Position Sizing His Edge

Last reviewed: August 2026. Sources: Jack Schwager’s The New Market Wizards and public records.

Randy McKay came home from Vietnam wanting to be a clinical psychologist. What fascinated him was the psychology of greed and fear — and it turned out there was no better laboratory for studying it than a trading floor. Through his brother, a floor broker at the Chicago Mercantile Exchange, he took a borrowed seat and $2,000 into the newly opened currency futures market. Seven months later that $2,000 was $70,000.

The fast start is the eye-catching part, but it is not why Schwager profiled him in a chapter simply titled “Veteran Trader.” The reason is what came after: a twenty-year record of profits in eighteen of twenty years, carrying him from a few thousand dollars to tens of millions. McKay is the Wizard who proves that longevity, not a lucky streak, is the mark of a real trader — and that the thing separating the two is almost entirely money management.

A borrowed seat and $2,000

McKay returned from Vietnam in 1970 and, through his brother Terry, took a job as a runner on the CME floor so he could attend night school. He wanted to study psychology. In 1972 a full membership seat cost around $100,000, so becoming a floor trader looked impossible. Then the exchange launched currency futures on the International Monetary Market, and seats for that new market sold for a fraction of the price — existing brokers, his brother among them, received them essentially for free.

McKay took his brother’s spare seat and $2,000 in capital and started trading part-time. The new market was so quiet in its early weeks that he made only a couple of trades a day. Even so, the $2,000 grew to $70,000 in seven months. He had found not just a job but a calling, in a market thin enough that a disciplined newcomer could genuinely compete.

Over the next two decades he moved from the floor to trading at home to managing money, staying profitable through all of it. His single losing stretch came in 1986, when he switched from the floor to trading from home and had to relearn his craft in a new environment. He adjusted, and the record continued.

The method: trade the middle, size to your conviction

McKay was a discretionary trader who read the market’s behaviour rather than following a fixed formula. Several principles ran through everything he did.

He did not try to buy bottoms or sell tops. His aim was to capture the fat middle of a trend, where the move is established and the odds are clearest, and to leave the turning points to others. He also evolved with the market: he once liked buying breakouts, but as professional traders came to dominate, he found that the breakouts which worked began to look identical to the ones that were traps. He adapted, learning to buy into breaks and sell into rallies rather than chase the crowd.

Crucially, he used fundamentals in an unusual way. He did not care whether the news was bullish or bearish in the abstract; he cared how the market responded to it. When a market failed to fall on bad news, or leapt on a headline, that reaction told him more than the headline itself. His famous 1976 British pound trade turned on exactly this: while others sold the pound because the government had capped it, McKay read the price action as a market pinned and straining upward, and positioned for the break.

The defining lesson: never let a loser get out of hand

Ask McKay for his most important advice and the answer was about survival, not profit. Never let a loser get out of hand. You want to arrange your risk, he said, so that you can be wrong twenty or thirty times in a row and still have money in your account. If a single loss can seriously hurt you, you are not trading — you are gambling.

Two habits enforced this. The first was getting out fast: when a trade hurt him, he got out, and he insisted that if you cannot put a loss out of your mind, you cannot trade well. The second was drastic variation in position size. When he was in sync with the market and winning, he pressed, trading larger. When he was losing or out of rhythm, he cut his size hard. His risk expanded in the good periods and shrank in the bad ones — the exact opposite of the instinct to bet bigger to win back a loss. That single asymmetry is much of what kept him profitable for eighteen of twenty years.

Where the Mind · Method · Money framework meets McKay

Method is his discretionary read: trade the established middle of a trend, buy breaks and sell rallies rather than chase, and judge markets by their response to news rather than the news itself. It is feel refined into principles, not a mechanical system.

Money is where McKay is a master and the heart of his legacy. Sizing so you can be wrong dozens of times in a row, cutting losers immediately, and varying position size drastically with your performance is one of the clearest risk frameworks in the entire series. He would say, flatly, that money management matters more than method.

Mind is the psychology he originally set out to study. Letting go of a losing trade completely, staying honest about when he was and was not in rhythm, and choosing an approach that fit his own temperament are all mental disciplines. He understood that the enemy is usually internal.

The honest counterweight

McKay’s record is real and admirable, but the path he walked cannot simply be copied, and it is worth being clear about why.

His edge was forged in a vanished world. Currency futures in the early 1970s were brand-new and thin, populated by inexperienced participants, and a sharp newcomer could thrive. McKay himself noticed the change: the breakouts that once worked came to look like sucker plays as professionals took over. The specific patterns he exploited have decayed, and the open-outcry floor where he absorbed his market feel no longer exists. The transferable lesson is that markets evolve and you must evolve with them — not that his exact tactics will work now.

His skill was also discretionary intuition built over twenty years of direct floor exposure. That kind of feel cannot be downloaded from a book; it was earned in an environment few traders will ever experience. The headline of turning $2,000 into $70,000 in seven months carries a whiff of survivorship, too — countless floor traders started the same way and were wiped out. The durable, unglamorous truth is the eighteen-of-twenty-years consistency, not the fast early score.

And even his signature tactic has a catch. Betting bigger when winning and smaller when losing is sound, but it depends on honestly judging when you are in sync with the market — a judgment that is easy to get wrong, and one that can quietly inflate your size into a hot streak just before it ends. The principle is right; applying it demands the self-awareness McKay spent a career developing.

What to actually take from Randy McKay

You do not need a floor seat or a 1970s currency market to use what McKay taught.

First, size for survival. Arrange your risk so that a long string of losses cannot take you out. If you can be wrong many times in a row and still have capital, you will still be trading when your edge returns.

Second, vary your size with your results, not against them. Press when things are working; cut hard when they are not. Never increase your position to win back a loss — that is the instinct that ends careers.

Third, get out of losers fast, and then let them go. A trade you cannot mentally release will poison the next ten decisions. Cutting the position is only half the job; clearing your head is the other half.

Fourth, watch how markets respond to news rather than the news itself, and aim for the reliable middle of a move instead of the glory of the exact top or bottom.

Frequently asked questions

Who is Randy McKay?
Randy McKay is a discretionary currency and futures trader profiled in Jack Schwager’s The New Market Wizards in a chapter called “Veteran Trader.” He built a twenty-year record of consistent profits, turning a few thousand dollars into tens of millions.

How did Randy McKay start trading?
After returning from Vietnam, he worked as a runner on the Chicago Mercantile Exchange floor through his brother. When the exchange launched currency futures in 1972, he took a low-cost seat and $2,000 in capital and turned it into $70,000 in his first seven months.

What was Randy McKay’s trading strategy?
He was a discretionary trader who aimed to capture the middle of established trends, bought breaks and sold rallies rather than chasing breakouts, and judged markets by how they responded to news rather than whether the news itself was bullish or bearish.

What was Randy McKay’s most important rule?
Never let a loser get out of hand. He believed a trader should size risk so that being wrong twenty or thirty times in a row still leaves money in the account, and he got out of any trade that hurt him immediately.

How did Randy McKay use position sizing?
He varied his size drastically based on performance — trading larger when he was winning and in sync with the market, and cutting his size sharply during losing periods. He never increased size to recover a loss.

Can a modern trader use Randy McKay’s approach?
His exact tactics were shaped by the thin, inefficient markets of the 1970s and by floor experience that no longer exists. But his core principles — survival-first position sizing, cutting losers fast, and adapting as markets change — are timeless.

Which book features Randy McKay?
The New Market Wizards (Jack Schwager, 1992), in the chapter “Veteran Trader.”

Continue learning

• Michael Marcus — a fellow early trader who turned a tiny stake into a fortune in the same era.
• Larry Hite — the wizard who shared McKay’s creed of surviving being wrong many times over.
• Monroe Trout — another master of keeping drawdowns shallow through disciplined risk.
• Bill Lipschutz — the currency Market Wizard who, like McKay, made his name in foreign exchange.
• Market Wizards (book review) — our breakdown of the Schwager series McKay appears in.
• The Mind · Method · Money framework — the lens we use to read every trader on this site.