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I wish software vendors would start every presentation with this story.
I hope to re-print this at Futures West...OK?
-----Original Message-----
From: Timothy Morge <tmorge@xxxxxxxxxxxxxxx>
To: Neal T. Weintraub <thevindicator@xxxxxxxxxxx>
Cc: cpbow@xxxxxxxxxxxxx <cpbow@xxxxxxxxxxxxx>; omega-list@xxxxxxxxxx
<omega-list@xxxxxxxxxx>
Date: Monday, August 03, 1998 6:33 AM
Subject: Re: Trading as a way to financial success (a reply)
>Neal:
>
>When I read a post here from someone talking about their $6000 trading
account,
>it makes my stomach hurt. That money will be gone. Period. Being under
>capitalized is a sure trip to a closed account. I know people think that
they
>have to make money and that futures traders make lots of money, ergo: they
will
>trade futures to make lots of money. But trading futures when you are well
>capitalized is extremely difficult; when you are under capitalized, it's
>basically impossible.
>
>I read this gentleman's brave admission and recount of his journey into
futures
>trading and unfortunately, it hit very close to home for me. My older
brother
>lives quite a ways away from me and called me one day to ask me what data
vendor
>I use and how much they charged. When I told him, he asked if there was a
>cheaper way to get daily prices, and so I told him about an end of day data
>vendor--still too expensive. Then he hit upon getting a daily Investors
Business
>Daily or Wall Street Journal. So I asked him what he was doing: He had
purchased
>Ken Roberts trading course and was about to start trying to trade! After
all,
>his little brother has been making a great living for years and years
trading...
>
>I was at a quandry here. I wanted to help him, but I didn't want to insult
his
>intelligence. I asked him if he was paper trading and he was. I asked him
if he
>had done well and he said it was mixed and he didn't plan to trade until
the
>results improved. I told him to call me if he needed more information or
had any
>questions.
>
>The next call came a few weeks later. He wanted a broker and wanted to know
what
>I paid in commisions. He had called one the course listed and they wanted
$99 RT
>and he wondered if that was a good rate for a $5000 account. I didn't know
where
>to start. I wanted to tell him that he should take the $5000 and buy a bond
>or...but not wanting to offend him, I helped him poke about for a useful
broker
>that wasn't near as expensive and was not affiliated with Ken Roberts.
>
>The last shock came when he called to ask me about rolling an Orange Juice
>contract. For the answer to this question, I faxed him a chart of the last
OJ
>trade I made: I was [naively] long 10 OJ in the early 1990's into a crop
report.
>I remember that I was so ignorant, I was out with my wife shopping when the
crop
>report came out that afternoon. The report was expected to show something
like
>175 million boxes and instead came in at 136. When I got home, my broker
had
>left about ten messages, and the first one was something like,
"Congratulations!
>Only you and the Smithsonian have any oranges!" I still didn't get it. Next
>message: "Juice will be limit a few times tomorrow." Now I started to get
it.
>The next day, Juice opened limit up and we sat through five more limits. At
that
>point, I took my profit by spreading out a back month.
>
>Now most people might have been happy with that profit, and in one sense, I
was
>very happy. But after the glow of the trade faded, I realized that I
*might*
>have been short into that report and when I thought of the loss I would
have
>been exposed to, I nearly threw up my lunch. I haven't traded OJ since. And
now
>I had my brother on the phone and he was trying to trade OJ with a $5000
>account...
>
>I explained it best I could and we went over the charts and the risks. He
told
>me there was a crop report out in two days [I was glad he at least knew it
was
>oming out] and he asked me if I thought he should get out. I managed to
stammer
>that, yes, I thought he should be flat into the report. And I then asked
him if
>he looked at any other markets. I spent as much time as I could talking to
him
>about markets like soymeal, mid-am currencies and grains and bonds-markets
>better suited to his capital levels. And I went through my library and
started
>sending him books and tapes of an educational nature.
>
>I think it's hard for those of us that do trade for a living to realize
just how
>unrealistic the view people outside the business or even on the fringe of
the
>business have. I don't know how we can better help people that are new to
>trading have a realistic view and approach, but because trading has
provided me
>with so much, I feel a responsibility to do so.
>
>Tim Morge
>
>
>
>Neal T. Weintraub wrote:
>>
>> Thanks for your response.
>> I wish more people were this direct. People tend to think all they need
is
>> software and a system and they are on their way to Easy Street with Easy
>> Language. Hey, maybe that could be a new slogan...Easy Street with Easy
>> Language.
>> You know when you consider that the Vanguard Funds are up nearly 100% in
>> three years, it is hard to understand why people even fall prey to
commodex.
>> The Merc has a course called before you trade. But I can tell you this.
>> Anyone with less than 20,000 in trading cash should not be in Futures.
>> Period. End of Story. I am tired of hearing about people saving $7500,
then
>> buying software for $3500 and using the balance to trade.
>> And anyone with more than $10,000 in credit card debt can never trader
>> themselves out of debt.
>> Take the $7500.00 and buy a vending route.
>> -----Original Message-----
>> From: Conrad Bowers <cpbow@xxxxxxxxxxxxx>
>> To: Neal T. Weintraub <thevindicator@xxxxxxxxxxx>
>> Cc: Omega List <omega-list@xxxxxxxxxx>
>> Date: Sunday, August 02, 1998 3:23 PM
>> Subject: Trading as a way to financial success (a reply)
>>
>> >Neal T. Weintraub wrote:
>> >>
>> >>
>> >> wHAT DO YOU THINK OF TRADING AS A WAY TO FINANCIAL SUCCESS.
>> >> PLEASE POST YOUR RESPONSE TO THE LIST.
>> >>
>> >
>> > For a minute I thought this was a joke (in light of my very recent
>> >post) but I believe it's not so here goes:
>> >
>> > I think you have to have a method that actually makes money and the
>> >capital to withstand the drawdowns that will occur before you succeed.
>> >That makes it not a very good way to go for someone of limited means or
>> >anyone who is emotionally attached to money. The brochures that say,
>> >we have a great system, and then show it on 20 commodities, often go on
>> >to say, "you can trade this on a more limited portfolio with $5000".
>> >Even tho they may have been honest in their testing, I believe the
>> >chances of the smaller portfolio having acceptable results is much
>> >lower. Primarily because the drawdown numbers for a smaller portfolio
>> >will be more prone to being inaccurate or the portfolio "cherry picked".
>> >
>> > It's not the easy street it's made out to be either. Unless it's a
>> >small portion of your net worth and NOT your way of making a living,
>> >it's hard to see how it could not be anything but stressful to some
>> >degree.
>> >
>> > For many of us who have other careers, it can become a second job in
>> >itself, maybe even supplanting our original one. In effect my original
>> >goal to pay off some debts has become a goal to succeed in trading. And
>> >that goal has distracted me quite a bit from my first career. I can
>> >tell you why I don't like my current job, but was the transition to
>> >spending a lot of time on trading well thot out? Nope, it evolved. For
>> >those of us who seek to make a transition (or by default are making the
>> >transition) from our current career to trading as a means of making a
>> >living or being sucessful, maybe we should step back partway along the
>> >way and ask, was this the right thing to do?
>> >Even if it was a means to $ sucess for an individual with another
>> >career, it might not be right for them. I guess everyone has to ask
>> >themselves what success is.
>> >
>> > Also I think your emotions have to favor you being in it. If you have
>> >conflicting feelings about it, it's less likely you will succeed.
>> >Recently, I built up my small account from about 3K to 6K, patiently
>> >grinding out small losses and a few larger wins in options and
>> >mini-contracts. But a number of emotionally charged issues have come
>> >up, at times introducing frustration, discouragement, and even guilt
>> >into my thoughts. After being rigorous (perhaps too much so) about
>> >kicking back options that werent' making money, I suddenly stopped
>> >looking at options i had altogether, same with most potential new
>> >positions. What was going on? The only thing I can think of, is that
>> >my ambivilence about some of my decisions, including getting into
>> >trding, was being manifest by actions that might take me out of it. I
>> >used to scoff at some of the stuff in M. Douglas book about how you may
>> >defeat yourself - seemed crazy, why would anyone do that? But now, I
>> >think I've seen it in my own trading.
>> >
>> > In short then I think it is a way to financial success for a few people
>> >- The ones who either find a method and/or have the talent to succeed
>> >in this field. It's a low-probability route for someone who does not
>> >have a fair amount of capital already. I think its a way to financial
>> >success for someone who:
>> >
>> >1. has a positive expectation system or talent, and has confidence in
>> >it.
>> >
>> >2. has the capital to back that up.
>> >
>> >3. has a risk mgmt plan consisntent with 1+2.
>> >
>> >4. Doesn't have conflicting emotions about the money at risk; doesn't
>> >have conflicting emotions about other issues or people that are in any
>> >way impacted by the decision to trade.
>> >
>> >
>> >What % of people in this crazy arena do you think have all 4? For those
>> >it's a good way to financial success. For the rest, nope.
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