There is one story often told by Russell Conwell of a farmer in India who sold his farm and everything he own in search of a Diamond mine that would make him rich. After much search, eventually killed himself at not realizing his life-long dream. Meanwhile the farmer, who bought his farm, serendipitously found that the farm had within it the diamond mine of Golconda, the most magnificent diamond mine in all the history of mankind. The first farmer, without knowing, owned and sold “acres of diamonds”.
I am not one to believe that staying at home and toil day after day necessarily turns into wealth. I am one to travel, to learn from others and to explore uncharted territory. But the story does imply that there is within us the seed of great success, if only we would give ourselves credit we so readily give to others. That armed with our powerful human brain, we have the chance of success if only we learn out to use that power. Indubitably, the first Indian farmer could have first educated himself on how to recognize a diamond in the rough, and learn all there is to learn about diamond mining before going out and exploring other lands. How often are we so ready to take someone else’s advice instead of keeping our own council?
Back in the 90’s I knew that Options were probably the instrument I needed to invest safely and extraordinarily profitably in the markets, and thus, they were likely my ticket to reaches. In the early 2000’s I went through a dark period in my life, full of doubt and will little hope, for a combination of reasons that are irrelevant to this discussion. I went in search of help. I paid for very expensive seminars, which only added to my fear of failure as I was unable to reproduce the success claimed in such seminar. I continued my search with the illogical faith still remaining in me. I continued to trade, I continued to read, and even bought a trading system or two in the search of the elusive “perfect trade”, for my acres of diamonds. Some even called it the “Holly grail of trading” and claim it does not exist.
Some of you may have come to this web site in the search of the acres of diamonds or the Holly grail of trading. Beware, because I can only teach you what has worked well for me, but my approach may not suit you at all and cause you even more frustration. I never give advice on what to do on specific situations because you may actually have a better answer than I do. So if I told you what you should be doing, which may turn out to be the wrong thing to do, you would not know what to do next. You really need to train yourself. If you have already paper traded sufficiently and back tested your system sufficiently you probably feel somewhat overwhelmed by the risk of actually putting money on the line. You may even have some fear that if it does not work for you, your dreams of wealth will go up in smoke. All I can say is that if you stay with it, with faith more than hope, you will see your success come to you, unexpected in common hours. Here are some rules to live by for the beginner:
1. Don’t just do what everyone else is doing, because that is not the best way, it is merely the average way. Search within your very own and most powerful mind and find the answers that suit you and no one else. If you think that what I have presented you with works for you then by all means, implement it in your own trading, but if you think you can do better, don’t hesitate to experiment.
2. Limit your risk to precisely 2% of your account on each trade. The importance of any individual trade will be so minimal that you’ll lose your fear of pulling the trigger and give it a chance to work. It is important that you use real money to trade your ideas because neither your ego, nor your money are involved in paper trading. Trading real money will accelerate the learning process.
3. Start with a $10,000 with $200 at risk in every trade. This will be challenging, as it is hard to find such cheap trades. But it you create the discipline of finding such trades, then you are going to be able to place the trade and forget about them, let the work or fail without your intervention. Your responsibility will be limited to finding the trades, not so much manage them.
Trusting yourself and give others no more credit than you give yourself is the basics of this secret of my success.
http://www.americanrhetoric.com/speeches/rconwellacresofdiamonds.htm
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4 comments:
Hi Juan,
I understand what you are saying, and more importantly I understand why you are reluctant to address specific trades. I would never want you to be a Cramer.
You are obviously very intelligent and I respect intelligence. My situation is that I am that farmer walking around staring at diamonds and not knowing which is a diamond and which is a rock. The big difference with me is that I do in fact know some are diamonds and others are rocks. I just don't have the confidence or skills yet to identify them correctly. I appreciate your candor and in the future I wont ask you specifics on trades. In retrospect I see how that was irresponsible of me and I apologize.
I am on a mission to find a trading style that fits me. I tried day trading but after 3 days it seemed more like a chore than anything I wanted to do. Swing and Elliot Wave trading are more my style. I have had limited success and that alone is encouragement to pursue this style. Now I feel that combining options with this method to increase leverage and reduce risk is what attracted me to your style.
I have listened to all the trader interviews and after hearing yours I finally said to my self now that seems like something I could do.
So I continue my education and I will be using your videos and comments here as a foundation for the style I ultimately call my own.
Thanks again,
Tony
Tony, thanks for your comments. There is nothing you need to apologize for, I am only honored that you have chosen to come visit my web site and ask questions and make comments.
The "secret #5" is meant to assure you that if you truly believe, you will find our own way. Trust that you are in the right path, and that much of what you'll need is within you.
IF you don't feel that you are making progress right now, imagine my own journey from 2000 to 2005, when I was not making much progress at all, but I know that my system will serve me for the rest of my life, thus it was a worthy pursuit.
I would not mind telling you what I think about an individual trade. However, I DO believe that no one really, really knows, so it is entirely up to you to pull the trigger and be ready, at the very least, to learn from the experience.
When I started this blog I used to say "I am not a guru", merely a student wanting to learn as much as the other guy. So I tell you what I know in the hopes that you make your own conclusions and perhaps contribute with your own successes.
Thanks very much for your kind note.
Hi Juan,
I took your advice and traded this with real money. I was doing pretty
good, until today when I was stopped out. After round trip commissions
I made exactly zero dollars. I have to laugh because this is exactly
how its been going for me since the early part of last year. I don't
think the Elliot Wave works for bear markets or at least these
volatile markets. I know you have made similar statements. Now is the
time to change strategies and give up the Elliot Wave until the bulls
come back. My only consolation is I didn't lose money and in the end I
made money for the brokers.
Thanks again.
Tony
Oh I forgot to mention that was the Colgate Palmolive (CL) trade I had mentioned in the previous blog post.
It seemed like a wave 5 to me and had good technicals, maybe last year at this time it would have made me money but not today.
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