The Best Game In The World
I am including this chapter for two reasons. First, because a lot of people first heard about me through the media coverage of this “game”, and second because it is one of the five ways in which I earn the money that has enabled me to live a wonderful lifestyle.
I have experienced a large number of employment and business situations. I have read accounts of dozens of others. Of all of these there is one and only one that is pure. By pure I mean at the end of the day there is no doubt about the result of your efforts. In fact the result stares at you in black and white.
There are no employers to tell you how to do it. There are no employees to train and supervise.
There are no overheads. There are no excuses. There is just you, your decision making and the result.
There is no advertising, no answering the phone, no customers, no inventory, no database, no marketing, no cold-calling, no bad debts, no set hours, no set schedule. Just you, your decisions and the result.
Even better, you are playing a giant game with players all over the world. When you get good enough to win regularly you get paid – a lot!
And it gets even better. The game is so vast and covers so many possibilities you can choose which sub-game you want to play. So you can choose a part of it that fits with your personality, with your strengths, with your sleep patterns, with your timeframes and your thresholds, using strategies that suit you. While there are some basic rules of play, you can develop entirely your own personal rules to win the game!
It’s the purest game of all and you can make a living or a fortune playing it. What is the name of this game?
Trading!
I have been trading foreign currencies and commodities part time since 1990. Let me tell you how I first started.
In 1990 when I was 25 I received an inheritance of $30,000. That was back when $30,000 was a lot of money! I must have been reading a lot of James Bond novels at the time because I thought it would be really cool to open a Swiss bank account. I applied to Credit Suisse for the account forms and while I waited for them to arrive, I decided to put my dollars into Swiss Francs.
At that time there was one dealing room in the city I lived in. I phoned them up and did the deal – I still remember the rate 0.8334! So my $30,000 became 25,002 Swiss Francs.
Three weeks later the bank documents arrived from Switzerland. I phoned the bank to talk about transferring the money. The broker told me the exchange rate had moved in my favor. I asked him what he meant. He said the exchange rate was now 0.7962 and that if transferred the Swiss Francs back into dollars I would have
$31,400. I said “Do it! Do it now!”When I put the phone down I jumped around the house whooping with delight. I couldn’t believe I had just made $1,400 for doing nothing.
The vacation job I had just finished paid $8.60 an hour which was $275 a week after tax. I had just made the equivalent of five weeks of early starts and hard dirty work – just by making two phone calls! I changed my mind about opening a Swiss bank account and instead I started to move my money in and out of currencies. In retrospect it was a very inefficient way to trade currencies but at the time I didn’t know any better. Surprisingly I did six profitable trades in a row and made a few thousand dollars – I literally could not believe it!
Back in 1990 there was no internet, and it was very difficult to check prices and movements unless you phoned your broker. However, I was studying at university and Reuters had sponsored a live trading screen at the library. I could check my profits and losses between classes! I had a friend at university who had some money so we started trading together.
As I learned more I started trading metals and commodities such as gold and cocoa. I was flying by the seat of my pants, and I had no real idea what I was doing.
Consequently I had some significant losses followed by that awful feeling in the pit of your stomach.Like anything, the more you do it the better and smarter you become. I have made lots of mistakes in trading but most of these have been real learning opportunities.
Losing hard-earned cash is a good way to learn fast. You never want to make the same mistake twice.
I want to make it clear that trading the financial markets for a living is not easy. During the difficult times when I have made many painful losses the following quote by Mark Cook (one of the world’s top financial market traders) has helped me:
“The true path to success always must journey through failure. All (and I mean all) the million dollar [income per year] traders I know had severe losses. And only when they coped with the losses did they achieve true success. The road is long - perhaps five to 10 years. The emotions will sometimes be an obstacle that just plain wins that battle. The true winner is the one who perseveres. The race is a marathon and not a sprint. Recognition that all humans fall short of perfect is the first step to the trek to knowing yourself and knowing your limitations. However, you must also keep foremost in mind that our God-given talents are very rarely realized to the true extent of the gift.”
If you are interested in trading the financial markets, please download my Free 57 Page Trading Guide here: www.TradingBook.net.
Solomon Wealth Fund
In the four years January 2007 to December 2010 my average annual return on capital was 76.06% (i.e. that is per year).
The next logical step for me is to manage investors’ funds. In order to learn about fund management, I started talking to the most successful people I could find in the industry. I have met with a number of very successful fund managers including one manager with over $20 billion under management and one with over $1.5 billion under management.
My most interesting discovery is that investors do not want outsized returns! The fund with $1.5 billion under management has averaged a return of 12% per annum since inception! The fund manager said to me that if I can consistently return 12 to 15% year after year with low volatility, investors will be very happy.
Needless to say a light went on in my head when I heard these stories! Investors would rather I consistently delivered 15% returns with low volatility (and therefore low risk) than 100% returns with the huge volatility I have been trading with.
I have therefore decided to lower the volatility and returns of the models I am using so the fund is more attractive to investors. Fortunately making the model less volatile is fairly simple because I can simply reduce leverage and reduce my position sizes, while still taking the entry and exits signals generated by my models.
You are welcome read about the fund which I plan to launch in 2013:
Please read the disclaimer on the site.
If you would like more information you can sign up on the site.