2011 is a year burned into my memory.
It was in this year that I accidentally made a small fortune trading silver futures. A few weeks later though, the banksters torched me, & turned my entire operation into a pile of ashes.
Actually, let me rephrase that last sentence – “I permitted” the banksters to torch me. So in essence I torched myself, as so many other speculators have before me.
From the depths of this brutal failure and misery, I stumbled upon the missing link to my program, and it forever changed the way I approached the market & my trading operation.
From the ashes of failure, Alchymist was born.
Love is Blind
They say love can blind a man, and I think we all have had enough experience to prove this to be true.
I say that if a man is blind, then he can’t see, and therefore it’s easy for him to be run over by a speeding 18wheeler - particularly when a psychotic, criminal Bankster is behind the wheel...
Thats it....Stay right there....Just another second or so...
I have always loved precious metals. I loved the feel of the weight in my hand. I loved the beautiful shine and glow of a newly minted coin. I loved giving the proverbial finger to the G-man as we have been recklessly deficit spending on the Warfare and Welfare state for over 30 years now.
But most of all I loved that Silver traded on the COMEX and for less than $9,000 in margin I could control 5,000 ounces of my favorite metal. Silver is effectively a levered play on Gold, & both had painted beautiful textbook consolidations on the price charts from late 2009 to late 2010, & now had broken out of those price ranges, indicating a run higher.
Finally the market was waking up to the realization that all this printed paper wouldn’t be worth much more than toilet paper soon, and I was ready to cash in.
I was long right from the get go & my reward was a $11 rally before any reaction took place – That’s $55 Thousand in pure profit, per contract, on a initial investment of less than 10 - but the fun was just getting started.
After a sharp 4 week correction, it was blast-off time. I’d seen this many times before in my 10+ years of trading and there was no way I was going to let this opportunity pass me by.
I began pyramiding as I was riding the Silver rocket higher & in just 2 months Silver shot up to 39. It was April 1, and I was now the proud owner of 35,000 ounces of Silver which now proceeded to shoot another $10 in just 3 weeks!
April wasn’t even over yet, but in less than one month I was up over 375,000 dollars. Oh man….This was way more than I ever earned in an entire year as a Senior Vice President on Wall Street!! Life was just so sweet - I made a shit load of money, vindicating me from all of my prior trading defeats, and more importantly, I had a huge chip stack to play with.
The Empire Strikes Back
Late Sunday night I sat at my workstation like I always do, seeing how the overseas markets were doing & how electronic trading on the Futures exchanges were opening up. WHAT THE F IS THIS?!?! Silver was down $4 – I started to frantically search for what was going on & there it was.. CME hikes margin requirements again. It wasn’t the first time this happened during this run, so why are we getting smacked like this now? Don’t these dumb asses see what these money printers are doing to the currency?
This is a bear trap, no way I’m selling one single ounce… I’ll have my 140 Gs back in a few days once this pullback is finished.
Well, not only was my 140 not coming back, but it was much, much worse. Over the ensuing days the COMEX continued to hike margins, forcing leveraged speculators to unwind their positions. Over an 8 day period Margins were raised 84% & silver crashed from a few pennies below 50 to a 33 handle. I was F’g destroyed.
The greatest month I ever had morphed into the worst 2 weeks I ever had, and my million dollar brokerage account was relegated to about 35k.
Phoenix Rises in Atlantic City
What was I thinking?... How could I let this happen?
This was absolutely the bottom of the barrel for me – I realized then & there that I had a fatal flaw that was riding shotgun with my passion for trading – I’m a gambling addict! - My mom was right about me.
I’m addicted to action… the thrill & rush of victory… the danger of betting everything you got.
Instead of treating trading like a business I was treating it like a flippant roll of the dice.
I had to separate my love of gambling from my love of trading, so what was the best way to do that? Got it! I’m going to head down to AC for the weekend & hit the craps table with a few grand. Play, gamble, have fun, & if I lose...well Fuck it.
I’ll get this out of my system, & then come back to NY ready to work.. ready to figure out exactly where I went wrong – You can’t lose that much cash without learning some valuable lessons. All of these losses are nothing more than tuition – I’m going to make it all back… Every last Silver dollar!
One of the things that I enjoy the most about the casinos is the interaction with the other players at the tables. They come from all walks of life - different religions, different faces, different races; but almost every single one is a character with a story.
It’s always a different script, but the ending is usually the same - every single one of them just missed hitting this big hand, or they bet it all & blew out... were up big, but then… on & on the loser stories go.
If you pay any attention to these guys, then after a little while they’ll really open up.. They just lost their house... their girl left them... kids wont talk to them…Usually I just take it all in and then later on me & my boys laugh our asses off about it - but man, this time it was hitting too close to home. Is this my fate? Am I gonna be here in a few years piking around a $5 craps table whining to some city slickers about how I was forced to sell my S5 for margin?
So here we are at the Craps table - It’s packed. There is that little buzz starting around the table when it starts to get hot. People are getting real excited.. a few shooters in a row threw a bunch of inside numbers before making the point, & every time the table would roar a little louder as everyone’s chip stack kept growing.
That wasn’t the only thing growing though – The board was was littered in chips as everyone was pressing their luck to take advantage of the streak that was now just getting going. I’m no different.. Once the table gets hot & I am making any money, I continue to press my numbers – Now I’m raking it in & before you know it I’m up over a grand.
This shooter really has it going & what I’ll never forget was his throwing style. Every time he threw the dice he’d blurt out some saying & Bang, he’d hit that number.. Did it like 6 times in a row.. If the point is a 5, he winds up & yells “Jackson Five Muthafuka!!” & out rolls the 5!
For those of you who don’t know craps I wont get into all the details, but essentially once a point is made (this means you rolled a 4,5,6,8,9,10) then the object of the game is to roll that number again before you roll a 7. During this sequence anyone can bet on any number & if it comes up you get paid. Once the 7 comes though, its tears as the house takes all - then the dice passes over to the next shooter.
“NINE MILLIMMETER MAN”!! – He just hit another one!
I’m telling my boy, 2 more points & I’m out of here – That will be over 2gs & I’m taking it!
“FOUR THE KINGDOM & the POWER !!” “OOOohhhhh” the table groaned – Sounded like the Garden back in 95 when Ewing missed the game tying layup in game 7 against the pacers.. Shit!!! 7 out…
Here we go now… the wash-up on my left now starts.. “Ah, that’s nothing, I lost 15k on a table just last week” He’s looking at me nodding his head as he’s saying it, with a little sly smile.. almost waiting for me to acknowledge his achievement. I wondered.. should I tell him what I just lost last week? But I couldn’t.. I wasn’t relegating myself to casino war story teller just yet, and plus I didn’t want to take any of his glory.. it might have been all he’s got left.
When a hot streak ends like that, what usually happens is people continue to overstay their welcome – Everyone is hoping that the magic can be rekindled, but it rarely ever is.. Almost every player is sitting there cussing to themselves, counting all the chips they just blew, while not paying attention to the small stack they have left, which is usually what they started with. They just say “Fuck it” & throw down what’s left on some low odd bet to put themselves out of their misery.
It’s an interesting phenomenon because if you really were accounting for what just happened over the past 2 hours..1) You started with say $500 2) You ran it up to some outrageous return, say almost 200%. You then have a bunch of chips on the table when the 7 hits & your $1500 is down to $350.. So you are really only down $150 & you still have $350 left. But all you can think about is that you just lost over a G from your peak, so who gives a rat's as about a measly $350 – after all, it’s only 70% of the bankroll you started with!!
The Silver Lining
As I’m scanning the mostly dejected table there is one older gentleman, directly to the left of the career loser that was on my left. He looked like he was stuck in a time warp, more suited for 1981 than 2011. He had the grey turtleneck, with slightly darker pants, black blazer, black shoes, But most of all he had something else that caught my eye.. A huge stack of chips!
I had to learn something from this guy, so as the table continued to thin out, I moved over and started up the conversation. “What gives” I asked? “Everyone on this table busted out, but your chip stack is completely in tact.”
I’ll never forget what he said.. “Kid.. the 7 is always coming, it’s just around the corner. Thing is, most gamblers don’t know it yet”
And there was my epiphany – In any betting game, your next loss is right around the corner. Therefore it’s your place betting that will determine if you are a winner or loser. This is where I fell short; and this is what has been doing me in all these years, much to the delight of the banksters.
I left the casino that day a new man… a new trader. I was going to treat Trading like any other game of betting and chance.
I would only bet when odds favored it…but I would place my bets as if they didn't... because that 7 is right around the corner!