In an earlier post I wrote about “The Kid,” who simply did not have the temperament to be a trader. There are many such kids in the market today who obviously should not be there. Some are self-destructive personalities drawn to the market like fireflies to light.
You would think that if you gave your money to a professional manager with a track record there would be little or no emotional stress. You would think…
One Night in Honolulu
One night in Hawaii I was at Mysti II, one of the better Korean bars in Honolulu. It was right next door to my favorite sushi bar, Akasaka. I was something of a regular and the mama-san treated me well: no hustle, plenty of complimentary food.
It was a slow night and the mama-san came and sat next to me. “Archer-san. I hear you make people big money trade commodities.” I replied that I did manage commodity money, had done so for about 10 years, and had a decent track record and client base. She explained her business generated a lot of cash (no kidding!) and she would like to try a test account with me. I liked that she wanted to test the waters first and not just dump $100k on me all at once. Smart mama-san!
The Account Forms and the Wire
I brought her the account forms, simple at that time: one for basic information and the standard warning that you could lose all your money trading commodities. For intelligent adults that should be enough. But tell it to the CFTC and NFA, which have all but destroyed the FOREX business in the U.S. in the supposed name of protecting small investors!
She wanted to hand me an envelope with 100 Franklins for a $10k test account. I told her the brokerage house was in Chicago and I could not take the money directly. The next day I faxed the forms to Chicago and received an account number for her. Then I met her at City Bank, where she knew the president, Mr. Ohama, quite well. We wired the money to Chicago and she was ready to rock.
I explained that she would get a flurry of statements showing trades and transactions, and she could call me anytime if she did not understand something. She did not seem overly concerned and suggested I simply update her when I visited. All seemed fine.
Up $2,000 and Suddenly Nervous
After three or four months she was up a little north of $2,000. My program called for being exceptionally conservative until an account was up fifty percent. She was always happy when I gave her updates and never seemed nervous. At that point I purchased a $10k T-Bill for her (interest rates were quite yummy at the time), as the brokerage accepted a percentage of the T-Bill as margin. With the cash in her account, it was more than enough to keep trading conservatively for a few more months.
Soon after, I was in the office around 9:00 am when the mama-san rushed in holding a statement. “I lose all my money! I only have $2000 left?!” She was very agitated. I smiled and showed her the second page of the statement with the credit for the T-Bill. She seemed a little relieved but still uncomfortable, and left.
A couple of nights later she asked me to close her account right away and wire the money back to City Bank. Just the thought of losing $8,000, even though she was profitable, did not sit well with her.
Over the years I had two other instances of much the same thing. Initially fine, but once the money was on the line, the client could not handle it emotionally. I never argued. The money is simply not worth ruining your health over, whether the risk is real or only imagined.
Charlie’s Observation
Charlie once said people like to imagine all the money they can make and only think about the risk when it hits them in the face.
There are many folks in the markets who simply should not be there.
This post is educational commentary. It is not investment advice. Trading futures and FX involves substantial risk of loss.
Good Trading in 2025!
Michael Duane Archer
Related Reading
- Time Hash: A Goodman Method of Trading Mini-Lesson
- Devil’s Advocate: Understand the Other Side Before You Trade
- Goodmanisms: Charlie Goodman’s Sayings on Trading, Explained
Keep Learning the Goodman Way
If this article was useful, these are the next steps:
- The Method: propagation, intersection and the 3-C Principle, drawn plate by plate.
- The Goodman Library: the books, from Goodman for Grasshoppers to The Goodman 6 & 6.
- The Trader’s Playbook: the Molokai setup in one printed, numbered volume.
- Mentoring: work one-on-one with the authors.