The Treasure HunterI hope you will find your own version of the rope-a-dope strategy.
You will need to first understand the concept of value for buys and
possibly the concept of hysteria for sales as well as the concept of
margin of error for both buys and sells. I wish you all the best of
luck in your endeavors. Thank you all, and now let’s go to lunch.
Lessons from Indi Jones
Protect Yourself, Protect Your CapitalThe most important pearl of wisdom from Indi Jones is how trad-
ing relates to boxing. According to Indi, the number one rule in
trading is the same as the number one rule in boxing, which is to
always protect yourself. “No capital, no trading, no life,” he states
succinctly. So how do you protect your capital? Always know your
worst-case scenario. Before you place a trade, figure out what you
are willing to lose in terms of points, ticks,anddollars. Check your
risk/reward ratio and make sure that no one trade has the potential
to destroy your entire account. As a general rule of thumb, Indi
Jones does not like to lose more than 5 percent of his equity on a
single trade. This way, even if the trade becomes a loser, he can
still survive to take another swing at the market.
Along the same lines, always have a backup plan. When Indi
first started out, he knew that if he lost his$25,000 starting capital,
he could find a job loading UPS trucks at night in less than a month.
As time progressed, he was able to build up some savings, which
allowed him to set up stop-losses on his life. In case he ever had a
major trading loss, he was able to put money away in places that
he could not touch, such as trusts or charitable foundations.
Take the Risk, Take the PlungeOnce you know your risk, you can take the plunge. One of the
worst sins in trading is to be right in your analysis, have the asset
move dramatically in your favor but not be on board for the ride.
In some cases, when a breakout into a new trend occurs, there
could be large extension moves with little retracement. In order
not to miss the trade, Indi will initiate a probative position just to
get some exposure and then if it retraces against him, he will look