I Fought ACME9 and ACME9 Won: Part 12 Unreasonable Expections

Soon thereafter, I had a goals meeting with Orange and Floyd that I found to be a bit surprising. Whereas, a year ago, I had been seen as someone who was too out there to be given any real responsibility, now I was widely considered to be too risk averse!

Orange and Floyd told me that I wasn’t trading certain profitable names. My response was that I was doing my best to steer clear of situations that could blow up in my face.

The following part of the conversation is key to understanding my huge beef with how I was eventually treated by ACME9. Orange went on to tell me that these riskier bets worked in the long term and that I should be taking them.

Now that’s fine, if everybody is on the same page. Making these trades pretty much assumes that you will take a big hit from time to time, and when you do take a big hit, your backer should be the first person reminding you that it’s part of the business, especially if he’s the one pushing you to venture into riskier waters.

Think about the following poker situation. A man backs you and another player, who you consider to be a terrible player. He puts you both into a big stakes game. You lose $200,000 mostly to the other backed player. You got your money in as a significant favorite every time, but this guy just kept on sucking out on you.

If the backer had watched the game, he should actually fire the guy that won the $200,000, but it just doesn’t happen that way in the real world. No matter the specifics he made money and you didn’t.

Essentially, my big mistake at this goals meeting, when they said it would all work out in the long run. I should have made them guarantee that I would actually have one.

At this meeting, it was also related to me that my account would be smaller version of the big one that Orange and Floyd were going to trade. I didn’t see any great reason for me to have the exact same strategy as them, but at this point it had been drilled into me to stop making waves and just do what they asked of me.

Another key to what follows is this, Orange was extremely hands on. He basically had me email him every big trade I made, both so he could see what he was doing and so he could possibly make the same trade too if he liked the idea. Most of the trades that would soon get me into trouble were ones that he told me that he loved.

Our group consisted of Orange, Floyd, me, and about 5 other new traders with smaller accounts. Orange, soon after, had a group meeting where he announced our goals. He told us that our goal was to make 100% return on our money, but that he thought that we could easily achieve 125%. He had even done detailed excel spreadsheets showing us how many more contracts we were going to be trading and how much money we would be earning.

Personally, I thought he was out of his mind. It was my opinion that you could make 50% a year in this business with perhaps a reasonable amount of risk. To be making 125%, you really had to be putting the pedal to the metal. It was possible, but there were going to be some really rough months ahead.

A graph of my earnings for the previous year, were pretty consistent. I never really lost any money and my returns were fairly stable and consistently positive. That’s one way to trade. Orange’s strategy had a lot more variance to it. He’d probably still make a lot of money, but he’d have to deal with huge swings from time to time.

I can’t know for sure, but maybe Oranges plans had been clouded by the fact that the last year and a half had been a relatively mellow one for the market. He had been on a huge winning streak, and that can blind you at times.

Here’s the gut punch, if you happen to be me. His winning streak was about to come to a dramatic end, and the long term for me would last about a month. Not even Keynes, who once said, “In the long run, we’re all dead” would have been that pessimistic, but things were about to get ugly.

I Fought ACME9 and ACME9 Won: Part 13 Spivey Goes Down!