señor

PREFACE

We live in an age that is dominated by the “I know what I want and I
want it now” attitude. It is a time of fast food and quick fixes. A time
of self before everything and Me! Me! Me! A rat race of the lowest
kind. Keeping up has never seemed more important-a mentality of
getting rich quick at any cost.
This attitude is also why many people are getting involved with
the commodityand futures industry. Trading can be a powerful endeavor. On the other hand, it can also be financially crippling. Trading is a game of risk versus reward. It is also a game that is not
forgiving of players who come in without learning the rules. For
those with the “get rich quick” or “gotta have it now” mentality, failure is all but certain.
The failure rate of those who attempt to trade inthe leveraged
markets arena is somewhere around 90 percent. As far as I can tell,
this means that 90 percent of those who begin trading stop showing
a net loss. I have also been told that at any given time 90 percent of
the open accounts show losses while only 10 percent of the accounts
show profits. These statistics illustrate that getting rich quick in
these markets is highly improbable. Tomake serious money in this
environment, traders must manage their money. Unless sheer luck
intervenes, no one will make a fortune in leveraged markets without proper money management strategy. This is the basis of this
book.

RYAN JONES
Colorado Springs, Colorado
March 1999
ix

ACKNOWLEDGMENTS

Many people have helped me gain the knowledge to write about money
management onleveraged instruments. The information in this book
is based primarily on experience-from experience, then came research. From my research I developed the methods described here.
Therefore, I want to acknowledge first those who made the experiences possible.
When I was 16 years old, I entered a national stock-trading contest with my high school economics class and became very interested
in themarkets. My first mentor was Mike Benzin, a member of the
same church I attended. He was an analyst with Smith Barney and
offered to help me. He took the time to begin to teach a high school
kid about the markets and how they worked. He opened his office
doors to me anytime (sometimes daily) and put up with my constant
inquiries and inconvenient presence. Without Mike, I would have
never gottenstarted in the markets.
I was married, had two children, and was putting myself
through college when Fred Stoops hired me at the law firm of
Richardson, Stoops & Keating in Tulsa, Oklahoma. My year and a
half at the firm was another crucial time period during my training.
Fred did more than just provide a paycheck, much more. A simple acknowledgment cannot describe Fred’s profound influence onmy
trading career or my life in general. I am greatly in debt to him for
what he has given me. In that same law firm, Chuck Richardson became a good friend and showed a great deal of trust in my trading
abilities. Chuck and I were in some trades together. Through one series of those trades came the experience that drove me to research

xi

-

xii

ACKNOWLEDGMENTS

money management intrading. Chuck certainly deserves some credit
for this book.
I left the law firm to become a broker in south Florida, but quit
after only three months when I realized that being a broker was not
for me. My plan all along had been to learn the industry for two
years and launch my own business. Needless to say, I wasn’t ready
to start my own business after three months. So, I decided to trytrading for a living. After about six months, I found out I wasn’t
ready for that either.
However, as I put my business plan together, Willard Keeran
showed a great deal of faith in my abilities and completely funded the
start-up of Rumery & Lehman, Inc. Not only did he and his family
completely fund the business, they did so without any strings attached. I had the freedom to take the...