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Oct 27

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How Salomon helped me today to 1% and 35pips on cable

Reading Liar’s Poker at the mo and before I drifted off to sleep I read Lewis’ account of the famous $1m Liar’s poker game offered by the then Chairman John Gutfreund. The story goes that Gutfreund wanting to have some action himself one day, challenged Meriwether (yes the legendary Bond trader and of LTCM infamy) to a game of Liar’s Poker for $1m….”one hand, $1m and no tears”. Read on……

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The code of the Liar’s Poker player was something like the code of the gunslinger. It required a trader to accept all challenges. Because of the
code—which was his code—John Meriwether felt obliged to play. But he knew it was stupid. For him, there was no upside. If he won, he upset
Gutfreund. No good came of this. But if he lost, he was out of pocket a million bucks. This was worse than upsetting the boss. Although
Meriwether was by far the better player of the game, in a single handanything could happen. Luck could very well determine the outcome.

Meriwether spent his entire day avoiding dumb bets, and he wasn’t about to accept this one.

“No, John,” he said, “if we’re going to play for those kind of numbers, I’d rather play for real money. Ten million dollars. No tears.”
Ten million dollars. It was a moment for all players to savor. Meriwether was playing Liar’s Poker before the game even started. He was bluffing. Gutfreund considered the counterproposal. It would have been just like him to accept. Merely to entertain the thought was a luxury that must have pleased him well. (It was good to be rich.) On the other hand, ten million dollars was, and is, a lot of money. If
Gutfreund lost, he’d have only thirty million or so left. His wife, Susan, was busy spending the better part of fifteen million dollars redecorating
their Manhattan apartment (Meriwether knew this). And as Gutfreund was the boss, he clearly wasn’t bound by the Meriwether code. Who
knows? Maybe he didn’t even know the Meriwether code. Maybe the whole point of his challenge was to judge Meriwether’s response. (Even
Gutfreund had to marvel at the king in action.) So Gutfreund declined. In fact, he smiled his own brand of forced smile and said, “You’re crazy.”

No, thought Meriwether, just very, very good.

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So the phrase I woke up with this morning was “I spend my entire day avoiding dumb bets..” So when I saw cable tumble this morning I wasn’t on it……..tumbling bang on London open is suspicious, tumbling that magnitude without any news is suspicious…so I’ll wait and see. If the Cable trend is truly down I’ll get an entry probably on New York session. Well low and behold people, back it popped bouncing of the daily Trend Line and Key Price of 1.5750 (set on 12th Oct on 4H chart). So my assumption here was that going short was the dumb bet first thing this session  (of course not if you got in and out during the 30min candle which was more than possible), how many traders were stuck short and then taken out 1 hr later ? I’ve been there many times and will do again in the future, today though thanks to Michael Lewis I was looking long on cable. My trade is below, got filled went to gym came back and closed out for 35pips….now I am going to dig over my allotment…..don’t laugh ! Anyone with allotment please pass on some advice as I have no idea what i am doing with this huge patch of grass !

Salomon Inspired Cable Trade !

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Permanent link to this article: http://intradayforextrading.co.uk/2010/10/27/how-salomon-helped-me-today-to-1-and-35pips-on-cable/

2 comments

  1. L&W

    Plant garlic.

    That is re. “uk allotments in late October” no re.”trading cable” :-)

    1. IntradayFX

      Gotcha…….digging yesterday resulted in huge clay lumps…..not good for planting anything. In fact the profile of said plot looks similar to the profile of cable right now !

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