Hey GB. Thanks mate - I always value your posts.
The first trade I made via my dad's account was in August '87. 'Nuff said. A tough lesson for my lawn-mowing money, but a good one for me. Capital preservation is critical, perhaps even more so than turning a profit some markets. A good tight trailing stop has saved my butt more times over the last year than I'm game to say. Even even if I decide to buy back in on the same day I'm happy to wear the transaction costs as part of a pause - reassess strategy. Even with those stocks I'm going long on and don't have stops set, I keep a paper diary of my goals for each trade and reasons for entering it and try to reassess at least weekly if my reasoning stands. ESPECIALLY in this market (which I think suits trading much more than going long) close monitoring is really important to cut the losers and let the winners ride. I have no hesitation in being merciless to the losers. MRE was one I let linger longer than I should have this year, and each one of those lessons makes me a bit more determined. I'm acutely aware that for each losing trade, I need to make two winning ones to achieve the % goal I set for the loser.
Even with some stocks I'm prepared to hold through retracements (eg: TZL and our mutal friend MCO) I set paper stops that I have to provide myself with a written explanation for staying in past. If nothing else, it's a useful way of pointing out where my mental-analysis (in addition to TA or FA) needs improvement. And if I'm giving the same 'excuse' for a stock more than once it's a big red flag.
Along the same line I have a personal rule NEVER to dollar cost average a dog.
I was actually really surprised that the guys in the video let their POG wins ride almost back to zero in '02 (or was it '03). I can't imagine being that committed to a trade. Much better to be stopped out and then wait for a clear correction before reentering.
All that said, I have a massive amount to learn about goldies and have never traded them in anything approaching a core, systematic way. It's the sector I want to become informed about in a much more rigorous way than I've traded before (buy and hold. . . yawn. . . etc). So I'm really fascinated to be boxed around the ears a bit for my assumptions by my betters.
Interesting that you mention instinct. I was actually ruminating on this today. For a while I made some trades on instinct or my gut. 'Instinct' turned out to be an inflated sense of self-confidence and the gambler's egoic sense that something good just *had* to happen. I've tried then to completely ignore gut and be able to intellectualise and rationalise/justify my decisions. The net result of this was an improvement, but also a tendancy to buy too late and sell too early. I was trying to puzzle out my 'gut' feeling about Gold today, and am wondering if I should give instinct some space again, acknowledging that healthy instinct rather than egoic instinct (if that makes sense) incorporates ways of non-conscious processing of facts and cues that the intellect sometimes misses (and there is some good empirical research on this).
Anyway, I'm rambling and taking my own thread OT.
If it's not too personal, and to wrench it back from myself, what's your current mix between bullion and seniors and juniors? I know it's an entirely idiosyncratic choice - but one thing I do wonder is if I should be altering my mix to be maybe 20/60/20 rather than 20/40/40. I find it hard to read how juniors will fare at the moment. A rising POG plus credit crunch would be a different scenario for some versus a rising POG alone. Depends on so many factors. Any thoughts on LGL vs NCM?
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