Unfortunately, those trading rules conflict! (RAMBLE)
TradingFool wrote: "I'll have to start following some of the rules I read about in books."
The rules seemingly give conflicting advice.
First conflict: Rule A: "Whatever you do, don't take the big hit." versus Rule B: "Only the weak hands get shaken out." So, should you ride down big dips (or collapses) and risk taking the big hit? Or should you "cut your losses quickly" thereby becoming the "weak hands" who got shook out.
Second conflict (reversalism versus trend-following): Rule C: "Buy on weakness, sell on strength." versus Rule D: "No stock is too high to buy or too low to sell." (Jesse Livermore)
Whether reversalism or trend-following is right, for a lazy investor only trend-following will work, because you can sit on a trend until (you figure) the trend is over --- as opposed to the active reversalist who has to jump in and out with every zig and zag. But trend-followers get whip-sawed in trendless markets.
In "The ABC of Stock Speculation" there's a discussion of two distinct situations. E: You have independent, fundamental reason to believe that the stock (or sector or market) is going up, long-term. In this case, you buy on weakness --- the lower it goes, the better the chance to buy. But in case F: You're watching for strength (in a stock, sector or market) by watching the price, and only when it breaks out do you buy -- on strength. This is hoping to buy high, sell higher.
Other rules: Don't buy in the vertical zone of a parabolic rise. Invest only what you can sleep easily about. Learning investing is largely about learning your own psychology, so practicing with imaginary investments is worthless. (Livermore) Many a stock down 80% to 90% has "broken its back" and is unlikely ever to recover (Richard Russell).
For West African golds, my belief is that the gold price is going way up, long term, and that most of the explorers I buy probably have good properties with lots of feasible gold. I am incompetent to predict secondary swings in prices, and I'm too lazy and ignorant to day-trade or try to catch short movements anyway. My only sensible criterion for selling is: sell when you have something better to do with the money. I also have an arbitrary rule: If something quadruples, sell half. I might revise that to "triples" after this.
Personal ramble: Months ago I sold Nevsun high to buy Cassidy; a few weeks ago I sold ASA and some Glamis at big profit, Royal Gold at big loss, but kept all my West Africans -- ouch! If Semafo dips again I may be snagged and get some. Also sniffing for lows in Guinor. Still baffled by Robex. Wavering about my Cassidy; take the big hit?. Can't understand why my St. Jude's massive 78+ grams/ton at Benso has benso unappreciated. I understand lack of support now for Birim, since investors will WAIT for Bui hits. My Akrokeri-Ashanti at C$0.01 is a memento of a sentimental gamble. Looking forward to Newmont gobbling explorers and properties in Ghana. Won't touch Mano River, or any praiser of Charles Taylor. Happy with Red Back's Chirano but not its loss??? of north Ghana properties in merger. Avoiding AGG CRVV Mankranho dilution complex (Cassidy, Delta too?). Despairing over RANGY.
If I'm right about gold, most West African golds should be bottoming around here and will commence a struggling rise, interrupted by more downward spikes (not as bad as the current one, I hope), most eventually rising to more than quadruple the December 2003 highs within a year or two. Newmont should be transferring some of its billions to us Ghana fans, too, even if I'm wrong about gold.
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