Steer Clear of the Rocks and Shoals

“He is the best pilot, who steers clearest of the rocks and
shoals.” – Thomas Jefferson

In trading I believe that where there is opportunity, you
seize it. When there is little opportunity, you save your
capital. Your capital doesn’t always have to "be at work"
somewhere. People have asked me what I do with cash when not
in something. My answer is that unless there is a compelling
currency move, it is in cash. A few years ago when the 
Aussie dollar dropped to about 65 cents, I was writing every
day to buy it. That would have been my default. Now it’s
just cash. And I know that cash devalues. But unnecessary
risks devalue more.

Let’s look at Jefferson. He was cautious. But what did he do
when he had the opportunity for the Louisiana purchase? He
seized it. And it wasn’t Louisiana. At that time Louisiana
contained the entire middle third of the 48 states.

http://tinyurl.com/4slhykt Thanks again Thomas.

Where the opportunities are there it will be obvious. So
obvious you can’t believe it. Like gold at $450/oz and we
were buying all the time. we even sold at $700 and bought
again at $550.00 when CNBC had a show , "Have metals lost
their lustre?"

Oil

I warned it might pull back to $99. and it almost has.

http://www.cx-portal.com/wti/oil_en.html

By the time you are reading this it might have. $99 was a
good time to buy again with medium risk. There is so much
going on around the world right now, it could affect the
charts more than originally planned however. We did get out
of our calls on USO on Thursday with an 80% profit because I
didn’t want to get greedy. I have seen time and time again,
that if you go out a few months in time buying at the money
options, it is very hard to get over 100%. Typically I go
for around a 50% to 100% gain when get out at the first sign
of weakness. Options are risky of course, but sometimes the
charts look too good. You should never use more than 1% or
2% of your overall portfolio for an option trade. I have
seen trades where we gained 50%, sold, seen it go to a loss,
then a 300% winner. But, it’s just not worth it to me to
hold on like that over time.

 We have one gold stock at the moment. i manage risk. Sometimes managing
risk is like a paradox. Where there is the least amount if
risk, you can make the most money, in my opinion.

This entry was posted on Monday, March 14th, 2011 at 3:47 am and is filed under Commentary. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

Comments are closed.