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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers -- Ignore unavailable to you. Want to Upgrade?

To: E. Charters who wrote (33102)	2/17/2007 12:21:14 PM
From: AuBug	Read Replies (3) \| Respond to of 78411

You have a unique take on probability. I've also read the probability of finding a mine, as defined by having an economic deposit that is profitable to extract, is 1 in 600. Not by any stretch of the imagination is finding a mine 50:50, a coin toss. I believe Quantitative Trading and Money Management: Revised Edition by Fred Gehm has a good discussion of runs. Now if I could only find my copy I could tell you what it says :-) amazon.com In speculation money management is the key. Do not risk more than 2% of your trading equity on any one bet and you'll have the staying power to hang in there until you hit on some 10-baggers. Having the psychological fortitude to hang on to a stock until it rises 10x is another story all together. Risk on a trade is defined as the amount a stock drops before selling it. Your Stop may even be set 25% below your entry price but the size of your position is determined by the 2% at risk rule. E.g., I have $1,000,000 in my trading account so I can risk $20,000 per trade. If I buy a $100 stock and set my Stop at $75 then I can buy $20,000/$25 = 800 shares. In this way I have the staying power to remain in the game and not be wiped out by a Risk of Ruin event. Using this method I could have 50 positions on and have hit on a couple of 5-baggers in the last year. I also have the staying power to survive being on the wrong side of a run.