As you can see from the this chart below, the price of gold nearly
doubled in one year -- from the 230's all the way to $440 by the
beginning of October. Many of us know what came afterwards, but for
the time being, examine the chart as if you were holding gold back
in 1979. What would you do? The price had nearly doubled, there was
a parabolic rise and some choppy consolidation. Would you roll out
into the next contract month - April - hoping for higher prices, or
would fold your hand, happy with your gains?
Looking at a chart in retrospect, it is deceptive to think that
making money trading is easy. Just buy low and sell high. But how
low is low, and how high is high? The great trader Jesse Livermore
is quoted as saying, "A stock is never too high to buy, and never
too low to sell."
