Amos Hostetter was the founder of Commodities Corporation. Located in Princeton, N.J., it became one of the most successful and influential trading entities ever. Ultimately, Goldman Sachs bought it out in 1997, so it is no more. This is where many of today’s best traders learned their craft. The list includes Ed Seykota, Michael Marcus, Bruce Kovner, Paul Tudor Jones, Louis Bacon, and others. These are some of the most successful and best traders the world has ever known.
Hostetter was a brilliant trader with rock solid trading principles. His success was astonishing up until his untimely death in 1977. I am going to share with you some of the reasons why he was so successful. What was his method? What were some of the main trading principles he implemented to get such superb trading results?
Trend following was the method that Hostetter implemented to achieve his amazing trading results. In my opinion, trend following is the most successful trading method. You can profit in up or down markets. There is no guesswork in your trading decisions. It does an excellent job of letting profits run, cutting losses short, and much more. I have been implementing the method of trend following for many years, and I will say its works exceptionally well.
To be successful trading the markets you need to follow principles that have been proven successful over a long time. Here are some of the principles Hostetter followed to amass a fortune trading the various markets.
Hostetter, a trend follower, said it is important to find a long term trend and ride it up. Stay with the trend until clear technical evidence tells you it is over. Patience is a key trait shared by most of the world’s best traders.
Money management is crucial. Hostetter believed in using stop loss orders to keep a loss small, if the market moved against him. He would also implement trailing stop losses to protect his profit as the market advanced in his favor. Stop loss orders are an excellent tool which I use on virtually every trade I make.
Hostetter believed that observation of the market gives the best tips of all. He said to follow your experience to exploit them, while only sticking to facts. It is important to do your own analysis and research. Become proficient at technical analysis. Learn the proven chart patterns, and analyze their price and volume action.
The keys to successful trading are to find a successful method that fits your personality. Trend following was perfect for Hostetter. Couple that with sound money management. Hostetter said to take care of your losses and the profits will take care of themselves. No truer words have ever been spoken in the world of trading. The world’s best traders know this well.