Amos Hostetter

Amos Hostetter's trading principles:

  • Try to find a long term trend and ride it up. Stay with the trend and don't be tempted to grab a quick profit. Patience is one of the most important traits of a trend follower.
  • Be careful not to be shaken out by market fluctuations. Instead try to sit tight as long as there are no warnings showing up. Prices that come back so that your initial gain halves are not necessarily a reason to sell.
  • Big wins can only be achieved with major trends. Find them and don't hesitate to buy at high prices when you may think it is too late. A market is never too high to buy or too low to sell.
  • Necessary is of course a stop loss near the entry point. A stop is the easiest way to put your capital at work on a trend, because otherwise you are too often and too long stuck in a trading market which goes nowhere or worse in a falling market.
  • Absolutely forbidden is averaging down or fighting the market trend.
  • To think that a market is cheaper now after prices came down and therefore must offer a better chance than it did when prices were higher, will put you in the wrong stocks at the wrong times.
  • Never try to sell at the top. The trend may continue. Sell after a reaction if there is no rally.
  • On the other hand don't expect the market to end in a blaze of glory. Look out for warnings.
  • Tape reading can tell you only that something is wrong. Don't try to analyze the flow of transactions as the tape shows them in too much detail.
  • Don't look for breaks. Look out for warnings.
  • Pyramid stocks only if the initial investment shows a gain.
  • Look out for normal market behavior. If a market doesnít act right, donít touch it.
  • If in a bear market a complete demoralization develops suddenly it may be a sign for a starting bull market.
  • Observation of the market gives the best tips of all. Follow your experience to exploit them, while sticking to facts only.

Forex   Under the millstones of the banks
Futures  Hoping for the trend and finding chaos
Options   Above average? You will still lose!
Stocks   The negative-sum game for investors