Amos Hostetter, the wise sage of the infamous Commodities Corporation, offered wisdom, well worth sharing:
Don’t sacrifice your position for fluctuations.
Don’t expect the market to end in a blaze of glory. Look out for warnings.
Don’t expect the tape to be a lecturer. It’s enough to see that something is wrong.
Never try to sell at the top. It isn’t wise. Sell after a reaction if there is no rally.
Don’t imagine that a market that has once sold at 150 must be cheap at 130.
Don’t buck the market trend.
Don’t look for the breaks. Look out for warnings.
Don’t try to make an average from a losing game.
Never keep goods that show a loss, and sell those that show a profit. Get out with the least loss, and sit tight for greater profits.
Dangers in Trading caused by Human Nature
Fear: fearful of profit and one acts too soon.
Hope: hope for a change in the forces against one.
Methodology: Lack of confidence in ones own judgment.
Independence: Never cease to do your own thinking.
Objectivity: A trader must not swear eternal allegiance to either the bear or bull side.
The individual fails to stick to facts!
People believe what it pleases them to believe.
Think about how simple Hostetter’s wisdom appears on the surface. But how many people could actually adhere to his strict rules? Its been said that rules to making money in the markets could be in the front page of the daily papers, and people would still ignore them . . .
See also Trend Following: How Great Traders Make Millions in Up or Down Markets by Michael Covel. More about the book at trendfollowing.com