Larry HiteBorn in 1956, Lawrence D. Hite is a hedge fund manager and one of the forefathers of system trading (along with Ed Seykota). Larry Hite co-founded Mint Investments in 1981. By 1990, Mint Investments had become the largest commodity trading advisor in the world in terms of assets under management.


Larry Hite Trading Tips


Bet, without risking all your chips

I have two basic rules about winning in trading as well as in life:

(1) If you don't bet, you can't win

(2) If you lose all your chips, you can't bet

There are really four kinds of trades or bets: Good bets, bad bets, winning bets, and losing bets. Most people think that a losing trade was a bad bet. That is absolutely wrong. You can lose money even on a good bet.


Thinking long-term

What makes this business so fabulous is that, while you may not know what will happen tomorrow, you can have a very good idea of what will happen over the long-run.




■ Three categories of players: the trade, the floor, and the speculator

In trading, you can define three categories of players: the trade, the floor, and the speculator:

(1) The trade has the best product knowledge and the best ways of getting out of positions. For example, if they are caught in a bad position in the futures markets, they can offset their risk in the cash market.

(2) The floor has the advantage of speed. You can never be faster than the floor. While the speculator doesn't have the product knowledge or the speed, he does have the advantage of not having to play.

(3) The speculator can choose to only bet when the odds are in his favor. That is an important positional advantage.


 I don't see markets; I see risks, rewards, and money

When I get together with other traders and they start exchanging war stories about different trades, I have nothing to say. To me, all our trades are the same.


■ Diversifying trading

We diversify in two ways. First, we trade more markets worldwide than any other money manager. Second, we don't just use a single best system. To provide balance, we use lots of different systems ranging from short term to long term.


Backtesting your system

If you use sufficiently rigorous methods to avoid hindsight, you can test a system and see how it would have done in the past and get a fairly good idea of how that system will perform in the future. That is our edge.


■ Financial Markets are not efficient

I have noticed that everyone who has ever told me that the markets are efficient is poor.


Two Empirical Indicators that matter

Although I don't really trade off indicators, there are two indicators that come to mind:

  • First, if a market doesn't respond to important news in the way that it should, it is telling you something very important.
  • The second item is, when a market makes a historic high, it is telling you something. No matter how any people tell you why the market shouldn't be that high, or why nothing has changed, the mere fact that the price is at a new high tells you something has changed.


The four basic principles of trading success

Applying four basic principles:

  1. Never trade counter to the market trend. There are no exceptions and always follow the system.
  2. The maximum risk on each trade is limited to 1 percent of the total equity.
  3. Diversification to an extreme
  4. Volatility is continually tracked in each market in order to generate signals to liquidate or temporarily suspend trading in those markets where the risk/reward ratio exceeds well-defined limits.



Larry Hite Trading Tips

Source: Market Wizards, Jack D. Schwager (c)





» @LarryDHite    


»  »  » 



Forex Traders: » Bill Lipschutz  | » Michael Marcus | » Randy McKay | » Stanley Druckenmiller | » Paul T. Jones | » Andrew Krieger

□ Macro Traders: » Bruce Kovner | » Colm O’ Shea | » Louis Bacon

□ Systematic Traders: » Ed Seykota | » James Simons | » Larry Hite

Hedge Fund Managers: » Ray Dalio | » David Tepper | » William Eckhardt | » Monroe Trout | » John Paulson | » Joe Vidich

□ Iconic Investors: » Warren Buffet | » Jesse Livermore | » William D. Gann | » Napoleon Hill | » George Soros | » Peter Lynch

□ Derivatives Traders: » Richard Dennis | » Peter L. Brandt | » Victor Sperandeo | » Linda Raschke | » Nassim Taleb

□ Find More: » Brokers Directory | » Automated Trading Systems