During this episode, Larry and I discuss trading, risk philosophy and probability, life and memorable moments, and Larry’s work as a philanthropist too. By 1990, Mint was the world’s largest hedge fund at the time, with $1-billion of assets under management. Besides a reputation for extreme risk management, Larry is perhaps best known as co-founding Mint Investments—a hedge fund formed in 1981. There’s no other way to say it; Larry Hite is the definition of a market veteran, he’s someone who first developed an interest for trading and markets during the 60’s… In 2000, after more than three decades in commodity trading, Hite chose to focus on his family office activities, which included proprietary trading and the funding of continued research and development in the field of systematic trading.In that same year, Hite also became a principal investor and chairman of Metropolitan Venture Partners, a venture capital firm specializing in technology-based firms. Investing like Larry Hite isn’t just about following a set of rules; it’s about cultivating a mindset that prioritizes data-driven decisions, disciplined risk management, and continuous improvement.

This principle is the foundation of trend following. Ricardo’s timeless principle. This applies to financial decisions, career choices, and even dating.

Balancing Risk and Reward

The straightforward thing that Hite is talking about is trend following — and he says anyone can do it. “I had to find a way to use the tools that were open to me,” he said on “Trend Following with Michael Covel,” a trading podcast. Download the free Kindle app and start reading Kindle books instantly on your smartphone, tablet or computer – no Kindle device required. In 1994, he retired from his role as hands-on fund manager at Mint. Through his early-life struggles and failures, Hite came to know himself well – his fears, his frustrations, his self-doubt, and his tolerance for all of the above. The empowering story of Larry Hite’s unlikely rise to the top of the hedge fund world – with critical insights and lessons you can take to the bank

• You should always conduct your own research or consult with a qualified financial advisor before making any investment or trading decisions.
• This book is a must read for every trader.”–Tom Basso, founder of Trendstat Capital Management, Inc
• Hite’s focus on risk management became legendary.
• System trading offers a pathway to disciplined, consistent, and potentially lucrative trading, embodying the essence of Larry Hite’s enduring legacy in the world of finance.
• Standing on the shoulders of giants such as Larry Hite has enabled the Outcome strategies to deliver superior risk-adjusted returns for our clients.

Practical Steps for Implementing Hite’s Strategies in Your Own Trading

In addition, we share Hite’s reverence for risk, and are at least as focused on managing xm group review risk and limiting losses in hostile markets as we are on generating gains in favorable environments. “Human nature – that is, our still primitive lizard brains – drives financial markets. Hite does not believe that markets are efficient, and thinks that this lack of efficiency creates investment opportunities. Specifically, Hite divulges that “We approach markets backwards.

The winning traders and the winning poker players both think in terms of odds. The book is available for immediate PDF access and has received high ratings from readers. If you want the chance for outsized returns trend following is where to be, but this ain’t clipping coupons. Trend Following™, its subsidiaries, employees, and agents do not solicit or execute trades or give investment advice, and are not registered as brokers or advisors with any federal or state agency. Readers are solely responsible for selection of stocks, currencies, options, commodities, futures contracts, strategies, and monitoring their brokerage accounts. We assume all data to be accurate, but assume no responsibility for errors, omissions or clerical errors made by sources.

Market Adaptability

Larry is skeptical that anyone can predict markets. One of my favorite anecdotes regarding risk is Hite’s reflection on a conversation he thinkmarkets broker review had with one of the world’s largest coffee traders, who asked, “Larry, how can you know more about coffee than me? His approach to investing clearly reflects his respect for risk. Hite places a greater emphasis on risk management than on generating profits, claiming that mistakes regarding risk can lead to catastrophic results.

For the uninitiated, trend following is a systematic, quantitative approach to trading that advocates for an investor to buy when an asset’s price is going up and sell when it’s going down. “In addition to sharing phenomenal wisdom and excellent trading principles, the book chronicles Larry’s life story, from underdog to the highest level of trading success. The principles he generously shares can improve your personal and trading life.” –Steve Burns, NewTraderU.com “Larry Hite was one of the pioneers of trend-following trading. He founded Mint Asset Management, which became the first billion-dollar hedge fund. The Rule is a breezy read in which Hite reflects on his life and provides his take on the lessons of trading and life–spoiler alert, they are both the same.” –Jack Schwager, author of the Market Wizards series This motivational book reveals that by accepting the facts of his life and of himself, he was able to accept markets as they are. Investing in financial markets inherently carries substantial risks, including but not limited to market volatility, economic uncertainties, geopolitical developments, and liquidity risks.

Larry was a pioneer in his exclusive reliance on a data-driven, systematic approach, using statistical analysis of historical data to develop trading rules, which are the basis of his investment decisions. Hite was able to garner his fortune through the act of trend following — a stock trading strategy that advocates for a systematic, quantitative, hopping-on-the-bandwagon approach to buys/sells. Hite’s approach to trading emphasizes risk management, trend following, and the use of statistical analysis and information technology.

• By the mid-1980s, Mint was managing over $1 billion — making it the first hedge fund to cross that threshold.
• System trading is a method of trading that relies on predefined rules and algorithms to make trading decisions.
• “If you diversify, control your risk, and go with the trend, it just has to work.”
• This approach involves identifying and capitalizing on sustained movements in market prices.
• This reinforced the need to manage risk based on probabilities, not predictions.

The responsibility for making informed investment decisions rests entirely with the individual. Performance benchmarks, such as market indexes mentioned on this site, are theoretical and are not directly investable. Past performance indicators, including historical data, backtesting results, and hypothetical scenarios, should never be viewed as guarantees or reliable predictions of future performance. Using leverage may result in losing more than your initial invested capital, incurring margin calls, experiencing substantial interest costs, or suffering severe financial distress. You must be fully aware that there is always the potential for partial or total loss of your principal investment. System trading offers a pathway to disciplined, consistent, and potentially lucrative trading, embodying the essence of Larry Hite’s enduring legacy in the world of finance.

Balancing risk and reward is essential for optimizing portfolio performance. Hite’s approach to position sizing is both strategic and disciplined. Position sizing involves determining the appropriate amount to invest in each trade based on the level of risk.

These trades not only demonstrate his ability to capitalize on market opportunities but also provide valuable lessons for traders looking to adopt similar strategies. Whether the market is bullish or bearish, trend following strategies seek to maximize gains by staying on the right side of the trend. Identifying trends is crucial because it allows traders to align their positions with the prevailing market direction. These principles ensure that his trading remains disciplined, data-driven, and resilient to market fluctuations. Hite’s approach to trading was firmly rooted in data-driven analysis. His belief in the power of data-driven trading led him to develop sophisticated algorithms that could analyze market patterns and execute trades with precision and consistency.

He in no way bases his approach to investing on making predictions, which he believes is an exercise in futility. But the point is, he didn’t look at the risk.” Five years later, Larry heard that this magnate lost $100 million in the coffee market.

Tips for Refining and Optimizing Your Strategy Over Time

The decisions you make based on information from this website are entirely at your own risk. Welcome to my journey in the world of fintech and data science! He built a fortune not by trying to control the chaos, but by accepting it — and turning risk into his greatest weapon. Larry Hite didn’t outsmart the market — he outlasted it. “You don’t need to know what the market will do tomorrow — you just need to know how to respond when it moves.”

In 2000, Hite chose to focus on his family office activities, which included proprietary trading and the funding of continued research and development in the field of systematic trading. Between 2002 and 2008, Noah was a proprietary trader in the equities division of Goldman Sachs, where he deployed the firm’s capital in several quantitatively-driven investment strategies. From 2008 to 2016, Noah was CEO and CIO of GenFund Management Inc. (formerly Genuity Fund Management), where he designed and managed data-driven, statistically-based equity funds. Standing on the shoulders of giants such fp markets review as Larry Hite has enabled the Outcome strategies to deliver superior risk-adjusted returns for our clients.

Potential Pitfalls and Difficulties in Adopting a System Trading Approach

Generally, traders use moving averages, support and resistance levels, and defined channels to identify, confirm, and dispel trends. As a testament to this notion, his firm — Mint Investment Management Co. — was the first hedge fund to hit $1 billion in assets under management, with Hite steering the ship. By 1990, the company had become the largest commodity trading advisor in the world in terms of assets under management. By focusing on realistic returns on your investments – versus what you expect or hope to get – you immediately improve your probability for success. The Rule shows that investing decisions are not only bets or gambles but investments in time, energy, and attention. In this book, you’ll walk of the footsteps of an investing legend, who imparts smart, practical trading lessons throughout the journey.

The key lessons were to set up a system that fully automated trades, blocking changes to the system, and constantly diversifying the individual investments. The actual journey to enduring success, however, was rocky. The trick to amassing wealth, Hite said, is to bet big (but not one’s shirt) on stocks or futures that have minimal risk but great potential. But the trend investor won’t be selling when the wave peaks at its highest, but when it falls back to the stop-loss level, which Hite programs to change as the price rises. At worst, I would have a small loss or, because I spread my investments, a bunch of small losses. After a six-year struggle, Hite graduated from NYU, but instead of working at an investment firm, he tried promoting bands and taking a cut at the gate.