If you find yourself worried about not being able to achieve substantial profits due to errors in setting stop losses and risk management, it's worthwhile to learn from Larry Hite. Lawrence D. Hite (Larry Hite) is a professional trader in the commodities market and is one of the pioneers in the use of detailed trading systems, which were introduced in the early 1980s. As the founder and fund manager of Mint Investments, Hite successfully turned the investment firm into the largest Commodity Trading Advisor in the world, based on the total assets under management. In 2010, Larry Hite collaborated with International Standard Asset Management (ISAM) to create a multi-strategy platform for Hedge Funds and account management. In 2012, Hite received the Hedge Funds Review Americas Awards for his contributions to the development of systematic trading strategies. Currently, Larry Hite serves as the president of ISAM. Hite's philosophy on trading systems and risk management has been widely imitated and applied in commodities trading, given his impressive achievements.
Career Journey
Larry Hite was born and raised in Brooklyn, New York. Initially, he was interested in the rock music industry and even became a music group promoter while studying to become an actor and screenplay writer. However, realizing that managing the finances of rock musicians was more profitable than being a stage promoter, he shifted to the investment world. Hite began working at a stock brokerage firm and eventually served as a Hedge Fund Manager since 1968. For him, diving into the trading world with all its risks was much more profitable than merely being an analyst monitoring the market.
Risk Management Principles
One of Larry Hite's main principles in risk management is asking how much loss can be tolerated, not how much profit is desired. This is a different approach from most other traders or Hedge Fund managers, who tend to promise minimal profits to their clients. Hite recognized that losses are an inevitable part of trading and that every investor should be prepared to face them. For Hite, it's important to know how much risk one is willing to bear before thinking about potential profits.
Breakthroughs in Risk Management
Larry Hite's expertise in risk management became renowned when he developed a software system that integrated risk management, investment behavior, and portfolio systems in commodities trading. According to him, diversification is the key to overcoming human greed in trading. The software he created provides trend reversal signals because Hite is a trend-following trader.
Advice for Beginners
According to Larry Hite, the key to success in trading is not about how to open positions, but about how you manage the positions you've opened. He emphasizes the importance of managing risk and positions well, and avoiding taking risks greater than the predetermined stop loss. For Hite, accepting losses is an inseparable part of the trading process, and what matters is how you can survive in the market despite experiencing losses.
Larry Hite's career journey and perspectives on risk management provide many valuable lessons for traders, especially beginners. By limiting maximum losses in trading and managing risk wisely, we can follow in the footsteps of success achieved by Larry Hite.
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