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the interpretation and application of price action concepts

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We all share a similar path in Trading. Even though you may not be a consistently profitable trader now, you can chose to enjoy the path. This alone may make the difference in your success.



Mind Maps - the beliefs and trading practices of Amos Hostetter by John Hayden

The Mind Map technique is a way to enhance your learning and raise your trading to a new level. It aids you in accessing both the right and left hemisphere of your brain simultaneously. The logical and creative area of the brain. You will experience increased focus while studying and increased retention of trading concepts and your trading plan during the trading day.  The act of writing by hand and use of multicolor pens also accesses both hemispheres. Additional, classical music does the same. So while studying or trading you might consider playing music very low in the background. Pachelbel's Canon (download) is one of the most effective.

I first practiced this technique after I had open heart surgery. It allowed me to plan and create a more healthy lifestyle. 

I have enlarged image #4. It contains some great trade advise and setups which I will cover at a later date. 

If you download the   pdf format  it may be a clearer quality with the ability to rotate the images. 

Here is  a list members experience with Mind Maps

by John Hayden

The following are the mind maps I made about the beliefs and trading practices of Amos Hostetter (8/27/1902 to 1/30/1977). Mind Maps are a methodology that allows you to organize complicated key thoughts in such a way that they are more easily utilized. It presents a "picture" that allows you to see the "big picture".

I would highly recommend books by Tony or/and Barry Buzan. Their most recent book: "The Mind Map Book: How to Use Radiant Thinking to Maximize Your Brainís Untapped Potential" will better explain my mind maps.

As a general rule I start drawing my mind maps at the 3:00 position and then proceed counter-clockwise. For example on the first page we see that Amos Philosophy would follow the fundamentals if the charts agreed. He also believed that in order to develop a good "feel" for the markets a trader should the charts by hand.

In any case I hope you enjoy them.

John Hayden


Mind Maps 1
Mind Maps 2
Mind Maps 3
Mind Maps 4
all above charts within chart 4 are enlarged below


If long any reaction that exceeds 60% of immediate major up move triggers emergency stop - rarely hit before other stops being hit. (Not to be used in congestion areas minor moves)
If a uninterrupted up move is followed by steep reaction  that approaches or exceeds 50% of price more then rallies-the magnitude of the reaction indicates caution. If the  bulls can keep prices from retracing 50% the subsequent  move the rally is intact-otherwise exit long
  • A-B-Major Rally to new high ground
  • X - Not a false Breakout as it occurred too early in uptrend AND it didn't fall back into prior congestion "C" AND  the congestion zone was too short
  • -The congestion zone after E was significant, "y" was false breakout and when it fell back into prior congestion zone confirmed the bull market had lost its vigor and longs should be exited
Hidden counter-trend moves

Amos Hostetter Ė 8/27/1902 to 1/30/1977


1. Experience must teach. Follow it invariably.

2. Observation gives the best tips of all. Observe market behavior and experience shows how to profit.

3. Buying on a rising market is the comfortable way. 

The point is not so much to buy as cheap as possible or go short at the top prices, but to buy as & sell at the right time.

4. Remember a market is never too high for you to begin buying or too low to begin selling. 

Let your tape reading show you when to begin. After the initial transaction donít make a second unless the first shows a profit.

5. There is a great deal in starting right in every enterprise.

6. When something happens on which you did not count when your plans were made, it behooves you to utilize the opportunity.

7. In a bear a market it is always wise to cover if complete demoralization develops suddenly.

8. Stick to facts only and govern your actions accordingly.

9. What is abnormal is seldom a desirable factor in a traders calculations. If a market doesnít act right, donít touch it.


1. Donít sacrifice your position for fluctuations.

2. Donít expect the market to end in a blaze of glory. Look out for warnings.

3. Donít expect the tape to be a lecturer. Itís enough to see that something is wrong.

4. Never try to sell at the top. It isnít wise. Sell after a reaction if there is no rally.

5. Donít imagine that a market that has once sold at 150 must be cheap at 130.

6. Donít buck the market trend.

7. Donít look for the breaks. Look out for warnings.

8. Donít try to make an average from a losing game.

9. 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.


The Dangers in Trading caused by Human Nature:

1. Fear Ė fearful of profit and one acts too soon.

2. Hope Ė hope for a change in the forces against one.

3. Lack of confidence in ones own judgment.

4. Never cease to do your own thinking.

5. A man must not sweat eternal allegiance to either the bear or bull side. His concern lies in being right.

6. Laziness prevents a trader from keeping posted to the minute.

7. The individual fails to stick to FACTS!

8. People believe what it pleases them to believe.

Amos Hostetter


General Principles of Trading

1. Take care of your losses & and your profits will take care of themselves.

a. You need big wins to pay for small losses.

b. Big Wins are only possible when you stay with trend all the way.

2. When in Doubt get OUT!

a. Donít Gamble

b. Make sure the "doubt" is real.

1. Fundamentals

2. Market Action

3. Not your nervousness!

3. All Major Trends take a long time to work themselves out.

a. Let others argue about day-to-day news.

b. Be Patient

c. Pay attention to what the market heard, and how it reacted.

4. Must have steady devotion to facts, facts, and facts.

5. Draw charts by hand as it adds hand Ė eye sensory input to help price action sink in.

6. Only trade when major trend exist and only in that direction. Never short a bull market to catch a dip, etc.

7. Never trade in a "trading market"

8. Stay with the trend Ė donít grab a quick profit.

9. Once a position moves in your favor, sit stubbornly until you think the trend has run its course.

10. If the 4pt profit shrinks to a 2 point profit Ė donít panic.

11. Save your fears and panic for the position that starts with a 2-point loss.

12. Maximum exposure on any given trade must not exceed 25% of equity.

Ask these questions before making any trade (Created by Amos April, 1966)

1. Do you think a MAJOR trend has either started or is about to start?

2. IS the contemplated trade in the direction of this trend?

3. Do you think that the move will be a substantial one (at least 10% of current price), and will run for a considerable period of time (3 Ė 9 months)?

4. Have you selected an actual or approximate stop loss where you would be willing to admit you are actually wrong, and take your loss?

5. Summarize your ideas:

I believe that ________________ (commodity & contract month) now selling at ______________ (current price) will advance/decline to ____________ in ___________ months. Meanwhile, I will stop my position at ___________ .

6. Is the potential move that you visualize at least twice the loss you will take if stopped out? (Minimum is 2:1 profits : loss, preferably 3:1)

7. Is the loss that you will take if stopped out (on the number of contracts being considered) less than 25% of the equity in the commodity account? (Preferably this loss will be less than 10%)

If ALL are yes Ė do the trade Ė but 1 NO kills the trade.

Before Exiting the trade (assuming the stop has not been hit) ask these questions:

1. Does the position show a loss?

2. Has it reached the price objective, which you expected when trade was initiated?

3. Have you held it for the period of time stated above?

4. Are you concerned that the major trend has changed since your forecast?

If ALL answers are NO then you must hold your position, 1 yes Ė you may exit.
























































































































































































































































































































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