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 Stanley Kroll, as profiled in John Train’s fascinating book, The Money Masters, was a legendary commodity trader, who operated during the 1960s and 1970s. He was the author or co-author of a number of books on futures trading. His first book, originally published in 1974 and the only title still in print and available, was The Professional
Commodity Trader. This is a well written, first-person, look-over-my-shoulder account of Kroll’s trading campaigns during the wild and wooly markets of 1973 and a close study of his trading philosophy and techniques. Kroll’s primary focus is on trading only with the major long-term trend; he favors entering trades only during significant countertrend reactions and holding positions until his long-term price objectives are met, his protective stop loss level is violated, or it becomes apparent that the primary trend has changed direction. This book is filled with charted and annotated examples of Kroll’s actual trades in various markets. He discusses at length the reasoning and timing behind the decisions involved in entering, adding to and liquidating each position. He held most positions for weeks or even months, which will be hard for today's typical, quick, in-and-out trader to imagine. Kroll quotes throughout from the venerable classic, Reminiscences of a Stock Operator, apparently Kroll’s favorite book, which chronicles the trading experiences and philosophy of immortal speculator, Jesse Livermore. The key sections to which Kroll refers are those in which Livermore advises “the big money is in the big move” and his biggest profits were made simply by “sitting tight”. Kroll kept a copy of Reminiscences at his desk at all times for inspiration whenever he felt tempted to exit a profitable position prematurely or to try scalping the market for small moves. Of special interest is the time period under study (1973), which in this writer’s 40-year experience in and observation of the commodity markets, was the "wildest” and most unforgettable year in memory. That’s the year in which soybeans went from $4.00 to $12.90 (and, subsequently, back down to $5.00), wheat went from $1.40 to $6.45, and other markets made huge moves as well. While Kroll “grabbed the bull by the horns” and realized huge profits in these runaway bull markets, this writer cringed in fear and withdrew from trading, petrified of the risk inherent in huge moves consisting of strings of “locked-limit” days in both directions. Kroll’s narrative is made even more credible by the inclusion of a summary detailing the track record of 38 individual accounts he managed during the 1971 - 1973 time period, which shows 37 of the 38 with net profits, with most having annualized returns well in excess of 200 percent. The one loser lost less than 2 percent. In the aggregate, he parlayed approximately $600,000 of capital into almost $3 million during this period. Shortly after he completed this book, Kroll closed out a huge wheat position he had held for months, closed out his business and retired from futures trading at the age of 40. For years, he enjoyed his profits and, in so doing, did what most “big winners” never do: take time to “smell the roses” with their profits before the market takes them back. Kroll did, eventually, succumb to the temptation to return to trading around 1980. The Professional Commodity Trader , published by Traders Press, is fascinating and highly educational reading for futures traders interested in formulating a viable, long-term approach to trading. The manner in which this book is written makes it a valuable, vicarious learning experience from one of the best traders of all time, who truly lived up to the standards he so respected as espoused by his hero, Livermore, but who kept his profits instead of losing them. It was my personal pleasure and privilege to be friends with Stanley Kroll for a number of years before his death in 1999, and I considered him a generous, kind and considerate person who was truly more concerned with helping others than with promoting himself. This book is a fitting memorial in his honor. |
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