Larry Tentarelli joins Michael Covel for his second appearance on the podcast; his no-nonsense take on trend following is a perfect match for Covel. Covel asks Tentarelli about his background and how he’s become such an advocate for systematic trading. After working for Merrill Lynch for about five years, Tentarelli realized it wasn’t the right side of the business for him; however, he still retained his passion for trading. Tentarelli set out on his own and picked up Covel’s “Trend Following” where he learned about traders that didn’t pay attention to the news or fundamentals, used price as their primary data, and traded every market the same way. Covel and Tentarelli talk about educating others about trend following and trying to get these messages across to the masses; the difference between following and predicting trends; getting over the emotional tug-of-war that so many investors and traders experience. Covel talks about one particular family office with a single client that was much more open to trend following v. other offices in Asia, and he and Tentarelli go on to discuss Cypress and why predicting the implosion of the financial system simply isn’t relevant to a trend following trader; how using a fifty day moving average allows you to not pay attention to the latest news; the idea of capturing the “middle meat”, not getting in at the bottom or out at the top, and following the path of least resistance; Tentarelli’s connection to Tom Basso from “The New Market Wizards”, what he’s learned from him, and the importance of reaching out to others; Tom DeMark and predictive technical analysis vs. reactive technical analysis, the lack of track records in the predictive technical analysis genre, and the advantages for risk management in reactive technical analysis styles; John Hussman; and the importance of exit strategies.