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Author: Michael Covel

“All the theories I had generated in my head about trend following started to…”

Posted on by Michael Covel

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Hello Michael,

Your email got me excited and wanted to share my story incase you happen to read it. I heard about your book through a friend recently and ordered it on Amazon – and I am already hooked. I was reading and reading and reading, understood in theory what you said (in whatever capacity I can) until one day I stopped reading and made a google sheet with data on some stocks/commodities, and applied a 200 day moving average rule. It was then when all the theories I had generated in my head about trend following started to take the form of true understanding and the concept became more clear – this was exactly two weeks ago. Since then, I am reading the book with more intent and clarity and I am slowly building my portfolio and have slowly started using trend following in my investments. I still have a long way to go, but thank you for the work you do! Its simple – its as straightforward of a strategy that it can be – to the point that when I tried to explain it to a couple of my friends – they dont buy the idea.

Regarding the biggest trading challenge, here are some key pointers that applied to me:

1) So far not knowing is the biggest challenge – I had no idea about trend following until my friend told me about it.

2) I have always been a classic Buy and Hold Guy – with roughly half a Million Dollars of Investments in index funds and some stocks, all through automation – always brought and never sold till date. Automated investments is boring, trend following from what I hear from you in the book is boring too, and its one of the biggest reason I feel I am getting hooked to it.

The challenges I am trying to solve related to trend following:

1) I am using a 200 day Moving Average – would you recommend using less/more?

2) Having a hard time picking up investments – no idea about how to invests in currencies, eurodollar, inr/dollar, steel, Japan’s Nikkei and other non-stock investments, trying to do some research on the same and expanding my horizons.

3) My google sheet that shows trend is robust – all it needs is plug a ticker name – and I can easily see the trend and make a buy/sell decision (manually still) – the key challenge is identifying these diverse investments.

4) I work at a Bank for an IT product and have access to Trade Data (I dont understand shit about it though), but my bank imposes a 30-day holding period – this policy has definitely created some resistance in my head my to pursue trend following, but its too early to tell. I am in this for the long run.

5) Also getting confused about making decisions in investing in stocks like SpaceX – dont care if its ivolatile, dont care if its risky, but trying to understand how does trend pattern fit into new stocks like this? Do you just reduce the moving average to a month in such cases? Or just ignore it completely until you have sufficient data?

Hope to hear your insights on the same. Thank you once again for the work you do, I have also started listening to your podcasts recently, and would continue diving into this methodology in more depth and apply it in my investment strategy.

Regards,
Rishab K.

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“I remember this guru on CNBC…”

Posted on by Michael Covel

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Dear Michael,

I remember this guru on CNBC a few days ago. 100% BS.

His stockholders should be ready to invest more in his company. https://www.procapfinancial.com/about

Since launch last year the price is down 89%.

Best,
Robin M.

Par for the course.

Thanks!

Welcome!

How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

• Trend Following Podcast Guests
• Frequently Asked Questions
• Performance
• Research
• Markets to Trade
• Crisis Times
• Trading Technology
• About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.

A Story Is Not a Trade

Posted on by Michael Covel

Anthony Pompliano put out a pitch that is worth your attention, though not for the reason he intended. In his post, Bitcoin had run up to 126,000 and then dropped to 62,000, and that cut in half was his reason to get excited. His message: “If you liked Bitcoin at $126,000, you should love it at $62,000.”

Then the reasons. It is a store of value. Wall Street is adopting it. It is becoming the backbone of digital credit. Sovereign wealth funds are buying it. It keeps producing block after block. Nothing has changed, he says. Buy the dip.

Read that and notice what is missing. Every line is a story. Not one of them is price.

This is the oldest trap in the market dressed in new clothes. “You liked it higher, so you should love it lower” only makes sense if you have decided in advance to ignore the one number that pays you. An asset that falls fifty percent is not on sale. It is in a downtrend until price proves otherwise. The discount you think you are getting is the market telling you something, and the story is what people reach for to argue with the tape.

Look at the five checkmarks again. Store of value. Institutional adoption. Digital credit. Sovereign buyers. Blocks on the chain. Every one of those can be true while the price falls by half again. Narrative and direction are not the same thing. The market has never once paid a trader for being right about the story. It pays you for being on the right side of the move. That is the whole game, and it is the part the story sellers leave out, because “I have a thesis” sounds smart and “I follow price” sounds boring.

Here is the line that gives it away. Nothing has changed. One thing changed. The only thing that matters. The price got cut in half. That is not noise around the thesis. That is the message, and the thesis is what keeps people from hearing it.

Now hear what I am not saying. I am not telling you Bitcoin is good or bad. A trend follower does not hold an opinion on Bitcoin any more than he holds one on soybeans or the yen. If Bitcoin trends up, you ride it up. When the trend breaks, you step aside and let the people with conviction catch the falling knife. When price turns and proves itself again, you get back on. No thesis required. No dip to be brave about. No need to love anything.

That is the difference between a story and a trade. A story asks you to believe and hold and add while the chart bleeds. A trade asks you one question. Which way is price moving, and are you on the right side of it. You can love a story all the way to zero. The trend does not care how you feel, and that is why it is the only thing worth following.

Are you buying the dip? Wrong question. Are you following the trend? That is the only one that has ever paid.

How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

• Trend Following Podcast Guests
• Frequently Asked Questions
• Performance
• Research
• Markets to Trade
• Crisis Times
• Trading Technology
• About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.

“You are not trading. You are donating…”

Posted on by Michael Covel

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“You are not trading… you are donating.”

Love it!

David N.

Thanks!

Welcome!

How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

• Trend Following Podcast Guests
• Frequently Asked Questions
• Performance
• Research
• Markets to Trade
• Crisis Times
• Trading Technology
• About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.