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“I have grown fond of the systematic approach to investing and found the concept of trend following extremely appealing…”

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Replying to your question below: It took me a while to discover that fundamental and technical analysis are not effective investing tools. Over time, I have grown fond of the systematic approach to investing and found the concept of trend following extremely appealing, especially given that it can be converted into lines of Python code and strategies rigorously backtested.

Regards,
Vladimir

Some thoughts that set the stage.

Ep. 1006: Robert Breedlove Interview with Michael Covel on Trend Following Radio

Robert Breedlove
Robert Breedlove

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“There is an economic storm brewing that threatens the sandy foundations of our monetary system.”

Money is a fact of everyday life. We earn it, spend it and save it. We’re tempted to worship it and to trust it to provide for our needs. While much has been written about the power, danger, and stewardship of money, little has been written about what money actually is and whether or not money itself is moral. That information gap has been exploited to enrich a privileged few, enslave millions, and reap confusion and division throughout the world. How did this happen and what can we do about it?

Thank God for Bitcoin explores the ways in which the current monetary system is broken and what can be done to fix it. It explores the creation of money, its corruption and its potential redemption. It looks at how Bitcoin is redeeming the ills of our corrupt monetary system and how the ongoing transition to sound money is a source of hope for a broken world.

Bio: Robert Breedlove is a Bitcoin-focused entrepreneur, writer, and philosopher. He was particularly inspired by Austrian economics and the teachings of Jordan Peterson, which helped him reconcile his purely objective outlook on reality with its more subjective dimensions of valuation, morality, and meaning. Robert considers himself a Freedom Maximalist and believes he has found his life’s work in the Bitcoin space as a contributor to the separation of money and state.

In this episode of Trend Following Radio:

  • Bitcoin Definition
  • Bitcoin Vs. Gold
  • Violation of Property Rights
  • Monopoly on Violence
  • Monetary System
  • Real Estate Assets

Mentions & Resources:

“This latest phase of markup has been particularly challenging since on chain analytics…”

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I know that the crypto market is primarily comprised of whales, institutional investors and retail. I’ve seen that whales push prices higher to attract the emotional impulses of retail to chase their dreams of unimaginable profit, irrationally, in order to then sell to them towards the market cycle top and exit the market until the next accumulation. Thus there is a higher degree of emotion informing trade decisions (and I’ve had a brief “dumb” phase myself, so I know what it feels like and how it tends to behave.) and these cycles and participant traits lend to the volatility of the markets. I think it’s imperative to consider what is happening on the other side of the trade from time to time, for it to be one of the check boxes in a trade decision tree. This latest phase of markup has been particularly challenging since on chain analytics indicate that the whales that sold off during the Wyckoff distribution really haven’t bought back in. I was expecting a lower bottom than what we appear to have reached, at around 28-29k, though I’m remaining skeptical of this recovery and am aware that in prior cycles there have been strong markups that have capitulated dramatically again. In all of this I’m trying to discern signs of what actors may be in play. I don’t think this should be the central thesis to trade upon, at least not alone, but I think it’s a mistake to divorce price action from the human beings as the causal factors entirely. All this being said, I know I barely know anything about markets and trading, I’m still very much in learning mode.

Forget every word you have written here. Rip it up and start over.

My books, Jack Schwager’s books, etc. Go that path.

“The biggest obstacle I’ve had in my trading is over trading…”

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Michael, The biggest obstacle I’ve had in my trading is over trading. I have to constantly remind myself of Jesse Livermore’s rule to sit tight when I’m right.

Your strategy now? Time frame?

I apologize in advance for this being lengthy. My strategy now is to sell my full position whenever the 10-Week Exponential Moving Average Line closes lower than the week prior. I will give my position until around 2:00 PM CST on Fridays to either pass or fail this test. If it’s below, I sell. I devised this test after reading all of Steve Burns’ books, which I otherwise wouldn’t have known of without your podcast. And in conjunction with those books, Ed Sekoyta’s quote, “The trend is your friend except at the end, when it bends.” I will always set up a stop-loss at -5% below the 10-Week Exponential Moving Average as my insurance policy in the event there’s a COVID-19 like selloff such as in March of 2020. I maintain this -5% stop-loss under the 10-Week Exponential Moving Average as it advances. I previously used the CAN SLIM system from Investor’s Business Daily, and would sell when I was up 20-25% and take the profit. After doing post analysis on my trades I discovered I was often leaving a ton of money on the table as many of these stocks would continue going up. My post analysis (which I refer to as my version of poor man’s back testing) by the time the 10-Week Exponential Moving Average bent downward it was well above the price I sold at. I have corrected this by no longer having a price objective to sell at. This has helped me from having numerous sell rules, to just two. It’s easier to keep it simple. Since I have your ear, I came across your podcast while looking for more interviews, insights, etc from Mark Minervini after I read his books. After listening to those podcasts with him I was drawn to your matter of fact, no bullshit attitude. I began bingeing your podcasts from Episode #1 in January of this year. I am currently on Episode #477. Through your podcasts I have nearly 400 books in my Amazon Save For Later queue. Every guest you have on who has wrote a book, I add it to my queue. I also added books from Milton Friedman, Von Mises, and others who have since passed as you have discussed them on your podcasts. I have read two of your books The Complete Turtle Trader, and Trend Following. The Little Book of Trading, will be the next one of yours I’ll read. I have just finished Ed Thorpe’s, A Man for All Markets, and I just started Jack Schwager’s, Getting Started in Technical Analysis. For the record I couldn’t believe the size of your book Trend Following. I figured it would take me a month to read it. I opened it up and read it within a week. I couldn’t put it down. Lastly, when it comes to CNBC, Bloomberg, and the fundamentalists, “People want to be bullshitted”. I can’t take credit for coming up with this quote, but after hearing it, it’s so true. And it’s never more true than today. I know you’ve discussed ‘shifting through the bullshit’, buy in my opinion, that quote is the WHY. It’s why CNBC exists, its why Bloomberg exists. You may have specifically said this as I am still 5 years behind in your podcasts, but every time you rant (I love when you do it), I can’t help but think of this quote. Thank your for your time, and keep educating all of us with your podcasts and the guests you have! PS: Keep swearing…it gives you THAT edge!

Thanks!

“So thank you for writing such great books…”

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I am a 37 year old guy who first placed a trade in fannie mae and freddie mac back in 2008 when the market was going bad. Since then, it sparked an interest in the trading aspect and i yearned to learn more about trading. And I spoke to a friend of mine who was a SVP at AXA Financial who would sponsor me for the series 7, 66 and I eventually became a FA which I was misled at first. But the spark was in trading for my own account and not a FA. I also was told by my family not to worry about the stock market and that the family businesses are what I should consider my stock market. I had to hide the fact that I was taking courses and learning about trading and thought that I will not be able to work for a hedge fund or prop desk ever. Your books gave me clarity that It is proven that anyone can become a trader and succeed at becoming a trader and the way to view the markets and myself. I also was learning that besides all the bs in material I have read, I need to concentrate on the basics of trends and not on the latest indicator. I haven’t succeed financially to the amount of those traders, but I am sure eventually I will and with the help of your book. I will always thank the guy who came into my family’s restaurant and leaned me towards turtle traders and told me about what experiment and from then I learned about your books and learned more about trend following and how the turtles traded. So Thank you for writing such great books.

You are welcome.

“Any directional coaching appreciated!”

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I am still learning. Any directional coaching appreciated!

I signed up for one of your classes this AM on the book purchase/password site.

I have been living in Chapter 28 of your book since 2005 (investment wholesaler)!

I am unlearning 16 years of what Chapter 28 railed on (with extreme accuracy I might add).

I got to Chapter 28, and I felt like Bruce Willis in “6th Sense” or Chaz Palmintieri in “Usual Suspects” when it hit them at the end and they figured it all out!!

I have already gifted “Trend Following” book to others that need to pull the ejection handle from “The Great Hypocrisy.”

I have listened to Episode 40 multiple times and sent it to a lot of friends.

Scales are falling off of eyes!

You have moved me to a new understanding of reality and I am open to ideas!

Go here, here, here, here, here, here and here.

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