Author: Michael Covel

George Crapple of trend follower Millburn Ridgefield offered wisdom in a Barclay Group publication:

“A futures fund traditionally invests its underlying assets in Treasury securities, some of which are deposited as collateral or margin for futures and forward positions. These positions typically have a face value of three to seven times the net asset value of the fund as in the case of Millburn Ridgefield Corporation’s funds. The substitution of individual equities for a portion of the underlying Treasury bill asset base would reduce the non-correlation of managed futures with equities, unless the manager adopted a methodology of hedging the equity exposure in bear markets. Regardless of the level of substitution of equities for Treasury bills, the leverage in a futures portfolio will still make the portfolio substantially managed futures, and the arguments for including such a strategy in a total portfolio remain intact. Since investors often look at each of their investments on a stand alone basis as well as on the basis of what they contribute to an overall portfolio, the inclusion of some equities in a futures portfolio can enhance rate of return and, in many situations, reduce volatility due to the non-correlation of the strategies.”

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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.

I have had the opportunity over the years to spend time with Peter Borish. He is truly one of the straight-shooters on Wall Street. A comment from his firm’s marketing materials:

“We don’t have a bias. In our view, the market is always right. So we remain flexible. Our approach is to analyze the data, pour over the stats, and call the plays to Joe [Joe Niciforo, Chairman of Twinfields Capital] – but it’s Joe who makes the final trading decision in light of his experience and read of the market. Unlike chess, in trading there’s no one right move. There’s an element of uncertainty. In that way trading is more like backgammon – highly unpredictable. But notice one thing: the same top players always compete in the big tournaments. That speaks to experience. Models are crucial to what we do as traders. We couldn’t work without them. But if you don’t have an experienced person making decisions in what is often an uncertain environment, you’ll lose. Joe represents experience and decisiveness in a cool head. He has the maturity to know when to follow our themes and when to ignore our calls and follow his instincts.”
Peter Borish

I spoke with a gentleman today originally profiled in Jack Schwager’s Market Wizards book (not Ed Seykota for those guessing). He wanted to talk about risk management. He made the point that as long as you have “great risk management” your entries could be “random”. His firm, for example, makes money from random entries. For all those “technical traders” out there relying on the next great “predictive technical indicator”, his point should cause pause.

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.

Ed Seykota on his web site offers insight into “trends”:

“All methods of defining trends compare various combinations of historical price points. All trends are historical, none are in the present. There is no way to determine the current trend, or even define what current trend might mean; we can only determine historical trends. The only way to measure a now-trend (one entirely in the moment of now) would be to take two points, both in the now and compute their difference. Motion, velocity and trend do not exist in the now. They do not appear in snapshots. Trend does not exist in the now and the phrase, “the trend” has no inherent meaning. When we speak of trends, we are speaking, necessarily, from some or another view of history. There is no such thing as a current trend. When we speak of trends we are necessarily projecting our own definitions.”

Boom.

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.

The great line:

“The stock market is like sex. It feels the best just before it ends.”
Harvey Eisen
Dow and Jones: The Wizards of Wall Street
“Biography: A & E Television Network”

More.