Please enjoy my monologue No Clue with Michael Covel on Trend Following Radio.
Just wanted to say thanks. I’ve been reading your books and listening to your podcast for years. At one point I decided to get into trend following but updating the spreadsheets got old so I bought a book about coding. That led to a whole bunch of unintended things.
Ten years later I’m defending a dissertation for my PhD in computational economics. I just went through a successful series A for a company I co-founded in the supply chain industry. And none of this is trading based.
All of it started because I risked the time to learn to code and applied it to math and my industry. Crazy. Small risk. Big upside. Trading a different way.
I just wanted to say thanks and let you know your stuff had a big impact for me.
Great story. Thanks!
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I was just listening to your episode ”Continuous Improvement” from the 13th of July 2016. I really recommend you listen to it, it is only 20 min. The Swede you are talking about is me and I am really laughing a lot about the episode today, 6.5 years later.
It is so funny how correct you were and how stupid I was. I guess I now can understand a little bit more of how tiresome it must be for you to receive those kind of emails haha! To my defence, I was only 20 years old 🙂
However, listening to this episode, I realize what a positive impact you have had on my perspective towards both the market and life. I would like to sincerely thank you for both of them.
Your answers in the episode made me really think.
Maybe even you, regardless of your success, need to hear that you actually create a genuine impact on the micro-level, thank you for that!
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My guest today is Larry Hite, a hedge fund manager who is credited as one of the forefathers of system trading. He co-founded Mint Investments in 1981, which by 1990, had become the largest commodity trading advisor in the world in terms of assets under management. After forming a partnership with the Man Group in the same year, he pioneered the principal protected fund concept, leading to a number of successful structured products and financial engineering innovations.
The topic is Trend Following.
In this episode of Trend Following Radio we discuss:
- Career risk
- Larry Hite’s strategies
- Risk and reward
Mentions & Resources:
- Larry Hite
- The Rule: How I Beat the Odds in the Markets and in Life – and How You Can Too
- Paul Tudor Jones
Listen to this episode:
- Listen to this podcast on iTunes. (Please leave a rating!)
- Listen on Spotify.
- Listen on Stitcher.
- Libysn RSS.
- Download as MP3 by right-clicking here and choosing “save as.”
- Free Video.
[Biggest challenge I face] I’m not sure which rule (game plan) I should use repetitively for 20, 30 years.
I have followed 3 different gurus, and now you are the 4th I follow. All have different rules and game plan. 1 emphasize on stock value, another on price action, another in between.
However, every time I see the market, I fear to enter a trade. Not sure if the homework I do is sufficient to identify a quality trade? How many checklists must I tick before I can identify a good trade? How much stop loss do I need to put? How much % of my portfolio per stock? How many stocks do I need to monitor daily, or weekly?
But following many gurus, it does bring me to you. I like the trend following concept. No need to feel restless on the news.
I am currently reading your book “trend following” (published 2007) from a local library which I come to know about you, I’m just reading til page 20+.
Which book will you recommend so that there is a strategy I can learn from you and start trade using the strategy? Or must I join your course? Cause this book that I am currently reading, (more on physiology) which is also really important, change my mind too! Thanks for that.
Hope to hear from you soon.
I help people with books, a podcast and training/courses. All are options. Start with the links below.
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Firstly, I just wanted to say thanks for the work you have done for the trend following industry. I picked up your original Trend Following book well over a decade ago and it really opened my mind. I have been a professional trader for a number of years and although the strategies of the firms I’ve been at haven’t really employed what I would call trend following, I believe at the core of it, it isn’t so much about the directional aspect of trend following its about the approach to risk, no matter your methodology for selecting your entry the unavoidable truth is losses are guaranteed, but keeping them as small as possible with an asymmetric pay-out is your best chance at trading and life as you are letting randomness and chaos in life work in your favour. I have seen highly successful traders from mean reversion, to trend following, to stat arb all be successful by using that core tenant.
I have become more interested in learning how to apply trend following to other parts of my life, as it’s such an elegant way to view the world its almost a philosophy, I applied it to dating and am now married, applied it to looking for a house and so on. I have recently read The Rule and although wasn’t too much in the book I didn’t already know it was fantastic at cementing the philosophy.
My question to you is, as someone that has studied this philosophy of trend following and I think has looked at it from a more “spiritual perspective” (I don’t mean that in any woo woo way but I mean the wider implications of living your life in this way) have you come across any complimentary books, theories or philosophies outside the world of trading that support this mentality?
I know elements of Buddhism are arguably about going with the flow, but I don’t feel Buddhists are particularly concerned about maximising payouts, it’s more about having no objective want or need which doesn’t really sit right with me. I’m very goal orientated and feel that’s important, I don’t think Buddhists are particularly bothered by how much they lose or asymmetric rewards. I feel there are so many things out of my control in life which I have learned to harness for my own good in the markets but troubled with how to deal with the “trend” of many other cultural things that concern me. My instinct is to “hold my losses” and stick to my way of thinking in life and often wonder if I am acting as a trend follower should. I know you have also stepped into some political discourse and other non market related talking points. Have you found effective tools for using TF for navigating areas outside the markets?
Hope that makes sense and is somewhat of an interesting point to ponder.
I agree. Trend following fits nicely with Buddhism. Alan Watts, for example.
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[My biggest challenge is] Determining the best trigger/entry point and in what time frame. Will using the turtle’s risk management over multiple time frames allow further diversification?
Well, you asked. I attached pictures for your review. When I put on the original trade, I had no formula to pyramid or feel confident of risk control when pyramiding. I only created the spreadsheet within the last week after reviewing “The Complete Turtle Trader” several times.
- Enter trade when price crosses above the 275 Upper Donchian Channel on a 15-minute chart
- Primarily working with only 2x and 3x Leveraged ETF’s
- Exit trade on a stop loss order at the 275 Lower Donchian Channel.
On the attached trade, obviously, I second guessed myself and sold early. I kept thinking about Turtle rules with their hard exit half of the entry spot. In other words, I exited when the price crossed below the 138 Donchian Channel on the 15-minute chart.
The question I have is, any suggestions on the best time frame to use? Minute, 5 minutes, 15 minutes, daily? Or can the same process be applied to all time frames for further diversification?
15-minute charts? Not trend following. See below.
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