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Feedback in:

Dear Michael,

My name is [name], and I am an independent trader from Italy. I have been studying trading for approximately nine years, including quantitative finance, systematic strategies and backtesting in Python.

Over the years, I have tested several approaches based on price action, moving averages, Heikin Ashi candles and Donchian breakouts. Despite extensive testing, I have struggled to find a strategy that remains consistently profitable after transaction costs and across different market conditions.

During these nine long years I have made an immense effort and I have been driven by a great passion, but now I feel tired and I would not want to lose hope.

This has led me to study your work and the philosophy behind Trend Following. I particularly appreciate the emphasis on the success of the most profitable traders in all over the world.

I would be very grateful for your perspective on three questions:

1. Do you believe an independent retail trader, using publicly available price data and a relatively small account, can still develop a sustainable edge through systematic trend following?

2. What do you consider the most important source of that edge today? Is it the entry methodology, the way losing trades are managed and winning trades are allowed to run, portfolio diversification, or the combination of these elements?

3. If you were starting today as an independent trader without institutional infrastructure, what principles or publicly available resources would you recommend studying first? I am particularly interested in practical methods that can be tested objectively, rather than discretionary interpretations or trading psychology.

I am very happy to have found you because I had come to the same conclusion as you: to study the teachings of the great traders and follow them with discipline.

Thank you for your time and for sharing your experience with the trading community.

Kind regards,
[name]

Great questions. Answers sent! Main answer: trend following is for everyone.

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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
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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.

Voyager 1 launched in 1977. It’s now more than 15 billion miles from Earth, and next month it will be a full light-day away. It still sends data home using about 69 KB of memory (less than a single email photo), a digital tape recorder, and code written by engineers who used slide rules.

It doesn’t need more. It was built for one long, patient job, and it does that job very well.

Trend following works the same way.

You’re not racing anyone.

High-frequency traders spend millions shaving microseconds off their orders. Trend followers hold positions for weeks or months. Whether your order fills at 10:00:01 or 10:04:30 makes almost no difference over a si x-month trend.

The whole tech stack:

End-of-day price data. No tick feeds and no expensive real-time terminals. Daily closes are enough.

A spreadsheet or simple script. A moving average or breakout rule fits in a few cells. Fancy code doesn’t make a rule work better.

A position-sizing calculator. This matters more than anything else on the list, and it’s basic arithmetic.

A reliable broker. You need low costs and dependable execution, not speed.

A backup plan. You need a second device and a written copy of your rules, so an outage doesn’t force you to improvise.

The real edge is discipline

Voyager has lasted almost 50 years because it’s simple, sturdy, and doesn’t do anything it wasn’t designed for. Your system should be the same. If it needs constant changes, more data, or faster machines to keep working, that’s a sign something is wrong with the system.

Keep it simple and let it run.

P.S. The ​Trend Following Mastery​ course teaches you to size and manage risk so volatility works for you instead of against you, and the Bull, Bear & Black Swan Report keeps you tracking the trends that matter every month. If you’d like a purchase link for the Report, just email us at [email protected].

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How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 76+ countries.

Also jump in:

• Trend Following Radio 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.

Subscribe to Trend Following Radio on iTunes

Please enjoy my monologue Trend Following Thinking with Michael Covel on Trend Following Radio.

Listen to this episode:

• Listen to this podcast on iTunes. (Please leave a rating!)
• Listen on Spotify.
• Libysn RSS.
• Download as MP3 by right-clicking here and choosing “save as.”
• Free Video.

Jump in!

People ask me whether I worry about how frothy the market is.

I tell them: stocks have already crashed.

Not the index. The index looks fine, held up by a handful of companies that grew large enough to offset everything collapsing underneath them. But inside the market, there is real carnage. Stocks of companies most people would describe as excellent businesses, household names, things they buy and use every week, have been cut in half, or worse. And almost nobody is talking about it.

Look at these drawdowns from all-time closing highs, price basis, as of mid-2026:

Nike: down 80%. PayPal: down 83%. Lululemon: down 80%. Lyft: down 78%. Wendy’s: down 75%. Wingstop: down 77%. The Trade Desk: down 91%. Campbell’s: down 71%. Kraft Heinz: down 70%. Charter: down 72%. CarMax: down 63%. Alibaba: down 65%. Boeing: down 55%. Disney: down 49%. T. Rowe Price: down 52%. Dick’s Sporting Goods: down 46%. Home Depot: down 35%. Pepsi: down 34%. McDonald’s: down 31%.

Read that list again. Those are not speculative tech names. Many have decades of operating history, real revenue, real earnings, and real brand recognition.

This is not anecdotal. More than half the stocks in the S&P 500 are more than 20 percent below their all-time highs, even as the index sits near a record. The cap-weighted index, dominated by a small number of giant companies, is telling you one thing. Individual stock prices tell you something different.

The index is not a democracy. The biggest companies carry the biggest weights. Their gains mask extraordinary damage underneath. You can own twenty, thirty, fifty individual stocks and experience a very different market from the one described by the headline index. The index is not your portfolio. The price of the stocks you hold is your portfolio. Watch that.

A Good Business Is Not a Good Trade

Here is the trend following lesson, and it is the same one it always is.

Price told you. It always does.

Every one of those stocks eventually gave a systematic trader an exit signal. Not because he predicted bad earnings, a strategic misstep, or a category disruption. Because price was falling and his rules told him the trend had changed. The brand did not protect you. The fundamentals did not protect you. The fact that it was a name you recognized at the grocery store or on the scoreboard did not protect you. Price told you, and the only question is whether you were listening.

The investor who held Nike because Nike is Nike, or Disney because Disney is Disney, has spent roughly five years underwater. The brand survived. He held onto the brand while the money disappeared.

This is what happens when you confuse a good business with a good trade. They are not the same thing. A great company in a downtrend still takes your money. The trend follower knows the difference. He does not need to predict which brand stumbles next. He needs a system that responds when price does, and the discipline to follow it.

The index is near record highs, while so many stocks sit deep below their individual peaks, meaning the headline index may tell you very little about what is happening in your own portfolio.

The crash is already here in dozens of individual stocks. You just cannot see it by staring at the index.

Watch your positions. Watch price. Follow your rules.

P.S. This is the kind of divergence I track in the Bull, Bear & Black Swan Report: what price is actually doing beneath the headline index, across stocks, sectors and markets. If you’d like a purchase link for the Report, just email us at [email protected]. If you want the methodology for building a system that responds to those moves, ​Trend Following Mastery​ teaches it.

Sources: Individual stock drawdowns from all-time closing highs, price basis, mid-2026, per public market data. S&P 500 breadth data per MarketWatch: more than half of S&P 500 members are more than 20% below their individual all-time highs as of this period. Cap-weighted vs. equal-weight S&P 500 divergence per standard index data.

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How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 76+ countries.

Also jump in:

• Trend Following Radio 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.

Subscribe to Trend Following Radio on iTunes

Please enjoy my monologue Trend Following via Canada with Michael Covel on Trend Following Radio.

Listen to this episode:

• Listen to this podcast on iTunes. (Please leave a rating!)
• Listen on Spotify.
• Libysn RSS.
• Download as MP3 by right-clicking here and choosing “save as.”
• Free Video.

Jump in!

Feedback in:

Hi Michael,

I’m just starting out on my trading journey. I’m 46 and have been injured at work and have been told I won’t be able to go back to my old job.

I read the Complete TurtleTrader and absolutely loved it. I had read different books but this one resonated with me. Trend following sounds exactly like me. I’m not a smart guy (not dumb either. more middle of the road). I feel this strategy will work for me.

I bought your book trend following and will purchase more as I finish each title.

Are there other books you recommend? Are there places to start? Mathematical strategies you could point me towards.

I’ve never had a mentor in my life and am so willing to learn. Any little bit of information or direction would be greatly appreciated.

Thank you for your books and your time.

Kind regards
Lucas S.

Trend Following is a great first start!

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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.

Look at this list.

US 10-year yield: highest since 2007.
Japan 10-year: highest since 1996.
France 10-year: highest since 2008.
UK 10-year: highest since 2007.
Germany 10-year: highest since 2009.
South Korea 10-year: highest since 2011.
Australia 10-year: highest since 2011.
Netherlands 10-year: highest since 2011.
Portugal 10-year: highest since 2017.

Nine sovereign bond markets. Nine multi-decade highs. All at the same time.

The financial press will spend months explaining why. Deficits. Inflation. AI debt. Federal Reserve policy. The Bank of Japan finally abandoning thirty years of yield curve control. They will disagree with each other, produce thousands of words of analysis, and be confident about it all. Some of them will be right about some of it.

Here is what will help you as a trader. That list is a trend. Nine of them, actually. And they all pointed the same direction.

Bond prices move opposite to yields. When yields rise to multi-decade highs, bond prices fall, and in some cases to levels not seen in a generation. The US 30-year Treasury touched its highest yield since 2007. Japan’s 10-year government bond reached its highest yield since 1996, unwinding thirty years of near-zero rates. These are not routine moves. These are the kinds of moves that define a decade.

There was no shortage of people holding the opposing story. For fifteen years the consensus was that rates were going nowhere. Every time yields ticked up, someone explained why they would come back down. The story was convincing, told by serious people with serious credentials. It was wrong, and it cost the people who believed it.

The trend follower was not trading the story. He was watching price. When yields broke higher and held, he followed. Not because he forecast what the Bank of Japan would do, but because price was moving and he followed it. The explanation arrived later, in the newspapers. The position was already on.

Now look at that list again with a different question. Not why is this happening, but what does it mean for every other market?

Rising yields are not isolated. They are the price of money becoming more expensive everywhere, simultaneously. Equities re-rate. Currencies shift. Companies that borrowed cheaply for years face refinancing at rates they never modeled. Governments that issued debt at near-zero yields now carry interest payments that in many G7 countries exceed defense spending. The ripple from nine sovereign bond markets all moving in the same direction does not stay in the bond market.

This is what a global macro trend looks like. It does not announce itself at a conference. It does not wait for consensus. It shows up in price, across markets, and it rewards the trader who follows where price leads.

You do not need to know why. You need to know which direction, and whether you are on the right side of it. Nine sovereign bond markets trending together is one of the clearest directional signals a systematic trader can ask for. The profit comes from being positioned before the explanation arrives.

Read the market. When it trends, follow it. When nine of them trend together, pay close attention.

P.S. This is exactly what I track in the Bull, Bear & Black Swan Report: major trends across stocks, bonds, currencies, and commodities, without trying to predict what comes next. If you’d like a purchase link for the Report, just email us at [email protected]. If you want the full methodology behind that approach, I teach it in ​Trend Following Mastery​.

Sources: Multi-decade yield highs per country as reported across financial media. US 30-year Treasury, German 10-year Bund, and Japan 10-year JGB levels as of August 2026 per FRED, Bundesbank, and Japan Ministry of Finance. G7 debt and interest payment figures per IMF and Reuters.

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How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 76+ countries.

Also jump in:

• Trend Following Radio 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.