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“I drank so much Covel juice my wife thought I was cheating on her…”

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Hey Mike,

I just wanted to let you know your books and podcasts have really changed the way I look at life. The interview you did with the black jack player had a powerful message there that I received loud an clear, but to honest it took awhile for me to develop the proper mind set in orders to get the message. I read and listen to your stuff over and over and over. I drank so much Covel juice my wife thought I was cheating on her, just kidding. I want to thank you deeply and let you know I’m doing my part in supporting you by telling my friends to buy all your books. When is the next book coming out?

Sincerely
[Name]

I am authoring a foreword for Larry Hite’s new book here.

“Biggest challenge? History…”

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Great question, sorry for the long answer.

Biggest challenge…history: I am a relatively smart guy, MBA finance, Retirement Plan Consultant/RIA therefore I used to “invest”, not trade, based on fundamentals and experienced several falling knives, as well as the usual emotional biases, sell winners too fast, hold losers too long. I finally learned that knowing a lot about stocks and markets has very little to do with investment success, might even be a hindrance. Moreover, it has been an expensive lesson.

In the process of moving to technical trading, but still took some unnecessary losses in 2018 by not having stops in place and holding a few losers too long. My biggest challenge is firming up “trading rules” to establish a stop limit up front on every trade, and exit-profit target price, or sell 1/2 at x price and continue to hold.

Have had some informal advice from a good friend who is an experienced trend follower trader, but more tips than details on his methods.

Two objectives for me are:

1) Develop firm rules based trend strategy—discipline.
2) Test strategy over time and track results. Make changes to strategy as needed, but only after proper time frame and evaluation of results. Lastly, KISS, simpler is probably better, at least in early stages.

Tracking results and getting feedback from market seems to be the key. If strategy is not working: is it the rules the trader is using, or the lack of precision and discipline in following the rules? In the past, have been too emotional because I like a companies potential for long term success or whatever.

I like what I see so far from your website, and plan on listening to several podcasts. My copy of your book “Trend Following” arrives tomorrow.

Thanks Michael, looking forward to taking the course.

[Name]
Northfield, Illinois

You are welcome. A good starting place.

“Biggest Challenges? Timing and Following a Consistent Approach…”

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Hi Michael,

My biggest challenges as a market participant have been 2 things. The first has been an inability to follow a consistent approach. Historically, I have been generally a fundamentally driven discretionary investor in equities and I have found it to be too restrictive as I have been more of a value investor. As a consequence, I have missed out on being able to invest in some of the best companies in the world as they have been more expensive but yet they have delivered great returns in many cases. This has caused me to chase them sometimes and generally, this has lead to poor results. I am interested in being able to layer on a more systematic approach to equities. My second issue has been timing. I have realized losses from positions many times due to investing in the wrong market phase. I would like to be able to have a better system for knowing when the time is right for the highest probability of success – both long and short. I hope this helps and thanks for the wonderful work you have done. I am currently reading your tremendous book!

Thanks again,
[Name]

You are welcome!

Ep. 745: Dana Cavalea Interview with Michael Covel on Trend Following Radio

Dana Cavalea and Mariano Rivera
Dana Cavalea and Mariano Rivera

Subscribe to Trend Following Radio on iTunes

Dana Cavalea is the former strength, conditioning and performance coach for the New York Yankees and author of, “Habits of a Champion, Nobody Becomes a Champion By Accident.” He started in baseball as an underperforming player, knowing he would never make it to the major leagues. In 2002, at 19 years old, he was given the opportunity to be a towel/weight room cleanup guy for the Yankee’s – he quickly jumped at the chance.

How did Dana make the move from towel guy to strength and conditioning coach? Core and functional training was just taking off in the world of sports. He committed himself to learning everything he could in that sports niche. Players would give him the chance to teach them different stretching techniques (on the side of their other training). His tips were working and players confidence in him and his confidence in himself snowballed.

Dana gave players two things other trainers weren’t providing: 1. He could find immediate ways to locate and alleviate pain. He took players like Jorge Posada and Derek Jeter and found where their pain was and gave them tips and tricks to help relieve some pain to get them on the field for their next game. 2. He built relationships with players outside of the stadium. Dana would go to breakfast, lunch and dinner with players and gain comradeship. When players know, like and trust you, you win them over.

As a New York native Dana grew up loving the game of baseball. And as a player himself, he always wanted to know what the pros “edge” was. His new book (and this podcast) is packed full of how players like Derek Jeter, Alex Rodriguez, Mariano Rivera, Mark Teixeira, Andy Pettitte, and Jorge Posada think. He shares what gives baseball’s elite players the edge needed to be a winner–lessons we can all use baseball players or not.

In this episode of Trend Following Radio:

  • Importance of routine
  • Derek Jeter
  • Talent vs. work ethic in pro sports
  • Science behind training
  • Yoga
  • Mindfulness
  • Meditation
  • Downshifting the nervous system

“Focus on the process and let the results create themselves.” – Dana Cavalea

Mentions & Resources:

“I think the stock market is the right place for me if I can manage my psychology…”

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Hello Michael,

Firstly, let me introduce that I am a CANSLIM follower–which is a trend following system.

I think psychology is the biggest challenge I have faced. Last year I doubled my capital in a beautiful rally market. That is not bad for a beginner like me. Then I increased leverage. That may be a big mistake for me.

I hope to study more as I think the stock market is the right place for me if I can manage my psychology.

Best regards,
[Name]

It’s system + psychology.

It’s both. Together.

“There are so many indicators, time frames, setups, long or short…”

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Biggest challenge is figuring out what to focus on and study as there are so many indicators, time frames, setups, long or short. I feel like I’ve touched bases on a hundred different things but cant narrow it down to a couple things to just master. Plus I hate how when I join a group and they have hundreds and hundreds of videos some well over an hour and it drags out and becomes overwhelming. I like simple step by step instructions without all the fluff commentary in between.

Go #trendfollowing.

Straightforward.

“I’ve Drunk the Trend Following Kool-aid…”

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Michael,

The change: I still have faith that TF works.

I’ve drunk the TF kool-aid.

I’ve written spreadsheets for moving average crosses with VBA code to parse through 20,000 combinations of MA’s to find the best regions of performance. This is implemented. Need to refine stop losses and add more markets. Need to add automated data download.

For the break out system, I can’t find a combination that beats long-only buy-and-hold on S&P data. Validating my code and hoping to find an error. “Head-banging on Wall.”

[Name]

Are you only trading one market alone?