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Hi Michael,
I read your book in the summer of 2023, during a period when I was struggling to understand the markets, coming off the lowest point in my portfolio (I started investing in March 2022, knowing nothing about big indices still being below the 200 SMA). Joel Greenblatt’s and James O’Shaughnessy’s books and ideas shaped my trading in those days.
But after learning about trend following from your book, I continued reading William O’Neil’s, Stan Weinstein’s, or John Murphy’s trend following rules — until quite recently, when I also discovered Steve Burns’ books.
What I think I’ve found so far is that trend following works for me; that I have the rules governing entries on pullbacks and breakouts to new highs quite well implemented, but I still do a poor job of cutting losses short. Which comes down to psychology: I thought Trump wouldn’t deliver such bad news on April 2nd, so I waited until April 4th — when a loss in my entire portfolio of about 2–3% turned into 8.5%. Not the end of the world, but still, execution seems to be my problem. As I write this, I am in cash, waiting for signs of trend reversals in both Nasdaq and S&P.
And I learned from you that both [name] and Jerry Parker obeyed the system — the simple rules they were taught. I know the theory, apparently, but I feel like I’m missing something. And, considering I want to start a business teaching others what I do (and learned from you and the other traders above), I need some advice or ideas on what I might still be missing — what you think I still need to do, to learn, to rehearse — in order to have smaller losses and — although less frequent than those losses — bigger profits taken off the table.
This is for helping me help others, as others have shown me it’s possible — to secure financial stability without working for others, without faking it till making it, without frustrations and stress.
Thank you in advance for taking the time to read this email! And thank you for your book — it was recommended by one of my (now) LinkedIn contacts, although it was unknown to me back then. It’s now clear to me that the book found me, and I was there to grab it.
Wish you all the best,
Razvan G.
A few openers:
1. Trend following is not pullbacks.
2. Trend following is not about one equity index alone.
More depth.
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