Subscribe now and watch my free trend following VIDEO.

Category: Risk Management

“The guiding principle of our work is figuring out a way to deal with uncertainty.”

Posted on by Michael Covel

Excerpt:

Q: What’s the guiding principle of your work now?

A: The guiding principle of our work is figuring out a way to deal with uncertainty. That’s what we deal with every day—an uncertain future. What’s going to happen on the next pitch is uncertain. We can’t figure out exactly what’s going to happen, but if we can get our arms around a range of possibilities, that gives us a much better chance to at least make better decisions. We’re still going to be wrong a lot, but hopefully we’re wrong less often now than we were 10 years ago. But we’re never going to be in a situation where our analysis tells us what’s going to happen. These are human beings interacting with one another in a highly stressful situation. So we’re never going to be perfectly predictive. But that’s what makes baseball interesting, makes it emotional.

Trend following 101…too.

Source: Go.

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.

A Great Example of How Too Much Protection Delivers Chaos — Either for Kids or Markets

Posted on by Michael Covel

Many think markets can be made safe. They truly believe there is a way to predict tomorrow and thus watch their accounts go straight up over time. Once all of the nasty unsafe stuff is cut, life becomes roses. A great example of the desire for ultimate protection can be seen in the ban of these stamps by the United States Post Office:

“With the Just Move! stamp issuance the U.S. Postal Service hoped to raise awareness about the importance of physical activity in achieving a healthy lifestyle. However, according to Linns Stamp News, the USPS will be destroying the entire press run after receiving concerns from the President’s Council on Fitness, Sports & Nutrition over alleged “unsafe” acts depicted on three of the stamps (cannonball dive, skateboarding without kneepads and a headstand without a helmet). (There’s also a batter without a batting helmet, a girl balancing on a slippery rock, and a soccer player without kneepads or shin pads.)”

Here they are:

Beam me up!

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.

Football Out, Nerfball In & Weenies Multiply

Posted on by Michael Covel

A sad excerpt from an article:

They were just informed that during recess, football is out and Nerf ball is in. Hard soccer balls have been banned, along with baseballs and lacrosse balls, rough games of tag, or cartwheels unless supervised by a coach.

First dodge ball and now “catch” is banned.

Soon kids will be wearing helmets to simply walk.

Watch.

It will happen.

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.

Ep. 164: Richard Noble Interview with Michael Covel on Trend Following Radio

Posted on by Michael Covel
Richard Noble
Richard Noble

My guest today is Richard Noble, a Scottish entrepreneur who was holder of the land speed record between 1983 and 1997. He was also the project director of ThrustSSC, the vehicle which holds the current land speed record, set at Black Rock Desert, Nevada in 1997.

The topic is entrepreneur.

In this episode of Trend Following Radio we discuss:

  • What 600 MPH feels like to someone who has never been there before
  • The mental processes when you’re going at high speeds
  • Process vs. outcome
  • The danger of emotional highs
  • Noble’s entrepreneurial spirit
  • How Noble got the desire for the land-speed record at the age of six
  • Whether Noble views his endeavors as “life threatening”
  • The idea of “higher risk” in life and society today
  • The importance of taking risks
  • The idea of developing a “risk culture”
  • Motivating people to come over to your own perspective
  • The difficulties Noble experienced with British culture, the media, and with big companies
  • The parallel experiences Covel and Noble have had on the web
  • Where Noble stands on breaking the 1000 MPH barrier right now

Listen to this episode:

Jump in!

richard noble

More awesome Noble pictures: 1, 2, 3, 4.

Money Management Clarity Called For

Posted on by Michael Covel

Feedback in:

I listened to your recent podcast with Jason Russell. The part concerning the importance of money management was interesting. My question: what is meant by money management? It seems to be a term that everyone uses but never really defines and it’s always good, right, just and American. Any trade you do that reduces your risk and volatility is good? And, the big question: when do money management trades become discretionary trades that are used in place of following the system? Back in the early ’90s when I sat in front of my CQG and got spooked by volatility I would override my system exits and reduce my positions only to have to buy them back a few days later. I correctly called that discretion and a lack of discipline – a trader must follow the system and enter and exit only when the system rules dictate it. Now, all of these ideas can be programmed and can be called “money management” when, in my opinion, they are little more than systematized discretion. Is it no less discretion and panic driven when the computer is telling you to do it? So many of the trades are not part of the system – entry, exit, stop loss – that produced the 2000 trade sample size that makes one feel that should rely on a trend following system. What’s the difference between a necessary sample size and “it’s worked in the past?” A lot. CTAs need to face this issue.

Thanks for the feedback [Name].

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 Kelly Criterion Shocks Some and Inspires Others

Posted on by Michael Covel

Feedback:

Hey there Mike. I was reading the hedge fund Market Wizards where the Kelly criterion was mentioned. To be honest it shocked me that any professional trader would take it seriously. It seems like it directs the trader to risk far more money than any professional trader would ever dare to risk. It tells the trader to risk as much as 20 to 30% of his trading account Mike! This sounds like trader suicide to me. Even after applying the “conservative” method of cutting it in half as one trader in the book suggested you would still be risking 10 to 15% of your trading account on each trade which again is far more than any professional I have heard of risks on his trades. As best I can tell, the Kelly criterion is a totally useless formula for serious traders and I can’t figure out how it even made it into the book. The only professional I have ever heard of who suggests such large bets is Larry Williams in his book in which he advises risking over 10% for some traders which shocked me when I read that book. I was just wondering what are your thoughts on the Kelly criterion?

Dave Druz and Ed Seykota wrote a good piece called “Determining Optimal Risk”. Worth a read if you haven’t checked it out already. Kelly also discussed heavily here.

More information on dave richard trade chart system.

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.

Richard Dennis Offers Sound Day Trading Advice

Posted on by Michael Covel

For every ten traders that try their luck at day trading nine of them will go broke. It is just the way the game works. Famed trader Richard Dennis had this to say about day trading:

If I’m buying and selling in the same day, it’s always to take a loss. I haven’t made a profit on a day-trade in five years.

Having a plan and sticking with it is also something Dennis stood by in his day trading advice:

“When you have a position, you put it on for a reason, and you’ve got to keep it until the reason no longer exists. Don’t take profits just for the sake of taking profits. You have to have a strategy to trade, know how it works and follow through on it.”

Without a solid plan, and the nerves to stick with it, the markets will exploit you, take advantage of you, and then in a sad quiet fashion…. leave you for broke on the side of the road.

Richard Dennis Tutle Traders Books
Be sure to read my book, the Complete Turtle Trader, to learn more on how Dennis led the Turtles to great success using the Trend Following method.

Find out more about the Turtle Traders.

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.