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Hi Michael, the biggest challenge that I faced during trading is about the right time of exit. Most of the time either it’s early or it’s delayed.
It’s more than that. You need:
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Hello Michael, loving your book Trend Trading 5th ed. I graduated Economics then MBA so, I have read a lot on economics and finance is one of my favourites. It’s perfect for me as I’m trying to learn to trade from home. I know the maths and the statistics but still I fall for a lot of the traps you mention. I can take a dummy account to millions or billions quite quickly, but as soon as real money is involved the behavioural psychology kicks in and I lose, every time, its driving me nuts. I’m predominantly trading US30. I especially like the quotes throughout the book, and I will certainly check out the podcasts.
Keep going. The adventure calls!
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Feedback in to my question of what is your biggest challenge:
Thanks for asking this question. It’s a question I’ve asked myself countless times. Finally I have my answer. For me it’s letting go of discretionary trades. You see I arrived at my own trend following systems without knowing about your work but every time I would fall back to baseline because I still felt compelled to do discretionary trades and inevitably f up the profit generated on the systematic trading. The reason why I felt compelled to do discretionary trading is because in the past I have had huge success with it (7 figures) but over the past 15 years most of it has been given back. I have automated my systematic trading system and also run my discretionary trades alongside and kept spreadsheets and equity curves and finally seen how I’ve been wasting my time and money on discretionary trades. The systematic trading has generated 5x this year (2021) whilst the discretionary has made a small loss. If I had just stuck to systematic trading for past 15 years there is no doubt I would have been into 8 figures. Now I’m reading your sites and listening to your podcasts and saying to myself I wish I had discovered this earlier. Now I realise I am the casino and I have so much peace of mind because I trust that the best outcome is achieved and is being achieved by just operating my automated system which is basically a trend following strategy. Now I will just spend time on improving at trend following.
Sounds like you have seen the light.
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Two Wise Voices with Michael Covel on Trend Following Radio.
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I face several challenges in my trading, but the biggest is to put my entry order in the right place, as the setup says, because I use financial stop, but as I’m studying and improving my knowledge I’ve already realized the importance of technical stop orders , but I’m still doing it, it’s funny because I did it again today, but I noticed it in a relevant way, after a stop loss and yesterday having learned about its methodology in an internet class, besides having really understood the importance of following the trend, from now on I will change this behavior.
Entry order is so important? I doubt that’s the issue. This sounds like a short term trading strategy to ditch. Trend following is an option.
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With the amount of listeners on your podcast episodes I can’t imagine the amount of emails you must get, so I’ll keep this short and sweet… I’d highly appreciate it if you send me the information that you reference to and the end of each of your episodes please. Thank you. Oh, and by the way, I love your podcasts. I appreciate your straight, no-nonsense way of bringing information across. There’s too much pretentiousness in this fake world and your episodes are my daily escape to moments that are raw and unfiltered. Just a slight bit of background: I am an almost 35 year old wife and mother of two living in one of the smaller cities in South Africa. Since my earliest memories I can remember always having this enormous passion for finances. When I was around 11 years old I started to sell candy out of a sports bag at my school. I took a few bucks, bought nickerballs, lollipops, chocolate and popcorn. I then melted the chocolate to mold it into smaller shapes, and I popped the corn and packed it into small bags that were flavoured either sweet or salty. That was my earliest experience of taking money and making it more. Each day I would count my money and calculate my profit (I made the highest profit on the popcorn by the way). I only used my profits to buy new stock and nothing else. It was just awesome…until the one day that the school principal called in my parents to tell them that what I was doing was not permitted at school and that I was taking away profits from the school tuck shop. My father, being the one that encouraged my entrepreneurial spirit, was not happy at all, and I was even more disappointed. Then high school came and I always thought that I’d end up being an accountant… I mean I have a passion for finance, right? Oh boy, within my first year of taking the subject I realised that, although I love the concept of balancing everything out, I will definitely not be pursuing this as a career. I want to make my own money, not spend my time counting someone else’s. Forward a few years later and I ended up working in the financial planning space… I did my Financial Planning Qualification as well as my Post Grad and internationally recognised CFP® I was doing very well in the industry but I knew I was still not in the right place. Somehow I ended up opening a share trading account and I started to explore the world of buying and selling shares. I suddenly had an aha moment and I knew I found my world. Took me quite some time, but I found it. I then enrolled for a Stockbroking qualification. I knew nothing about what it entailed, but what the heck, I’m doing it. I basically just jumped into the deep end and gave myself no choice but to swim. Looking back, the qualification did not teach me much about trading (which I sort of hoped that it would) but rather it focused a lot on the rules and regulations of the exchanges and the stockbroking industry. But, if there is one thing it taught me, it is to have respect for the financial markets and even only for that I am grateful as having respect for the markets I feel is very important. I am now on my own journey to explore the financial trading industry and I have a special interest in trend following, as buying and holding is not the way I want to go. I do not want to invest, I want to trade. My entrepreneurial days in primary school showed me the power of accumulating small profits day after day. I am someone that plays by the rules and I love surrounding myself with like-minded people through technology. I want to learn and keep expanding my knowledge, and maybe someday teach someone else. Studying is my hobby and sharing my knowledge is something that brings the inner me to life. This is probably not as short as I initially intended it to be, but in any case, thank you for your time and I am looking forward to hearing from you! Have a super great weekend!