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Category: Trend Following

No Funnymentals in Trend Following

Posted on by Michael Covel

Feedback in:

Hi Michael, I’ve been trading trends the last 3 years and it’s been good. However, whenever I revisit Market Wizards or listen to your podcasts, I always notice that some of the great traders, including the trend followers, have some fundamental aspects in their trading plus the use of technical indicators other than price. If trading is merely trading numbers and price action is really what matters, is it foolhardy to think that trading without charts(just daily closing prices and nothing else) can be profitable? I had manually churned out a set of performance data based on some EOD price charts of the last 15 years. But I’m planning to work on evaluating my trend following system using only prices and no charts. Is there someone who has traded trends profitably without charts? I appreciate your entire work of trend following. Thank you! Warmest regards, Francis T.

The core trend followers in my books? No funnymentals (Ed Seykota term of course). None of the trend followers in my books talk about charts. They use price data. Do charts help? That’s all subjective! Price is objective.

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.

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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.

Markets: They Trend, They Flow, They Surprise

Posted on by Michael Covel

Chapter taken from “Trend Commandments”:

Markets go up, down, and sideways. They trend. They flow. They surprise. Have markets changed? Not only have markets changed, they will continue to change. Check your history books. If you have a valid market philosophy, learning to accept that change and flow with it is your greatest asset. No matter how ridiculous market moves appear at the beginning, and no matter how extended or irrational they seem at the end, following trends is the rational choice in a chaotic, changing world.

That thinking leaves trend followers as generalists when it comes to their trading strategy and that’s not easy to accept for many. The dominant trend within universities is ever-narrower specialization. A higher premium is placed on deep knowledge within a single field (read: fundamental expertise in one market), versus broad wisdom across multiple fronts.

For example, one trend following practitioner started trading trends in 1974—making hundreds of millions in profits and perhaps billions for clients. The major strategic elements of his trend following trading systems have never changed. He was blunt: “The markets are just the markets. I know that is unusual sounding.”

Occasionally, someone trying to promote something or start a debate will argue that trend following has to change due to changing market conditions. Specious. The root of trend following is based on responding to change. It is designed to be adaptable.

Does that mean every systematic trend trader will take the risk of shooting only for huge returns? No. Does that mean every trend trader will capture a trend in the exact same way? No. The trend following way has many practitioners and many recipes. However, just as there are thousands of car models, they are still cars.

Think about my words.

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.

Trading Rules: Strategies for Success

Posted on by Michael Covel

A great excerpt from “Trading Rules: Strategies for Success” by William Eng. It’s a great reminder that market prediction is a fool’s errand:

When you buy something, you want it to go up. When you sell something, you want it to go down. The chance of entering the trade correctly is small, but the chance of exiting the trade correctly is smaller. The chance of being right on both entering and exiting is the smallest. With such diminishing odds of coming through with a completely correct and, therefore, profitable trading campaign, the fewer decisions you make in the markets, the more profitable your trading should be. How many people actually get to sell at the top or buy at the bottom? At most, a handful in each reversal area. First, you must be a market follower, once the market has told you want it wants to do. If the market is a raging bull, you have no alternative but to buy. If it is bearish, you have no alternative but to sell every time you get the opportunity. Let the market tell you what to do. To do otherwise is to try to control the markets-something that is only reserved for God and natural disasters. Secondly, selling at the top and buying at the bottom does not guarantee profits. How many times have you heard of traders who managed to sell near the highs or buy near the bottoms, only to miss the ensuing move completely.

Read that back in the day. I need to see if William might appear on my podcast.

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.

Ride the Bucking Bronco: The Nature of the Trend Following Profit Beast

Posted on by Michael Covel

Some trading 101 from Trend Commandments:

One of the most useful criticisms that you can use to further your understanding centers on prediction. Trend followers… do not predict a market’s timing or distinction. Trend followers react to market movements. It is a critical distinction best seen in the words of trend follower Bill Dunn, “We don’t make market predictions. We just ride the bucking bronco.”

For more information on books and other resources to further your trend following education go here.

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.

Where Should Beginning Trend Followers Start?

Posted on by Michael Covel

Feedback in:

Hello, I am currently a college student, and am very interested in learning about stock trading. I just listened to your interview on the Tropical MBA podcast, and it was great! As someone who is new to stock trading, with little experience, where should I start? Any advice from you would be greatly appreciated!

Thank you,
Adam D.

Three places:

1. Resources here: trendfollowing.com/resources
2. Training here: trendfollowing.com/products
3. Podcast here: trendfollowing.com/podcasts

That should get you started. Plus, books.

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. 180: Porter Erisman Interview with Michael Covel on Trend Following Radio

Posted on by Michael Covel
Porter Erisman
Porter Erisman

My guest today is Porter Erisman, a former Vice-President at Alibaba Group (2000-08), China’s internet giant. He witnessed it grow from humble beginnings into the world’s largest e-commerce company.

The topic is his documentary Crocodile in the Yangtze.

In this episode of Trend Following Radio we discuss:

  • What it was like working with Jack Ma
  • Short-term vs. long-term entrepreneurs
  • The lack of knowledge/insight America has for China
  • The perceived threat of China to America
  • Whether nationalism played into Ma’s success
  • The commonalities between the greatest internet entrepreneurial success stories
  • Government interference with Alibaba
  • How eBay was defeated by this small startup in China

Listen to this episode:

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Ep. 179: Tim Price Interview with Michael Covel on Trend Following Radio

Posted on by Michael Covel
Tim Price
Tim Price

My guest today is Tim Price, a partner and director of investment at PFP Wealth Management in the UK, an independent asset management and financial planning practice.

The topic is markets and investments.

In this episode of Trend Following Radio we discuss:

  • The subordination of freely discovered prices to policy goals
  • Why the recent trading environment seems “wrong and dangerous”
  • Why Price wouldn’t be able to speak freely working for a large bank
  • Why Price and his colleagues aren’t “doom and gloomers”
  • Why the media neglects to report on black swans
  • Why the role of the Fed is to keep “spiking the punch”
  • The vested financial pushback on having some of these views
  • Risk and “Against The Gods”
  • Why people are hardwired to be loss averse
  • An analogy to the US Forest Service

Listen to this episode:

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