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Category: Trend Following

The Winton Papers Revisited

Posted on by Michael Covel

Feedback in:

“Hi Michael, as you know I love your work and keep buying copies of your books for friends, family and clients. I know you say that persistence pays off and I am working hard on implementing trend following in my business and also in my investing life. I have been trying to hunt down those Winton Papers that Mr. Harding gifted to you. In Australia [name] has a Managed Account with Winton that they allow retail investors to invest in, so we have started placing client monies with Winton. I have had a number of clients call in happy that Winton and Aspect made 10% last year when Aussie equities dropped 10%. I have asked all the [name] associated with Winton if they have seen [The Winton Papers]. No such luck. This morning I attended a presentation where Winton was one of the managers. As usual Winton was last so I had to listen to two other fund managers explain how great they were even though their 5-year returns were negative (both fundamentalists). Winton was represented directly by staff. One was [name], who is a wonderful lady who had just started. I have spoken to her previously…and had inquired if she had seen the papers. She came back questioning if the “The Winton Papers” were a figment of my imagination. More importantly, employee number [blank] at Winton (that was used in his intro) was [name]. He managed to confirm that yes they existed (which I already knew; see your blog 2010/11/06), however, he did not have a copy. So I guess what I am asking is there any chance you have a soft copy of the papers? Or would you like to sell your copy? Or maybe I could rent them for a period of time? Anyways hope business and family are going well. Thanks in advance. Kind regards, [name]”

Yes, I have a copy of The Winton Papers, but I have not been granted permission to distribute.

Note: David Harding of Winton Capital is profiled in my book The Little Book of Trading. He also appears in my film Broke. He has made $1 billion USD from trend following.

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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.

Trend Follower David Druz on Systems

Posted on by Michael Covel

From The Little Book of Trading trend follower David Druz has a plan:

Once a system’s algorithms and parameters are established, the system must be followed exactly and religiously. A system cannot be second-guessed or used intermittently. Values of variables cannot be altered. Parameters cannot be arbitrarily changed. A robust system works over many types of market conditions and over many timeframes. It works in German Bund futures and it works in wheat. It works when tested over 1950-1960 or over 1990-2000. Robust systems tend to be designed around successful trading tactics not designed around specific types of markets or market action. And here is the amazing thing about robust systems: The more robust a system, the more volatile it tends to be! Druz gives this advice: “There are whole families of trend trading ideas that seem to work forever on any market. The down side is they are very volatile because they are never curve-fit. They’re never exactly fit to any particular market or market condition. But over the long run, they do extract money from the market. You want to be focused on how you divvied up the risk in your portfolio, how much risk you take in each market, how many contracts you trade in each market, that’s the stuff that really counts…if you have money management wired, you can let volatility go because you know it doesn’t have any correlation with the risk of ruin. You can use volatility to your advantage.”

Wise.

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.

Larry Hite on “Being Wrong”

Posted on by Michael Covel

An excerpt from The Little Book of Trading:

One final important gem from Larry Hite is that being wrong is okay. He says he was never very good in school and not much of an athlete either. But he turned that to his advantage because he was able to grasp the idea that he could be wrong. In fact, it came as no surprise to him when he was wrong. Hite recalls with pride: “I’ve always built in an assumption of wrongness [in my trading]. I always ask myself: What is the worst thing that can possibly happen in this scenario? Then I use that worst-case scenario as my baseline. I always want to know what I’m risking, and how much I can lose. And sometimes, when you really look at it, there’s really not all that much risk [which is why you can get rich].”

More on Hite.

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.

Michael Covel Active Trader Article

Posted on by Michael Covel

My January 2012 article in Active Trader: Trend-following winners are not “lucky monkeys”.

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.

Pencil and Paper: The Secret to Success?

Posted on by Michael Covel

One of John W. Henry’s associates elaborated on the early days:

“Originally all of our testing was done mechanically with pencil and graph that turned into lotus spreadsheets, which was still used extensively in a lot of our day to day work. With the advent of some of these new modeling systems like system writer, day trader and some of the other things, we’ve been able to model some of our systems on these products. Mostly just to back test what we already knew, that trend following works.”

Had this same conversation this year with one of the interviewees for my book The Little Book of Trading. The difference? He was not talking of thirty years ago, but about being success today!

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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• Performance
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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.

Alexander Ineichen on Following the Trend

Posted on by Michael Covel

Some research (PDF) from Alexander Ineichen. Nice to see my book Trend Following in the bibliography.

Remember: “The aim of the wise is not to secure pleasure, but to avoid pain.” –Aristotle

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:

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• 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.

“Good Morning Mr. Dennis!”

Posted on by Michael Covel

My book on the Turtles serves up lessons that never go stale. An excerpt:

People were willing to do just about anything to get Dennis’s attention [to get hired as one of his student traders]. Of all the approaches his students took to get themselves admitted to his trading school, Jim Melnick’s was the most extreme and inventive. He was an overweight, working-class guy from Boston who was living over a saloon in the Chicago suburbs. However, Melnick was determined to get as close to Dennis as possible. He actually moved to Chicago just because he’d heard about Richard Dennis. He ended up as a security guard for the Chicago Board of Trade and every morning would say, “Good morning, Mr. Dennis” as Dennis entered the building. Then, boom, the ad came out and Melnick got selected. Dennis, who was loaded with millions and power, took a guy off the street and gave him the opportunity to start a new life. The story of Melnick is pure rags-to-riches. How did he know that getting that close to Dennis could lead to something? He didn’t, of course, but he hoped it would. His self-confidence was prophetic. Another of Dennis’s students described Jim’s “everyman” qualities: “He reminded me of a truck driver and like magic became a ‘Turtle’ and he still couldn’t believe why or how…as far as where he is today, I have no clue at all.” Mike Shannon, a former actor who had left school at the age of sixteen, made it to Dennis’s door, too. He recalled, “I was working as a broker, and I was a very bad commodity broker.” Through a bunch of floor brokers Shannon found out about the ad, but he knew his résumé was problematic. He had a solution to that: “I made up a phony résumé, and I sent it off to Richard Dennis. I used the school of audacity to get the job.” People get fired or, at the very least, don’t get hired because of falsifying a résumé, but that was not how it worked with the eccentric head of C&D Commodities.

Nice.

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.