“Michael Covel’s Trend Following: Essential.”
Ed Seykota
Trend following legend originally in the “Market Wizards” classic book
“The way I see it, you have two choices–you can do what I did and work for 30-plus years, cobbling together scraps of information, seeking to create a money-making strategy, or you can spend a few days reading Covel’s book [Trend Following] and skip that three-decade learning curve.”
Larry Hite
Trend following legend originally in the “Market Wizards” classic book
“Some people think [trend following] trading is a system, but it’s really much more powerful than that…it’s a trading philosophy. The course [Flagship] gives comprehensive insight to the most accessible active management strategy currently in use. [You] find revealing explanations of all the critical elements of a successful trend following trading plan. The concepts espoused here are not just opinions…these techniques have been proven to work.”
Paul Mulvaney
Mulvaney Capital
Note: Mulvaney was an early client.
“There have been few authors that have tackled the financial markets with a candor that was entertaining while not alienating themselves from the community they wrote about. A few greats come to mind: Michael Lewis, Jack Schwager, and Nassim Taleb. I believe Michael Covel also belongs squarely in this camp for his work to champion the trend following movement.”
Tim Pickering
Founder and CIO, Auspice Capital Advisors
Full review: (PDF)
“I have been trading for many years and doing okay but my method was not systematic enough and too stock focused. I decided that I needed to up my game and ran across a reference to Trend Following while reading another book. I decided to contact Mike after reading the book and decided to work with him one on one. This experience has put me in a new league and really helped me focus on my weak areas which were risk management and portfolio selection. I would recommend any trader who is not where they want to be to start with Mike and the Trend Following book, website and Flagship.”
Steve Beamer
“Years ago, famed Chicago bond trader Tom Baldwin put trading in a phrase: “Everybody wants the money, but whose willing to do the work?” I know a few. One of them is Michael Covel. Michael did the yeoman’s duty no one else would do: bringing together the principles, practices and track records of trend following. In his now numerous books, Flagship and programs, he solidly demonstrates trend following is a viable trading and investment strategy; moreover, one that can be learned and mastered. Something many so-called trading and investment strategies have yet to do.”
Charles Faulkner
Market Wizard Trading Coach
“I was a customer of Mr. Covel’s way back in 2001 (his original trading course). I was on the right track at the time, but definitely had a few “ah-ha!” moments upon going through his course. I’m guessing that some of his material probably saved me a year or two. Not to mention the many dozens (literally) of testing ideas generated from all of his subsequent books.”
P.B.
“I purchased your course on a Friday for around $3k sometime in 2018. The following Monday it was on sale at 50% off. I could have cared less if it did what you said it would do. Well, after two years of reading your books, studying, and playing the market with real $$$$.$$ (and hundreds of mistakes) I thought I’d give you a report card. Below are actual trades copied to my Excel files. I returned 80% as of 3/29/20 for the 1st. quarter of 2020 while the DJIA is down ~ 24%. I can’t guarantee I can duplicate anywhere near above returns on an annualized basis, but confident I’ll do well. I’ve tweaked your/my system many times and have extreme confidence. Attached are my adjusted EMA’s for this volatile market we’re in. I had to adjust to a shorter time frame for faster entry exits. Also attached is my “Trading Bible”. My “Bible” is a result of trade mistakes and some are quotes from your books. Like anything worth pursuing, you have to give 100%. I’ve done that with your tutoring, and finally making extraordinary returns. This is too fun and love it when I don’t have to trade.”
Greg A.
“I apologize in advance for this long email but I felt the need to write to you and tell you that you are right about everything. Well, not everything in general, but everything about trend following. Of course, you know this. So why do I bring it up? Well, I had a couple of hard lessons last year and into this one. Even though I read your books and others, took your course, listened to hundreds of podcasts and had the examples of history, I still didn’t “get it” fully. I guess I’m the kind of person who has to experience things for himself before finally understanding it. I naively thought I was immune to the psychological traps that plague other trader/investors. I was wrong. The first lesson was in cryptocurrency. Now, I did make some profit on Bitcoin Cash and broke even on Bitcoin. However, I lost money in all the alt coins I owned. Why? I did trend follow these but I didn’t honor my stops. I was swayed by the HODL mindset. I told myself that it was a new asset class, that “this time is different”. Where have I heard that before? Lesson learned: It’s never different. New asset classes are subject to the same market forces as any other. Trend follow it. The 2nd lesson was in a private equity investment I made about 3 years ago. It went public a year ago and I started to trend-follow it. In a short amount of time, it shot up to $11 but then started to decline. It finally hit my stop at around $9 and I sold. But, I didn’t sell it all. Only 1/10th of my holdings. You see, I had a target of $13 and I figured it would go back up. After all, I was an early investor and knew more about the company than the general public. You can guess what happened after that. The stock slid down over the course of the year and, looking back at the chart now, made a perfect, textbook example of a long-term downtrend. It had its rallies and I sold at different points but I never could bring myself to sell it all. I hung on to the idea that it would bounce back. After all, I was with it from the beginning. I knew the company and the industry. What could go wrong? I sold my last remaining shares yesterday at breakeven. Looking back, I didn’t do too bad. I more than doubled, almost tripled my money. But I could have made so much more if I had sold it all when my first stop was hit. I beat myself up every day for it. Lesson learned: No matter how much you know about or are involved with a company, you never know more than the market. The market is always right. Trend follow it. I can only hope that I’ve learned my lessons now and that I still have time to apply them. I take great inspiration from Tom Basso though. He had a hard lesson in silver, but got past it. Now he’s still trading in retirement. Thanks for your continued teachings in this way of trading (and even a way of life) through your books and podcasts. I wish for you a long life full of health, wealth and happiness.”
Terry
More Success Stories
“I am a big fan of Michael Covel. What impresses me the most is his single minded determination to get his message out regarding his central theme: trend following works. His books provide plentiful evidence of long term superior performance by numerous trend following traders. He doesn’t coddle his readers with pep talk–that’s not his style. Instead he says “if you’re going to try to make money in what might be the world’s hardest profession, why not take a studied look at how some of the most successful traders got that way and emulate their behavior?” And talk about a bargain–he’s done the arduous work compiling track records, picking the minds of sometimes elusive superior traders and then distilling all the data down into thoroughly useful, readable text. What tremendous value for a few bucks. And then, because Michael understands his role as a gifted entrepreneur, he goes the next step by providing guidance and tools to would be traders utilizing the internet and a variety of affordable trend following trading Flagship. I traded my first futures contract in 1969 and spent my professional career in the futures industry until my retirement in 2001. Through the years I have been asked many times for advice about how to attempt to be a successful trader. My answer now–read and apply Covel.”
Jack Zaner
“I just wanted to say thanks for all you do. My brother read your book back in 2005 and gave it to me to read. It changed our trading and, I believe, our lives. Please indulge a little background. My brother is 8 years my senior. He’s in the construction business and I’m in the insurance business. Pretty different professionally, but not philosophically. What we had most in common was a fascination of the financial markets and figuring out a way to profit from them. He and I have both spent most of our adult lives educating ourselves on economic and financial issues and continue to do so on a daily basis. We would categorize ourselves as followers of Austrian economic thought and free market libertarians. We had been dabbling in the futures markets for over a decade and could never find an approach that would work for us. Unfortunately, we followed various gurus on our way to losing money year after year and depleted several different trading accounts. We had always focused on systematic approaches to trading because we both felt that we couldn’t trust ourselves to maintain any trading consistency with soft rules or instinct. Our problem was that we lacked any understanding of trading systems and all of their component parts. As a result, we chose to follow the complicated black box systems designed by others. These systems all focused on picking tops/bottoms or otherwise predicting market direction in some way. We didn’t realize it at the time, but in retrospect, the one thing positive we took away from these experiences was the understanding that our greatest attribute as traders was our discipline. We took every single trading signal from every guru we ever followed, come hell or high water. The better educated we became, the more we realized that NOBODY really knows anything about the direction of markets. To design or follow a systematic approach to trading based on the premise that market direction was predictable was a ticket to the poor house. We’d heard about trend following methods but only in a disparaging light. We quit trading for 5 years. Then we both read Trend Following. It was the proverbial “ah ha” moment that we had spent 20 years looking for. Sometimes the truth is so hard to see because it’s right in front of your face. To make a long story a little shorter, my brother purchased your Flagship…and we starting our little trading company in Feb 2006 with $100,000 in seed money. We trade a basket of 10 futures markets using the rules in your course (although with a lower risk %). We never deviate and we take every signal, subject to the our risk management rules. We spend no more that 1/2 hour a day on our trading business. We have tripled our account balance to $300,000 in the intervening 3.5 years without ever adding any more capital. We have not had a losing year yet, although I’m sure we will eventually. We made just under 100% return in 2008, which would have been much greater had our capital base been larger or if we had been comfortable with a greater per trade risk %. We had to beg off some trades that were immensely profitable in fall 2008 due to our position limits and % risk rules. Unfortunate, sure, but we slept great and still doubled our money in the greatest financial debacle of our lifetimes. 2008 was only the beginning. Government interference in markets always makes for great trend trading opportunities. The size and scope of government today simply means that trends are only going to be bigger and will occur with more frequency. We’re ready and waiting. We can’t thank you enough for sharing the wisdom of trend following with us. We truly believe that significant trading wealth is simply a matter of time for us thanks to the education you provided…mixed in with a big helping of discipline!”
Jeff P.
IL USA
“I’ve had the pleasure of collaborating with Michael Covel on various projects over the years and have rarely seen anyone so passionate about his field. Trend following historian, biographer, novelist, documentarian, reporter, teacher, curator and advocate, Mike may be best categorized as an activist for change in our economic paradigm. His message: financial empowerment is possible if you accept personal responsibility and take action. Specifically, this means doing away with ‘buy and hold’ and ignoring financial market pundits and other soothsayers. It also involves a strict adherence to trend following principles, whether trading for yourself or investing with established CTAs who will trade for you. It is always fascinating to see what Mike will do next to change the way most people think about investing.”
Jeffrey K.
“I am a trader since over 12 years now. My trading style was purely day trading, because of my past as a market maker in forex. Since 5 years I do trade in my portfolio trend following systems. Actually it became the bigger part of my portfolio. I did read your books the first time in 2007 (I have at least 10 copies at home of your books, in English and German) and for me it was like a confirmation, that what I was doing was right and gave me confidence to trade more in trend following then in day trading. I also then bought your Flagship and finally this year bought your Tradestation code. I also bought your movie. I am a big fan of you Michael and thank you very much for your work. You helped me a lot to have more confidence and trust in it and so far it paid off…Please don’t forget that I am Swiss, so my English vocabulary and grammar is not very well. I don’t have a webpage and don’t use Facebook or Linkedin, so I don’t need any publicity on my side. I would love though, to meet people that also do active and since longer time Trend Following trading to share experiences, ideas or just to chat. Sometimes I feel very lonely in this trading world, of course there are many that try to trade out there, but very few people who do it successfully. Let me know how to proceed.”
Adriano [Last Name]
“Micheal Covel is a rare breed. He is the only author I have come across who really understands how traders can make money, regularly and consistently over a long period of time. The question is how long can a trader last with a specific style of trading. There are many traders who have made a lot of money only to blow up or loose it all eventually. Many trading strategies can work over a period of 2 to 3 years, but will they work over a period of 20 or 30 years? I have seen extremely smart spread traders trading mean reversal type strategies who made a fortune in 2 to 3 years, and then blow up and never recover. I have come across arbitrage strategies that were very successful over a period of 4 to 5 years, but eventually blew up over a tail event. I have also met very successful macro traders who have bet successfully on certain market moves and made a fortune but their careers stalled and eventually they burnt out. The only successful traders that have consistently made money over a long period of time are systematic trend followers, the type of traders that Micheal Covel covers in his books. Unfortunately, the financial wold has been hijacked by crooks, charlatans, bankers and investment advisers hoodwinking the general public into believing that buying and holding a financial asset over a long period of time is the right strategy with “shareholder democracy”. And when that does not work, advisers try and trick investors with volatility of returns and complicated ratios, when all that matters are absolute returns over a long period of time. Micheal Covel shines a light in this world and is indeed a rare breed. I cannot recommend his work enough.”
Jad T.
“The following is my story of how I have found myself trading for students. It all started with me being introduced to Michael Covel in a Barnes & Noble in northern Cincinnati. No, not an introduction in person, but his life’s passion. Back in 2005, I was working for one of the largest brokerage/mutual fund companies in the world. It was fairly mundane work, answering phone calls from students trying to open brokerage accounts. This was just a ‘hold-over’ position in that I knew I didn’t want to be doing ‘this’, but didn’t know what my long-term plans were. I had always been interested in markets, and wanted to know how to actually make money trading. Unfortunately, the company I was working for had no interest (or ‘know how’) in teaching me how to properly manage money (ultimately, a good thing for me), and looking back to my time spent in finance classes in college, my professors had no real-world solutions either. It was this experience that prompted me to start reading every trading book I could get my hands on. Good or bad, this started my trading education. Most of these books I read were filled with the ‘how to read financial statements to determine if a market is undervalued/overvalued’ confusion. But then, there were some that were helpful in getting me past the notion that I had to study balance sheets and income statements in order to win; however, were mostly filled with this B.S. oscillator or that B.S. chart pattern. There was no meat. The most important thing I learned from a few of these books was the phrase ‘Follow the trend’. Now, I don’t say that for the sake of giving these various authors credit, but to say that it was the phrase ‘Follow the trend’ that led me to Michael Covel’s first book Trend Following. As I was walking in that Barnes & Noble, I spotted something familiar on the spine of one of the hundreds of books on the shelf, the words ‘Trend Following’. As I pulled it from the shelf and started leafing through the pages, I came across names such as Bill Dunn, Ed Seykota, John W. Henry and more who made millions, even billions trading a Trend Following strategy. It was Covel’s book for me that transformed ‘Follow the trend’ from just a phrase in to ‘Trend Following’ the worldview. You see, trend following is not just a trading strategy, but a way of living one’s life. It was my AHA moment. Wanting to make trading a big part of my life, I graduated on to Michael’s Trend Following course. It was here where I was able to really get down to the nuts and bolts of building a systematic trend following trading system. In his Flagship, Michael taught me how to evaluate the odds of any risk-taking endeavor, that magnitude trumps frequency, and that being able to take losses are a big part of trading as they are in life. It taught me to assemble a complete trading system, including knowing when and where to enter, when and where to exit with a profit and a loss, portfolio selection, and how much to risk on each trade. After studying for a couple of months, I moved on to paper trading, then to live trading. Did I hit the ground running? Not exactly, I stumbled a few times, and this is where access to Michael paid huge dividends. Whether it was asking him questions directly or reading his blog, assurance was right around the corner. As an owner of my own company, watching how Michael made himself accessible to students and non-students alike, always responding to questions, but without surrendering his belief in who he is or what he does, taught me a great lesson on how to run my firm. It has been a little over a year since I started Availeth Capital, and I know, without a shadow of a doubt, that it would not be in existence if it wasn’t for Michael Covel’s work and the passion he puts into it. See, if he hadn’t written ‘Trend Following’ I would’ve never been introduced to the only strategy that does ‘Make Millions in Up or Down Markets’.”
Todd Miller
“Mike Covel is not just a cheerleader for trend-following, he is the Head Coach. He understands the game, the strategy and crucially the psyche of the players. Would-be winners will ensure that they study Mike’s teachings and books before stepping onto the playing field.”
Christopher L. Cruden
Chief Executive Officer
Insch Capital Management
“There are no hollow promises [on TurtleTrader.com]. Instead, every statement asserting the power of these methods is backed up with empirical data and coupled with the caveat that the key to trading success is discipline, trading the markets every day and money management (or to ‘preserve capital until more favorable price trends reappear’). This site offers no comfort to those who are looking for a quick buck or the Holy Grail, and the proprietors don’t seem to suffer fools gladly. The message is open, honest, straightforward and makes no hyped-up promises. It sticks to the facts; it is one of the best system trading sites for futures traders I have seen.”
Gibbons Burke
“I have only read your books but I think they are as good as they come in finance. They are as good, if not better, than the Market Wizards books by Schwager and Leferve’s “Reminiscences of a stock operator”. They are an absolute read for anyone with a job in finance. I recently quit my job after 10 yrs as a trader at Morgan Stanley to start my own hedge fund, together with a colleague of mine. A majority of the risk in the fund will be allocated to trend following concepts in various time frames of stocks, sector and index futures.”
Johan S.
“As a subscriber to your original Flagship, and occasional fan writing in, I must say, what a great text! I am referring to the latest edition of ‘Trend Following’. After it came in the mail, I devoured it over the course of the last couple of days, and what coincidental timing, it served as a refresher, and has helped me stay on track with my own trading (Yes, in the past I’ve taken “hits”, but I turn them around, an outcome less due to me and more due to the risk management stressed by the trend follower approach). A few years ago, that would have been a devastating loss of a limb as opposed to the temporary pain of a pulled muscle, all in service to the ego and the desperate need to be “right”, even when the account equity says you’re “wrong”. In fact it was just such a loss several years ago that led me to your course over three years ago, which, funny enough, as I think about it’s “great expense”, has repaid itself many times over in various trades. As for what some reviewer noted on your website, dismissive of trend following, it’s very clear he didn’t do his homework (As an aside, may I say you have no need to defend your work with retorts or responses, so please consider what Mr. Ed Seykota might say about your exchange with him and ask yourself what you are getting out of any “back and forth” exchanges). We know such reviewers get a paycheck no matter what, and are therefore indifferent to your work, and produce “critical” reviews lacking critical thought, driven by conventional thinking and a deadline, which are a disservice to all. Your work, and the results of it’s most focused and disciplined practitioners have, and will speak itself in favor of trend following. Those who can’t think for themselves might not be among your potential readership anyway. As an aside, I recall a chart you presented once about Mr. Dunn’s results, during his rough patch earlier this decade, and I was reminded by your coverage of Mr. Dennis’ trading history in your work, and what some of his students and successors were counseling in terms of the trading sizes… that anything is possible, a temporary “bad patch” might have been encountered by his system. And indeed it was proven to be the case, just temporary. So, even if such empirical “proof”, as Mr. Dunn’s brief downturn, might be used by those who were too lazy to read your books and dismiss you, you would see in due time overwhelming proof to trump such data cherry-picking of drawdowns and brief “rough patches”. The bucking bronco that shakes a trend follower about at times eventually leads us to greener pastures. Could we say that for the latest incarnation of LTCM? Recent news of a new bond arbitrage fund, a third go-around for its founder, after bombing over a decade ago and prompting the first of many Moral Hazardous bailouts, followed by a closing of a second-firm in 2009, might succeed (anything is possible) but may I point out that Mr. Dunn and others like him (Jerry Parker and Salem Abraham) never needed a “bailout” or a fresh (re)start, just time and the risk management disciplines of true trend following. Thank you for your fine work, it helped give me tools to navigate through market waters both calm and/or treacherous.”
Edward
“I have been a follower and a student of Trend Following since 1998. I was first introduced to Trend Following by a friend of mine working as a proprietary FX trader for a global American investment bank who had an office in my home town of Sydney Australia. He has since moved on from being a proprietary gold Bullion trader, to now becoming the principal of his own Hedge fund. I was introduced by this friend to “the Turtle Trader” rules at the same time, and have gone on to prosper and generate an incredible and awe inspiring life for myself and now my young family…The principles and system of technical Analysis based system trading has made an impact on many areas of my life, including: financial,spiritual, and physical improvements. This has come about by what I personally believe is the “complete” commitment I desired and now have to live a completely satisfied and grateful lifestyle. I believe I would not be in the fortunate position myself and my Family are in today if it was not for people like yourself Michael. Your contribution to Trend Trading is such a marvelous basket of awe inspiring products, which can only benefit those who really believe in creating contribution to those around them, like ourselves. Gone forever from my life is the “Blah Blah Blah”, of thinking that I will “never be satisfied” with my current position in my life. Living life with my favorite Commandment: Thou shalt Not Judge. As I am a true believer in Technical Analysis based System Trading. I thank you for keeping the flame well and truly alight on spreading the Gospel of Trend Following.”
Pete M.
Trend Trading Disciple
“Here’s my testimonial for your trading system Flagship: Many years ago, before I learned about how Richard Dennis and William Eckhardt breed traders like “turtles” and Michael Covel educated the World on the “trend following way”…I was a losing trader and cursed – “cut my profits short, hold onto the losers” all the time. Soon I found trading like that could bankrupt me very quickly, then I found out about Mike’s Turtle Trader website and his trading system course. I have to thank Mike for his in-depth research on this subject and a proven way for traders to make money – simply by following the trends (not that simple for most, really). Today, I could make profits from the market better than I could ever imagine, using my own developed trend-following based methodology. And I must admit that Mike’s trading system course has made positive contributions to my success in trading and managing my students’ money.”
Brendon W.
“I am not a well known trader, but I do credit your two books, along with Jack Schwager’s first two Market Wizards books, as being essential to my transformation into a consistent, winning trader. Back in 2008, I was a recent college graduate employed at the world’s largest mutual fund company. While earning my Series 7 license, my job was to talk to students all day on the phone and provide them with whatever service they required. Consequently, I was the reassuring, “voice of reason” they would hear when they called us during the Fall 2008 market collapse. I spent those days talking to retirees who were losing their life savings, confused traders who up to that point had never experienced a bear market quite like the one we were experiencing, and uninformed, American workers asking me why their 401ks were down so much. We were told to feed them lines like, “You haven’t really lost anything until you have sold” and “Prices going down just means it is a better time to buy.” I heard the fear and pain in our students’ voices and, even then, I knew I wasn’t helping by telling them what they wanted to hear, but I did not know what else to tell them. As a result of this experience, I vowed never to let myself get into that situation. I knew that with so many people losing money, there had to be investors out there making that money on the other side. My mission then became to find out who these winning traders were and what they did to put themselves on the right side of the trade. I left that company, and with it, the “buy and hold” mindset they employed. I started doing my own research and reading, and one day came across your book Trend Following in the bookstore. I was immediately drawn to its subtitle describing how I could learn to make millions in up or down markets, and left the store with the book in hand. Over the next couple of days, I devoured its contents, feeling like I had stumbled across the secret I had been searching for. This was the winning philosophy I needed to study. Around that same time, I also read Jack Schwager’s Market Wizards books, and particularly enjoyed the Richard Dennis interview which described how he taught a group of traders how to become systematic trend followers. Once I saw that you had written another book telling the story of these “Turtles”, I immediately started reading it and saw for the first time how a very simple strategy could yield consistent, high profits. This was my turning point. Fast forward to the present day. I am free. I am no longer a slave to the markets or the financial media. While it seems the majority of the trading world is still obsessed and fretting over what the market will do next, I relax in knowing that the price and my systems will lead the way and put me on the right side of any major move, and I have your two books to thank for helping me get to this point. My goal is to become a “Market Wizard” myself, and it is trend following that will get me there.”
Andrew Adams
St. Petersburg, FL
“I have been thinking quite a bit about your requests for testimonials. I just want to share the impact that your website and two books both The Complete TurtleTrader and Trend Following have had on my thinking and aspirations. When I took an original interest in investing I read a biography of Warren Buffett, I then sought to follow in his footsteps. I bought numerous books on Value Investing; I was determined to become a CFA. When I originally checked out your website, I was very skeptical. However, when I read the review by Bill Miller, I decided to see what this was all about. I read The Complete TurtleTrader first. I couldn’t believe it. I was just as average as some of these people. I thought “Hey, I can really do this!” This was almost shocking that these people with two weeks of training were able to make so much so easily. I read Trend Following next. It was even more revealing. The most shocking thing was the shear number of traders who are trend followers. Their returns are just as good as Buffett and other famous fundamental investors, but I had never heard of them. They simply don’t seem to have the respect of the media. I also realized that this wasn’t as simple I had thought, but it was entirely learnable. This book and website are the starting points. I have a new direction to take with my investing. I have to say that it was the most refreshing read on investing I have ever read. I look forward to later this year purchasing your = and learning even more. I hope to turn all of this into a career soon. Thank you for creating your company, so that others can learn to be turtles as well.”
Bruce S.
Enid, OK
“I have read and very much enjoyed both your ‘Trend Following’ and ‘Complete TurtleTrader’ books — how refreshing to find such clear, concise, no bull analysis. I am interested in purchasing the training but want to make sure it is appropriate for the markets I want to begin with. In particular I am most comfortable starting with ETFs (and mutual funds — though I find myself going more with ETFs because of the liquidity). I noted that most of the trend followers were in the commodity markets — but the texts and your site seem to indicate the basic approach would work with ETFs (though the returns may not be as dramatic). Am I correct in my impression? Thanks for your consideration — and thanks again for your work. Please let me know if you need more information to respond to my question.”
Steve M.
“It always amazes me how few people make any money at this game even though successful methods are available. The reason is that MOST PEOPLE AREN’T TRADING TO MAKE MONEY. They think they are, but the fact is they’re trying to fulfill some other needs: for excitement, gambling, feeding their egos, being right, being clever, outsmarting somebody, sharing their score at the next cocktail party. Meanwhile, Trend Followers (and others) are sitting around, ignoring all the chit chat, all the arguments pro and con, discussions of the Fed, etc., just plugging in their numbers, managing their money, with discipline, and watching the cash pile up over time. There is what you must do to make money trading. There is a plan, a methodology that works and if you DO it, if you WORK the plan, you make money. That’s just how it is, but most people are more interested in trading some method that feeds their other needs: they want to pick tops and bottoms, they want riches overnight, etc. It’s like [Richard] Dennis said, you can publish the rules in the paper and people still won’t make money. Someone said you can publish tomorrow’s closing prices in today’s paper and people STILL won’t make money because they’ll put their own garbage in the way. It’s really a wake-up call when you realize that successful trading has nothing to do with forecasting the market. Something I fortunately learned early on is that it is a numbers game: knowing the risk, knowing the odds, and placing your bets accordingly. And it’s NOT glamorous. It’s NOT exciting. It’s NOT cruising in your Ferrari down Wall Street and flashing your Rolex. It’s just playing the numbers with discipline and doing the hard thing – the uncomfortable stuff that no one else wants to do. That’s what makes money and it’s why most people don’t. They’re not interested in making money. They’re not interested in being successful traders. That’s not their real motivation. If they really wanted to be successful traders, they would be because the information is there, the opportunities are there. But it doesn’t work the way most people would like to THINK it works and so you can show them what works, you can give them the methodology, and they don’t care. They don’t want it. It doesn’t fulfill their needs. Trading is for one thing — taking money [profits] out of the market. Any other needs you have, you better get them fulfilled elsewhere. But people bring their needs to the market and want the market to fulfill them. That’s why they get killed over and over again.”
Mark M. R.
“What Edwards and Magee did for technical analysis and Benjamin Graham did for fundamental analysis, Michael Covel has achieved for the art of following trends. Arguably the definitive text on this style of trading, Trend Following covers all the bases from human behavior to systems trading, while debunking many prevalent misconceptions about what it really takes to make money. Covel gives it to you straight: what works, what doesn’t, and how outsized gains are earned, straight from the mouths of the world’s top traders. If you want the “quick path to easy trading success”, look elsewhere (And good luck to you!). But if you want a real education in what it takes to capture huge market gains over time, read this book.”
“I think the book did a superb job of covering the philosophy and thinking behind trend following (basically why it works). You might call it the Market Wizards of Trend Following.”
Van K. Tharp, Ph.D.
Author of Trade Your Way to Financial Freedom
“I think that this book documents a great deal of what has made Trend Following Managers a successful part of the money management landscape (how they manage risk and investment psychology). It serves as a strong educational justification on why investors should consider using Trend Following Managers as a part of an overall portfolio strategy.”
Tom Basso
“Thank you for writing Trend Following! I read your book while I was interning on a sales & trading desk (sadly it wasn’t required reading). Until I read Trend Following, I was always baffled by how analysts came to conclusions and how fundamentals were weighted and valued. Intuitively, I thought it rather absurd that the majority of analyst recommendations were BUY and that all SELL recommendations tended to come around the same time. I’m only 22 years old, but my goal is to learn as much as I can about trend following, practice it, hone my system, and eventually become a successful trend follower. Your website has been more helpful than my $200 college text books.”
“I think the point at which critics of your book and trend following in general get mixed up is the fact that you make the methodology of trend following sound so simple, especially in relation to other strategies such as fundamental analysis. The fact of the matter is that it is relatively simple, but that’s not the problem. What they miss is that trend following like any other successful trading strategy requires sometimes enormous amounts of discipline, patience, and persistence, and not everyone has it. Anyone who has spent any significant amount of time developing, testing, and/or trading a trend following strategy can see the potential of such a strategy (my guess is that your critics haven’t done so). However, these strong results in simulation or in ‘paper’ trading mean nothing without the qualitative tools to make it happen consistently in ‘real’ trading. The problem is it’s so much more comfortable for your “lucky monkey” critic to use and blame someone else’s blackbox strategy (fundamental analysis) when it fails, than to know that success or failure ultimately rests in your own hands. Keep up the good work.”
“I stopped looking at news as something important in 1978. A good friend of mine was employed as a “reporter” by the largest commodity news service at the time. One day his major “story” was about sugar and what it was going to do. After I read his piece, I asked: “Gary, how do you know all of this?” I will never forget his answer…he said: ” I made it up.” I have looked only at price since 1978.”
Michael G.
“Nine months ago I started down the trend-following pathway. Your book was one of the first of more than a dozen I’ve read and is certainly one of the few that I keep on my bedside table and/or desk to constantly check some info or to refer to insights from the traders you interviewed. The others are the two Market Wizards books, Ed Seykota’s Trading Tribe, and of course ‘Reminiscences’, perhaps the greatest of them all. Reading and re-reading always leads to new ‘ah-ha’s’. I can report to you that everything you and the others say is, of course, true. My greatest enemy has always been impatience and not having a detailed plan. The two issues go hand in hand. Impatience breeds frustration/indecision and indecision comes from not knowing exactly what to do and how to measure and understand the probabilities of the various outcomes of one’s actions. Your book, and others such as Van Tharp’s, told me in no uncertain terms that unless I could develop a testable systematic approach to trading, I could not trade with any confidence, which would lead me back to impatience and frustration. I began to get the picture, and committed to working with software that I considered appropriate for my style of trading. I completed enough testing by mid-October to have the confidence to invest real money with my system. My timing worked out, as a new up-trend began in my preferred market (US stocks) at about that time. I just received and have started reading your updated version of ‘Trend Following’. My college-student son was home for the Christmas Holidays and took the original version back to school with him! We talk about trading once or twice a week now and he tracks the family portfolio on line…he’s learning the system so that he can run it from school in the evenings (we use end-of-day data) if I am traveling and not able to access the computer. It takes no more than 30 minutes to update our system in the evening and enter any trades necessary. No need to watch the market during the day. Thanks for your excellent book and websites. My study of trend following and system development has given me the confidence I needed to believe that really superior returns are possible.”
Max C.
“I wanted to thank you again for taking the time and effort to put together the trading Flagship. The material is fantastic. It lays out the ground work for YOU (meaning Me) to make your own decisions regarding investing. You take out all the people and companies that can cloud your judgment. I just finished watching Broke. It was the last item of the course for me. I am glad I saved it for last because it cemented the ideals behind the theory of trend trading. When you interview all the people that have had a rough go because of their own decisions, but yet still want to place blame on something else, made me realize that I now can be different. Different in thinking, different in doing, different in acting, and by different I mean not in a bad way. Thank you for opening my eyes to a different than the herd style of investing. The theory makes perfect sense to me. I have started to incorporate it into my investing. My big problem will be trying to deal with being wrong 60% of the time. It has been drilled into my head that you have to have a 70% winning percentage if you want to make money. I now realize that this is scalping and not what I want to do. I want to ride the wave of the trend until it is done. When I always looked at charts and see a big long trend in a direction. I always asked myself how can I get in that trend and ride to the end. I now know the way to do it. And I can’t wait to take responsibility for my own investments without having to listen or think about what others say or do. I will have a plan in place and I will run with it.”
Chris C.
“Thank you for sending me your film. I thought it was an excellent film for beginning and veteran speculators. It’s a great reminder of what makes or breaks traders in our business. I found Jim Rogers statement about mutual funds very interesting. I am aware of his thoughts about the US in general, but he really laid into Wall Street. Many of my veteran clients are also not fond of Wall Street or even buying stocks in general. I dislike mutual funds but am still a believer of a self-directed stock portfolio. When new traders enter or research the futures arena, I generally give them the “train wreck” story of what can happen trading derivatives. But in reality only trading can instill this sense of humility and discipline traders develop over time as the trains come off the tracks on occasion. Not one successful futures trader interviewed appeared the least bit “cocky” like you might expect with Wall Street folks. Your movie complements my “train wreck” story. I am excited about the prospects of an increased appetite in commodities. There will be many road blocks along the way as institutional investors find the best way to diversify into our field whether through veteran funds of CTAs or through ETFs, etc. Either way, the demand is there. I will recommend your movie to my clients and prospects. I think it is ideal for individuals learning how become “traders or speculators” (I do not think it is particularly appropriate for everyday mom and pop long-term investors as it is biased towards a handful of successful futures traders with little positive portrayals of equity managers).”
“I’ve actually been “following” you for a while on your email list and websites. I read about Salem Abraham in Michael Covel’s The Complete TurtleTrader and Trend Following books. Abraham’s story is unique and his credentials, especially his trading performance, are impeccable. So when I heard about the Market Wizard Mentoring video featuring this second generation “Turtle,” I couldn’t wait to see it. After seeing the video, I highly recommend it. It’s a tremendous experience to watch a casual 1.5 hour conversation as Michael Covel picks Salem Abraham’s brain. Abraham tells the story of how he got started and of his influences growing up. He shares the major lessons he learned along the way and offers his advice. He teaches about probability and risk. I was blown away! I was getting a lesson in probability from one of the top traders in the world! I think the best part of watching this video is not just the content but the nuances you get when you “read between the lines”: the way he thinks; his confidence and mindset towards trading. I had some high expectations and this video definitely delivers!”
“I greatly admire your entrepreneurial efforts. The depth and variety of your subject matter is very impressive across your three websites. The gathering and organization of content, and smartly harnessing computer technology to deliver this content into a cogent whole is quite an achievement. Plus, you’re having to keep up to date, monitor performance records of prominent trend followers, and keeping tabs on the overwhelming flow of investment information. And you travel to boot. Wow! I bought and read your first book. I thumbed through your second. I’m on your e-mail list. It appears trend following is viable. Certainly, many have achieved strong long term performance records using this approach. Allow me to somewhat play devil’s advocate, having in mind your very staunch stance of trend following as opposed to practically any other investment method. 1. Is there not in all the world of investment, people who’ve succeeded consistently using other investment strategies? 2. Just as the fervent atheist digs in his heels, and has a ready counter-argument for any explanation a believer in God can espouse, do you believe you are open minded toward other investment strategies? 3. Is it not possible someone could have an intuitive or even common sense approach to the market? Here’s what I mean, beginning with intuitive: someone loves a particular market and is immersed in it. Say there approach is short term, perhaps one minute/hour/day to a few weeks or even longer at times. There only rule is to cut losses to 5 percent or 10 percent, whatever one chooses. Other than that, they have developed their intuitive faculty and do well. It seems this could very well exist. Granted, this type of person may not get in at the bottom and out at the top or vice-versa if they’re investing short. The common sense approach: Someone says to themselves,”That Walmart sure is catching on. It seems the people I know are going there a lot”. So they buy Walmart and hold. They get rich. Even today, with the 1987 drop, the 2000-2002 bear, and the recent drop, this person would be way way ahead. The same would apply to the person that simply observed computers were catching on, and bought Dell. And, of course, other individual stock examples could be given. I wanted to write, and so I did. I appreciate your work.”
“You’ve created a very, very strong presence and are a thought leader…I’ve attracted some large investors from actively participating on some private message boards, so I am fully aware of the potential. And, at some point you’re going to want to take what you’ve developed to the next level. That could mean a lot of different things. Offering a sponsorship may be the safest way initially (as opposed to becoming a consultant/rep/solicitor). Here is a unrelated example. In addition to business owners and executives, many of my investors are specialized physicians. For a few years xxx Capital was a “TMA corporate partner”. The TMA is the Tennessee Medical Association with 10,000 member physicians in TN. Take a look at these links to understand how they did it. I did the Elite Package which allowed me to pen 6 articles in their monthly publication, a full page ad in the same every month, we attended their annual meeting (with a booth, etc), links and logo on their website, did some conference calls, etc. The large funds that you’ve included on your site an in your books have no doubt already benefited immensely from your efforts (and you have benefited from their giving you access). It’s probably some of the lesser known and possibly even better shops that need the help in…gaining more exposure. I will suggest the next Soros probably looks a lot like what I sent you last night! And, of course, you’ll need to check them out diligently using the regulatory websites. Some people can appear one way, but when you check them out with regulators they’ve bounced around a lot and are actually salesmen, not money managers.”
Mike S.
Chief Investment Officer
Portfolio Manager
“I am a former stockbroker and economics graduate who had his initial financial education forged in the fires of major institutional academia. And that wrought-iron mutual-fund-based financial steel was reinforced during my time at Edward Jones Investments, a conservative buy-and-hold financial firm. Well, the classic saying in economics is “there’s no such thing as a free lunch.” But my personal belief, however, is that there’s no such thing as economics — if you want to learn economics, learn psychology. Understanding motivations is more important to understanding economic decisions that learning some stodgy abstract theory from a university professor who has the uncanny ability to postulate far and wide on situations after-the-fact, claiming keen insights and deep understanding about why something happened yesterday. Ask him what will happen tomorrow and you’ll get an answer that’s about as useful as if you’d asked your pet labrador. The point is: economics, and more specifically, economic prediction, is futile. And my personal experience selling bond mutual funds to old ladies was a process in supreme frustration (…no, the value of the bond can change but the interest payment you receive will always be the same…[sigh]…). So armed with these thoughts and feelings I set out on my quest to ally myself with real information that I can use to make some real money… And luckily, Michael Covel’s ‘Trend Following’ was the fourth financial book I read. Let’s put aside for the moment the fact that it contains several real world examples of real traders making real money from real decisions based on the concepts shared in the book — it was the first book I read where the fundamental (I use this word carefully) underlying assumptions behind the concepts made intuitive sense, were useful, and could be applied by anyone in a real way in the real world. The simplest solutions are usually the best solutions, and Michael has done an excellent job in ‘Trend Following’ of cutting away the extraneous clutter of useless financial information and getting to the point of what types of information it makes sense to pay attention to and why… and how you can make money. It was an Ah-Ha moment for me…I have also read ‘The Complete TurtleTrader’ and watched Broke, and have read through Michael’s websites. There is enough information on these to go out an start making money tomorrow. That is not a promise or an endorsement of divine riches to all who read Michael’s work. We all know that only a small percentage of the population actually act upon the knowledge they receive, even if it is to their benefit. But if it is relevant information that you seek, then in Michael’s work it relevant information that you will find.”
“While I’m sure you always get these types of letters, I would like to tell you my story, because you actually met me and influenced years back. A long time ago, I wrote you an email and you replied and were very responsive and kind, which was surprising (I had heard you were a cocky guy). Anyway, I read all your books, and wanted a chance to learn from one of the greats [and you recommended how to go about that]. Well, I got a chance to meet Mr. [name] very briefly, and while [name] couldn’t bring me on because such a tight shop, you both encouraged me to just continuing knocking down doors. Well, sure enough I got a chance to convince a famous manager to train me (this was before you had your Flagship). Anyway, he took me under his wing as long as I kept him anonymous. Sure enough at the end of 09 and making a killing during my “entrepreneurship,” I decided I had to start my own fund. It’s been a long road, but today I now am running [number] million…So I figured I’d stop on by and pick up your course, to see what you have learned from all those greats. [Also with a group of traders] I will be writing the last few chapters on trading “theology,” a little of my background will be intermixed and I would like to mention you. I know you don’t need brand recognition, but while short sometimes, you did encourage me and lead me down the right path with your writings and correspondence…I know you have large fund clients, but I guess you could indirectly say [I was] one of your readers and [now a] third generation turtle [who] is now running money of his own. My [hope] one day [is that] I’ll be able to have you interview me as [one of a] new generation of trend traders. While the path was the toughest I could imagine, [it was] nevertheless fruitful.”
“I want to thank you again for your work. You did not teach us specifically how many units to trade, what our position sizing algorithm should be, or where we should exit our positions, but we are in many ways still your turtles. Back in 2005, being a couple of average guys in our early twenties from rural North Carolina with no contacts in the industry and no prior training in the science of trading nor system building, the resources you provided were instrumental in helping us get started. Perhaps more important has been the ongoing confirmation provided by your books and daily insights from your site. As many traders would attest, building a profitable trading system is not necessarily the difficult part, it is having the fortitude and confidence to stick with it and sell it in the face of pressure from drawdowns and a misled, doubting public. Every day we continue to trend follow and grow our business is living proof of the ideas you continually put forward–that anyone with the guts and willingness to put in the work can succeed at whatever they are passionate about, whether trading or anything else. Almost seven years into it with just under $20 million in total assets across multiple products, we are still barely a blip on the money management radar. However, we love every minute of our work and are as hungry as ever to grow our business further. We will continue to read your books, follow your sites, and watch your films for any additional insights and hope you keep the passion that sets you apart.”
Brandon L.
Not persuaded that Flagship is for you? Listen and read. You can also read my podcast reviews here.
One more!
Oh, I forgot. Love this magazine article. She ties her path to fortune directly to my book TurtleTrader. I hope you enjoyed reading the above trading success stories and that they give you the inspiration to be a success yourself.
