I want to first say thank you for all the great material and insight you’ve put out into the universe regarding trend following trading. I have all of your books and have listened to every single episode of Trend Following Radio. Both your books and podcasts have provided me with a plethora of information on the subject of trend following and the general psychological mindset needed in order to be a successful trader.
I also wanted to say thanks for helping me with the motivation I needed to finally leave Los Angeles for the first time since college to go out and travel, something I’ve wanted to do since I graduated. As a 28-year old guy with no children, I really had no excuse as to why I wasn’t getting out there and seeing the rest of the world. Also, your mantra of “you’re gonna die”, though simple, helped push me in the direction of taking more risks.
Right now I’m living in Bangkok. Through listening to your podcasts, I know you spend a decent amount of time over here in Southeast Asia. I was wondering if you had any public speaking engagements or live appearances over in this part of the world. I’ve read all of your material and listen to every podcast but I think it would be awesome to see you speak in person about trend following. I don’t see any future speaking engagements listed on the website but since I happen to be living over here for the moment I figured it couldn’t hurt to ask.
Anyway, thanks again for everything and much peace and prosperity my friend.
[Name]
You are welcome, but no new news yet on live events. Stay tuned.
[Trend Following] fills a void in a marketplace inundated with books about buying low and selling high, index investing, and all other types of fundamental analysis, but lacking any resource or, for that matter, practically any reference to what I believe is the single best strategy to consistently make money in the markets. That strategy is known as trend following. Author Van Tharp has described it succinctly:
“Let’s break down the term ‘trend following’ into its components. The first part is ‘trend.’ Every trader needs a trend to make money. If you think about it, no matter what the technique, if there is not a trend after you buy, then you will not be able to sell at higher prices … ‘following’ is the next part of the term. We use this word because trend followers always wait for the trend to shift first, then ‘follow’ it.”
Trend following trading seeks to capture the majority of a market trend, up or down, for profit. It aims for profits in all major asset classes—stocks, bonds, currencies, and commodities. Unfortunately, however simple the basic concepts about trend following are, they have been widely misunderstood by the public. My desire to correct this state of affairs is what, in part, launched my research. I wanted to be as objective as possible, so I based my writing on all available data:
• Trend followers’ published words and comments over the last 30 years
• News accounts of financial disasters
• News accounts of the losers in those financial disasters
• Charts of markets traded by trend followers
• Charts of markets traded by losers in the financial disasters
If I could have written books comprising only numbers, charts, and graphs of trend following performance data, I would have. However, without any explanation, few readers would have appreciated the ramifications of what the data alone showed. Therefore, my approach to writing Trend Following became similar to the one Jim Collins describes in his book Good to Great, in which a team of researchers generated questions, accumulated data in their open-ended search for answers, and then energetically debated it.
However, unlike Collins who was writing about generally well known public companies, trend followers form a sort of underground network of relatively unknown traders who, except for an occasional article, the mainstream press has virtually ignored. What I have attempted to do is lift the veil, for the first time, on who these enormously successful traders are, how they trade, and what is to be learned from their approach to trading that we might all apply to our own portfolios.
Trend Following challenges much of the conventional wisdom about successful trading and traders. To avoid the influences of conventional wisdom, I was determined to avoid being influenced by institutionalized knowledge defined by Wall Street and was adamant about fighting “flat earth” thinking. During my research, starting with an assumption and then finding data to support it was avoided. Instead, questions were asked and then, objectively, doggedly, and slowly, answers were revealed.
If there was one factor that motivated me to work in this manner, it was simple curiosity. The more I uncovered about trend followers, the more I wanted to know.
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Feedback from a listener:
Hi Michael.
I’ve been listening to your awesome podcast for a few months now and it has intrigued me quite a lot. Thank you so much for putting it up out there.
I never really thought about money before. I’m one of those suckers who has been keeping the money in the bank, too skeptical of financial advisers, too afraid and ignorant of the stock markets. At some point obviously I started to realize that I needed to be in control of my savings and start planning my future. I’ve been reading a lot about the markets, but nothing makes as much sense as your words.
Despite understanding your message (at least I think I do), I actually don’t know how to exactly implement that way of thinking on a personal strategy. I am a dentist living in London, 2 small kids at home, so not a lot of time on my hands. I have been putting some of my savings on a buy and hold strategy with Vanguard equity funds. But without a doubt I am dependent on market timings and on the hope things will always “get better.” And that doesn’t seem to be very sensible.
So, I am contacting you in the hope you could help me to have some more clues on how to start on a trend following strategy that could fit my circumstances.
With great admiration,
[Name]
My father is a dentist. I feel a kinship! Good news and bad news: Good? Trend following can help anyone. Bad? Need to do some prep. Here are some starters: Start Now and an Intro Video.
I recently started listening to your podcast and love it! Just listened to your podcast related to baseball v football. Question, do you have analysis or know of any experts that have done the same type of trend tracking on what small businesses are most profitable to invest in over time? Example, starting a restaurant and franchising vs a car dealership vs owning a car wash etc.
Thanks in advance for any direction. Keep pumping out the great content.
[Name]
Michael, thank you very much for putting the truth out there! I was introduced to Trend Following about a year ago after trading (unsuccessfully) with the Elliott Wave Principle for eight (8) or so years. I lost a little capital at a time but in all, took losses of about $40,000 USD. Something had to change and it was when I was introduced by a trend following system being marketed to me via a pop up window while browsing the internet of all places. Well, I bit, tried it out, and quickly found it to be a more realistic view of the markets and it made rational sense. After a few weeks I saw potential and devoted many many sleepless nights back-testing and tweaking systems and the results now have been phenomenal to say the least. Over the past nine (9) months I’ve taken [blank] and turned it into just over [blank], fairly conservatively.
Your blog posts, your podcasts, and lastly your books have been there to mainly keep me going, remembering the plan, striving to do the same thing day in day out, win or lose. It’s so rare to have support as a trader and your message and content have helped immensely. My plan moving forward is to grow my personal futures trading account to over [blank] in the next twelve (12) years and along with using my current system, listening and reading your content is going to get the job done in time. I thank you very much good sir for your passion for common sense investing and your willingness to share and assist in an industry that is typically full of poor advice.
“Most of the misinformation is not deliberate. People want to be led astray. They constantly ask the wrong questions, and those selling information get rewarded by giving them the answers they want.” -Van K. Tharp, Trade Your Way to Financial Freedom
I think CNBC will be around in 50 years, probably answering the same types of questions.
I’ve been listening to your podcast for over a year now, and it is truly excellent! The interviews, the guests, and the first-rate information they provide is invaluable. I just left a rating on iTunes. You and I must be distantly related (aren’t we all?). My mother’s maiden name was Coval, and her father was John Coval, from the Ukraine (Skala).
Please send me the right trend following steps to continue my knowledge. Also, would you please send me your free video.
Thanks,
[Name]
Thanks, but not related!
How is Covel pronounced? Co-vell. “Co” rhymes with toe. “Vell” rhymes with bell. Equally accented each syllable. It was shortened from Covalesky, which was shortened originally from Kavaliauskas (which is father’s Lithuanian side).
A client’s bank sent an over payment for one of my products. An over payment of $6000! His feedback once we got it all sorted out for him:
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Hi Mike,
Hope your season festivities met with your expectations and more. I received the reversed payment from you on December 22. Thank you. The paragraph below can be included in a future blog if and when required:
Mike, there are people out there who would probably not have gone to the time and effort to resolve the over payments and some who would not have bothered to return them. Thanks for your valuable time, effort, I dare say money and most of all your honesty, have great year.
