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Ep. 568: Steve Burns Interview with Michael Covel on Trend Following Radio

Steve Burns
Steve Burns

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Steve Burns and Michael Covel get together yet again to discuss all that is trading.

After a lifelong fascination with financial markets, Steve Burns started investing in 1993, and trading his own accounts in 1995. It was love at first trade. A natural teacher with a unique ability to cut through the bull and make complex ideas simple, Steve took to blogging and social media by founding New Trader U in 2011.

Since then, New Trader U has attracted hundreds of thousands of visits a month, becoming the go-to resource for people wanting to build a strong, trading foundation. New Trader U offers an extensive blog resource with more than 1,000 original articles (Steve posts daily and is the author of numerous trading books).

In this episode of Trend Following Radio:

  • Trend following
  • Taking a loss
  • Risk management
  • Proper psychology
  • Mindset

Mentions & Resources:

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Ed Seykota: Greatest Quotes

A big thanks to Steve Burns for the list.

Ed Seykota wisdom:

  • “If I am bullish, I neither buy on a reaction, nor wait for strength; I am already in. I turn bullish at the instant my buy stop is hit, and stay bullish until my sell stop is hit. Being bullish and not being long is illogical.”
  • “Fundamentalists figure things out and anticipate change. Trend followers join the trend of the moment. Fundamentalists try to solve their feelings. Trend followers join their feelings and observe them evolve and dis-solve.”
  • “The feelings we accept and enjoy rarely interfere with trading.”
  • “Systems don’t need to be changed. The trick is for a trader to develop a system with which he is compatible”
  • “It can be very expensive to try to convince the markets you are right.”
  • “There are old traders and there are bold traders, but there are very few old, bold traders.”
  • “I would add that I consider myself and how I do things as a kind of system which, by definition, I always follow.”
  • “Systems trading is ultimately discretionary. The manager still has to decide how much risk to accept, which markets to play, and how aggressively to increase and decrease the trading base as a function of equity change.”
  • “Trying to trade during a losing streak is emotionally devastating. Trying to play “catch up” is lethal.”
  • “The elements of good trading are: 1, cutting losses. 2, cutting losses. And 3, cutting losses. If you can follow these three rules, you may have a chance.”
  • “Losing a position is aggravating, whereas losing your nerve is devastating.”
  • “The markets are the same now as they were five to ten years ago because they keep changing – just like they did then.”
  • “Luck plays an enormous role in trading success. Some people were lucky enough to be born smart, while others were even smarter and got born lucky.”
  • “Having a quote machine is like having a slot machine at your desk – you end up feeding it all day long. I get my price data after the close each day.”
  • “A losing trader can do little to transform himself into a winning trader. A losing trader is not going to want to transform himself. That’s the kind of thing winning traders do.”
  • “If you can’t take a small loss, sooner or later you will take the mother of all losses.”
  • “It is a happy circumstance that when nature gives us true burning desires, she also gives us the means to satisfy them. Those who want to win and lack skill can get someone with skill to help them.”
  • “Risk no more that you can afford to lose, and also risk enough so that a win is meaningful.”
  • “Dramatic and emotional trading experiences tend to be negative. Pride is a great banana peel, as are hope, fear, and greed. My biggest slip-ups occurred shortly after I got emotionally involved with positions.”
  • “Be sensitive to subtle differences between ‘intuition’ and ‘into wishing’.”
  • “The trading rules I live by are: 1. Cut losses. 2. Ride winners. 3. Keep bets small. 4. Follow the rules without question. 5. Know when to break the rules.”
  • “I usually ignore advice from other traders, especially the ones who believe they are on to a “sure thing”. The old timers, who talk about “maybe there is a chance of so and so,” are often right and early.”
  • “I set protective stops at the same time I enter a trade. I normally move these stops in to lock in a profit as the trend continues. Sometimes, I take profits when a market gets wild. This usually doesn’t get me out any better than waiting for my stops to close in, but it does cut down on the volatility of the portfolio, which helps calm my nerves. Losing a position is aggravating, whereas losing your nerve is devastating.”
  • “I intend to risk below 5 percent on a trade, allowing for poor executions.”
  • “I don’t judge success, I celebrate it. I think success has to do with finding and following one’s calling regardless of financial gain.” (On losing streaks and over-trading) “Acting out this drama could be exciting. However, it also seems terribly expensive. One alternative is to keep bets small and then to systematically keep reducing risk during equity drawdowns. That way you have a gentle financial and emotional touchdown.”
  • “In order of importance to me are: 1) the long term trend, 2) the current chart pattern, and 3) picking a good spot to buy or sell.”
  • “Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money.”
  • “Fundamentals that you read about are typically useless as the market has already discounted the price, and I call them “funny-mentals”. However, if you catch on early, before others believe, you might have valuable “surprise-a-mentals”.”
  • “If you can’t measure it, you probably can’t manage it… Things you measure tend to improve.”
  • “The key to long-term survival and prosperity has a lot to do with the money management techniques incorporated into the technical system.”
  • “If you want to know everything about the market, go to the beach. Push and pull your hands with the waves. Some are bigger waves, some are smaller. But if you try to push the wave out when it’s coming in, it’ll never happen. The market is always right”
  • “To avoid whipsaw losses, stop trading”
  • “Pyramiding instructions appear on dollar bills. Add smaller and smaller amounts on the way up. Keep your eye open at the top.”
  • “Markets are fundamentally volatile. No way around it. Your problem is not in the math. There is no math to get you out of having to experience uncertainty.”
  • “Our work is not so much to treat or to cure feelings, as to accept and celebrate them. This is a critical difference.”
  • “Before I enter a trade, I set stops at a point at which the chart sours.”
  • “Trading requires skill at reading the markets and at managing your own anxieties.”
  • “The positive intention of fear is risk control.”
  • “Speculate with less than 10% of your liquid net worth. Risk less than 1% of your speculative account on a trade. This tends to keep the fluctuations in the trading account small, relative to net worth. This is essential as large fluctuations can engage {emotions} and lead to feeling-justifying drama.”

Nice. See Ed on my podcast too.

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Ep. 353: Steve Burns Interview with Michael Covel on Trend Following Radio

Steve Burns
Steve Burns

Michael Covel speaks with Steve Burns on his third appearance on the podcast. Steve Burns has been investing in the stock market for over 20 years. He is the author of seven books, ranks near the top 500 of all reviewers on Amazon.com, and is one of the sites top reviewers for books about trading. Additionally, Burns has single-handedly developed an exceptional Twitter following. Today, Burns and Covel answer questions from readers of Burns’ forum. Covel and Burns discuss the self-publishing world; how one goes about making choices in social media; getting over the obstacle of fundamentals; mindfulness and the writings of Alan Watts; backtesting processes; brand new traders being introduced to a model that loses 60% of the time; survivorship bias; predictive vs. reactive technical analysis.

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Ep. 139: Steve Burns Interview with Michael Covel on Trend Following Radio

Steve Burns
Steve Burns

Michael Covel talks to author, blogger and trader Steve Burns. In his second visit to the podcast Burns and Covel discuss several famed trading quotes containing wisdom from Ed Seykota, Richard Dennis, Tom Willis, Jesse Livermore, Amos Hostetter, Ben Stein, Bertrand Russell, T. Boone Pickens, and Larry Hite. Covel and Burns discuss risk management; position sizing; the magic of compounding; why individual trades have very little meaning; turning down the volume on your emotions in your trades; how your losses can be an education; concept and theory with regard to trend following; quantifying and capturing trends; “just trading the numbers”; greed and fear in the context of trends; the common attitudes and misconceptions of novice to trend following traders; trading against the market vs. trading against yourself; drawdowns, and the importance of studying the track records of the great traders; entry and exit strategies; the importance of starting “right” in every enterprise; the curse of laziness; ignoring the talking heads; why you don’t need 20 screens on your desk to trade optimally; cutting your losses; the 1% rule; being blinded by the fundamentals; why if you diversify, control your risk, and go with the trend, it just has to work; I.Q. vs. emotional intelligence (E.Q.); and technology and long term trend following.

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Ep. 54: Steve Burns Interview with Michael Covel on Trend Following Radio

Steve Burns
Steve Burns

Steve Burns makes his 1st appearance on the podcast:

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