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Tag: trend commandments

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.

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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.

If You Want A Guarantee Buy A Toaster!

Posted on by Michael Covel

A question arrived today:

Will your book ‘Trend Following’ help me develop a trading system to become profitable?

I replied: For some people yes, and for some people no. Feel free to follow-up. He replied:

Will your other books help me?

All of my books will help some people. My books will not help all people. There are reasons for this.

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.

Risk Management, Stops, Exits, Losers and Winners

Posted on by Michael Covel

Feedback in:

Hello Michael, thanks for accepting my friend inquiry. First, I want to say that I am a big fan of your podcast and interviews. Really great stuff. About myself? I have traded for 5 years, but have not traded profitably. I think my largest hurdle is not holding onto the winners. I do not give my entries enough room. Therefore I keep my losers very short, but very often see the position run after stopped out. In a nutshell my strategy is to move the stop to the entry point as soon as the position has a little bit of room. But so many times the position turns around just to touch my stop and then move on. Do you have any advice for me? Would you say that’s just risk management and part of the business? Because I think I miss too many good trades with this strategy. Thanks a lot in advance and have a nice time in Asia.

Frank

My first advice would be to read one of my books. Not a dodge to your question, but my books are filled with the necessary detail not easily put in one email response.

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.

How I Look At The Markets

Posted on by Michael Covel

The markets are a science. Plain and simple. Some like to look at fundamentals and guess what will happen next. I like to look at the numbers. The facts. The only thing you can trust. Billion dollar hedge fund manager David Harding views the markets similarly:

Our approach to markets is a science. It is an unpublished science, but it is a real one. You would have thick leather-bound volumes of papers on it if there were a willingness to “open the kimono,” as the horrible modern expression has it. The process of trading our system is like repeatedly drawing different colored balls from the statistician’s apocryphal bag. As we draw out a ball it becomes part of the track record, and we put it back in the bag, but there is no guarantee that the balls will come out in the same order in the future.

Trend following is speculation in its purest form–find an edge and exploit it consistently over time. That attitude is critical for any entrepreneurial success. Throw the lottery mentality away. Forget the one hit wonder luck the press propagates to the masses of lemmings. Learn the real way to profit that goes against buy and hold (hope).

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. 92: Cheat Sheet for Trading Success with Michael Covel on Trend Following Radio

Posted on by Michael Covel
Cheat Sheet for Trading Success with Michael Covel on Trend Following Radio
Cheat Sheet for Trading Success with Michael Covel on Trend Following Radio

Please enjoy my monologue The Cheat Sheet with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive.

Listen to this episode:

Want to learn more Trend Following? Watch my video here.

“Play Calling Is About Probability, Not Certainty”

Posted on by Michael Covel

Take two traders who win 40 percent of the time with their winners being three times as large as their losers. One has a history of 1,000 trades and the other has a history of 10 trades. Who has a better chance in the next 10 trades to have only 10 percent of their total trades end up winners instead of the typical 40 percent? The one with the 10–trade history has the better chance. Why? The more trades in a history, the greater the probability of averages holding true. The fewer trades, the greater the probability of moving away from the average.

Consider a friend who receives a stock tip, makes some quick money, and tells everyone about it. There is a big problem with this scenario. His population of winning tips is extremely small–one to be exact. That’s statistically insignificant. He could just as easily follow his next hot tip and lose all of his money. One tip means nothing. The sample is essentially anecdotal evidence.

Thinking in terms of statistics is everywhere if you are observant. During a Monday Night Football game, one of the announcers, Ron Jaworski, put numbers and odds in perspective for playing the game of football: “Play calling is about probability, not certainty.”

It is the same in trend following trading.

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 the Black Swans Hide: Mebane Faber Opines

Posted on by Michael Covel

Mebane Faber, who was kind enough to offer positive praise for my new book Trend Commandments, takes a look at outliers here (PDF). Take a read–worth your time.

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.