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Ep. 542: Trading Psych Mega Episode with Michael Covel on Trend Following Radio

Trading Psych Mega Episode with Michael Covel on Trend Following Radio
Trading Psych Mega Episode with Michael Covel on Trend Following Radio

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Michael has had some of the brightest psych minds on his podcast. Today he pulls together the great psych minds in trading into one podcast. Those interviews include: Brett Steenbarger, Jason Williams, Van Tharp, Daniel Crosby, and Meir Statman.

Brett Steenbarger is a Clinical Associate Professor of Psychiatry at New York State University, and author of The Daily Trading Coach, The Psychology of Trading, and Enhancing Trader Performance. His newest work is Trading Psychology 2.0: From Best Practices to Best Processes.

Jason Williams is author of The Mental Edge in Trading. Jason received his psychiatry degree at John Hopkins. His father is famed trader Larry Williams.

Van Tharp runs the Van Tharp Institute and is author of four acclaimed books published by McGraw Hill: Super Trader, Trade Your Way to Financial Freedom, Safe Strategies for Financial Freedom, and Financial Freedom Through Electronic Day Trading. His new book is called Trading Beyond the Matrix. He was also featured in Jack Schwager’s Market Wizard’s: Interviews with Great Traders. Van Tharp received his Ph.D. in psychology.

Daniel Crosby is author of The Laws of Wealth: Psychology and the Secret to Investing Success, and co-author of the New York Times bestseller Personal Benchmark: Integrating Behavioral Finance and Investment Management. His background is in behavioral psychology and he sees the markets as a great backdrop to view human behavior in a real world setting. He is also founder of Nocturne Capital.

Meir Statman is a professor of finance at Santa Clara University and a behavioral finance expert. His acclaimed book is titled What Investors Really Want.

In this episode of Trend Following Radio:

  • Envy and happiness
  • Fear of losing vs Fear of missing out
  • Mental accounting
  • Expert discretion
  • Efficient market theory
  • Human ego
  • Warren Buffett and his trading strategy
  • Passive investing
  • Sigmund Freud’s impact on trading
  • Standard deviation as a proxy for risk
  • Matching “the benchmark”
  • Systems theory
  • Money management vs. Position sizing
  • Ed Seykota’s trading and psychology strategies
  • Tom Basso’s trading and psychology strategies
  • Yoga
  • Training your brain how to think

Mentions & Resources:

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Ep. 509: Van Tharp Interview with Michael Covel on Trend Following Radio

Van Tharp
Van Tharp

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Van Tharp is on today’s podcast. It is his third appearance on the show. Van runs the Van Tharp Institute and is the author of four acclaimed books published by McGraw Hill: Super Trader, Trade Your Way to Financial Freedom, Safe Strategies for Financial Freedom, and Financial Freedom Through Electronic Day Trading. His new book is called Trading Beyond the Matrix. He was also featured in Jack Schwager’s Market Wizard’s: Interviews with Great Traders. Van Tharp received his Ph.D. in psychology, is a certified Master Practitioner of Neuro Linguistic Programming (NLP), a Certified Master Time Line Therapist, a certified Modeler of NLP, and an Assistant Trainer of NLP.

Michael starts the podcast asking Van how he felt the year Eugene Fama and Robert Shiller won the Nobel Prize. Van has a long standing theory that those who win the Nobel Prize are just supporting the ideas of the status quo. It is meant to propel the majority into believing they are in the right. Trend following does nothing to support the status quo, therefore Van says that Michael and himself will not be winning the Nobel Prize anytime soon.

People looking for help constantly approach Van. Michael asks, “What is it like to observe the learning of people who come into your world?” Van goes into the steps he takes new students through when teaching them how to trade. He shares some typical biases that new traders have when starting their training. He first teaches people to understand that they need to take total responsibility for what happens to them while trading. If was easy to make money in the markets then big money would make it hard to participate in the game, but since it is not easy to make money in the markets, they make it easy to join.

Michael switches gears and asks, “When were you first exposed to the ‘how much’ question?” Van says that it was at a workshop with Ed Seykota. Seykota asked, “What is the most important factor in your trading?” Van responded, “Well, It’s you.” And Seykota said, “No, it’s how much.” It all starts with how much you are willing to lose and how much you can afford to lose. Michael moves on to ask “Are there anymore interesting things that you learned from working with Ed Seykota?” Van shares a story about Seykota and the psychology behind what makes him such a legendary trader. He moves on to share some stories about another legendary trend following trader, Tom Basso. Van shares personal stories about how he conducted his business and trading.

Discretionary trading is the next topic. Van says, “If you are a pure discretionary trader, it seems to me that it would be very difficult to implement some of the position sizing methodologies that are in your work.” A trader needs to know when something is not working anymore. You need to be aware of market changes, and subtle changes in that market that no longer works.

Michael ends the podcast asking, “Who changed your thinking in your life? Who helped to send you down this path?” Van started his business around 1982, which coincidentally was probably the low point in his life. He went to a life science church that helped him work on himself. He can’t pinpoint a specific event or person that has molded him into who he is right now, it was a collaboration of events and people.

In this episode of Trend Following Radio:

  • Systems theory
  • Money management vs. Position sizing
  • Ed Seykota’s trading and psychology strategies
  • Tom Basso’s trading and psychology strategies
  • Yoga
  • Training your brain how to think

Mentions & Resources:

Listen to this episode:

Ep. 463: Jack Schwager Interview with Michael Covel on Trend Following Radio

Jack Schwager
Jack Schwager

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Michael and Jack Schwager talk about his new venture Fund Seeder. Jack is the author of the Market Wizard series. His books have remained relevant over the past 25 years, and for many traders they are the best trading books on the shelves today. Michael and Jack talk about the structure of the Market Wizards books and how they evolved to interview style format. Michael thanks Jack for opening his mind on the direction he took the Trend Following Radio podcast.

Many of the traders Jack was able to interview, such as Bruce Kovner and Michael Marcus, never did another interview after “Market Wizards.” A lot of the secret to the book series success was the exclusivity of the interviews. Michael asks, “Of all the traders you have talked to, what trader impressed you the most?” Jack has a hard time, of course, narrowing it down to just one because there has been so many extraordinary people that he has interviewed. That being said, in terms of track records and sheer intellect, he would chose one. Jack was completely awed by his accomplishments and was surprised how great he was on a personal level.

There has been a strong trend over the years for money to go to bigger and bigger asset managers. It has become a safer thing to do, to put money with a larger manager. It isn’t performance driven, it is purely safety driven. Jack says that even if you have skill it is becoming exceedingly more difficult to gain new clients and get big. Jack’s new venture is focused on helping these start up traders. The firm helps connect investors as well as companies that may want to find new and upcoming traders. Jack elaborates on the match making process and how they present verified and unverified track records.

In this episode of Trend Following Radio:

  • Trading legends
  • Futures markets
  • Equity markets
  • Gaining clients as a new trader

Mentions & Resources:

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Willful Ignorance: Trend Following Radio Feedback

Feedback in:

“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.

Love the podcast.
[Name]

Thanks!

Note: His feedback is on this.

Willful Ignorance
Willful Ignorance

Ep. 247: Van Tharp Interview with Michael Covel on Trend Following Radio

Van Tharp
Van Tharp

Michael Covel interviews Van Tharp on his second visit to the show. Van Tharp runs the Van Tharp Institute and is the author of four acclaimed books published by McGraw Hill: Super Trader, Trade Your Way to Financial Freedom, Safe Strategies for Financial Freedom, and Financial Freedom Through Electronic Day Trading. His new book is called Trading Beyond the Matrix. He was also featured in Jack Schwager’s Market Wizard’s: Interviews with Great Traders. Van Tharp received his Ph.D. in psychology, is a certified Master Practitioner of Neuro Linguistic Programming (NLP), a Certified Master Time Line Therapist, a certified Modeler of NLP, and an Assistant Trainer of NLP. He has used his expertise in NLP to create the successful models of trading and investing upon which so much of his work is based. Covel and Van Tharp discuss beliefs in the context of trading and investing; the moment of now, and the Navajo’s belief of a never-ending present; the belief examination paradigm; “big money” and what it means to Van Tharp; the idea of “trader jail”; fear of the unknown; the importance of sleep; and the difference between spirituality and religion.

Listen to this episode:

Van Tharp

Behind the Curtain

I share many items for free on my websites. Unfortunately, there are some items that must remain behind closed doors:

Michael, first of all, thank you for all of your work. I appreciate your conviction and tireless effort. You referenced an Eckhardt audio speech in your podcast episode with Van Tharp. Would you be willing to share the speech with me? I would be very interested to hear the speech from Mr. Eckhardt. Please let me know at your earliest convenience. Keep up the great work!

Thank you,
Jacob

Unfortunately I can’t share it. Wish I could.

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