Ep. 229: William Adams Interview #2 with Michael Covel on Trend Following Radio

Synopsis: Michael Covel talks with Bill Adams in his second visit to the podcast. Adams is a private trader and systems developer. He is based in Zurich and works with institutional clients. Adams and Covel discuss if Adams views himself as a trend following trader; why the word futures can be problematic; broad diversification and diversifying on a number of different tiers; risk-based diversification; why making sure you’re in the game is the most important factor; why every business is seasonal; why price is the most important aspect to a trade; how Adams has (or doesn’t have) the “expertise” to trade certain markets; informing your system of various events as a quantitative or systematic trader; thinking about Adams’ strategy in the context of evolution; core baskets vs. satellite baskets; the adaptive aspect of what Adams does; the philosophical and operational aspects of volatility; average true range as a volatility measure; trading to make a return vs. trading as an economist; Adams’ greatest areas of challenge and frustration; Michael Lewis and whether the markets are “rigged”; and execution strategy. Want a free trend following DVD? Go to trendfollowing.com/win.

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Posted in Interviews, Multimedia, Podcasts, Trading 101

The Mechanical System Light Bulb Moment!

A recent email:

…read your book “Trend Following” on the plane. Your style of writing is amazing simple, clear, and direct. I used to be a journalist in the Marines so I appreciate well written thoughts. I especially love the stories and analogies you’ve captured. They are truth to me and have started the mindset shift I need to receive what trading has to offer. I’m not a college graduate. Just a simple knuckle-dragger who goes around Southern California to close deals and consult. I went to college to learn how to trade (never did and never finished). Since 1991 that’s all I’ve ever wanted to do–trade. Don’t know why, it’s just been calling me for years. Without being too long winded, I stumbled across Courtney Smith’s mechanical trading strategies. I never fully grasped the magnitude of mechanical trading until reading your work and I’m grateful and thankful to discover it. I look forward to riding the bucking bronco until I die. Thanks again for everything.

Welcome!

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Posted in Feedback, Trend Following

Ep. 228: The Vocbulary of The Media with Michael Covel on Trend Following Radio

Synopsis: Michael Covel cuts up a Yahoo Finance segment called “Are Social Media Stocks In A Bear Market?” with Michael Santoli and Jeff Macke. Covel dissects the terminology and words used by the media, and the position of the talking heads on this Yahoo Finance article. First, inspired by Larry Tentarelli, Covel discusses the idea of researching stocks. There is advice that says you should be doing one hour of fundamental research per week on every stock you own. If you own 50 stocks, that’s 50 hours a week. Covel thinks this advice is asinine, and points out that the best traders don’t do that. If the best traders in the world don’t do that, why should you? It doesn’t matter what the research tells you; if you don’t have a stop loss, you’re going to lose your money. Period. Covel then moves on to the Jeff Macke/Michael Santoli segment and dissects it each step of the way. Covel breaks down the terminology, including “crowded longs”, “chatter from brokerage firms”, and “hedge fund favorites”. Covel also discusses how we don’t know the why behind bubbles, inspired by his Justin Fox interview from a few days ago. Covel also discusses why you don’t need to know what a good price is on the way down; defining “smart money”, “aggressively buying”, and “leadership” in a trading system; and whether or not the market is “anxious”. Covel ends with something inspired by James Altucher’s article, “Ten Reasons You Have To Quit Your Job In 2014″. Want a free trend following DVD? Go to trendfollowing.com/win.

Media

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Posted in Multimedia, Podcasts, Trading 101, Trend Following

“That Annoying Covel Grows on You!”

Good feedback is always welcomed:

Hey Michael, was trying to write a comment following one of your podcast and couldn’t seem to get past the captcha. Just wanted to let you know that because of your show I can no longer listen to the radio. Yours guest are full of great insight which in turn promotes thinking. As oppose to listening to Bloomberg reporters which are just reading sheets of paper past down the line. To be completely honest when I first stumbled upon your podcast I found you to be a little bit annoying. But yours guests kept me listening. Since then you have grown on me, lol. I have read The Complete TurtleTrader and Trend Following, as well as many others. Market Wizards series, O’Neil, Livermore, Wyckoff, Darvas etc. Since reading Trend Following I have realized that my style has been more towards predictive TA then Reactive. But upon reviewing my trades it has been a mixture of both. While I continue on the journey of finding my style, keep up the good work. Apart from reading, your show is the only other thing that has promoted such healthy thinking in this field for myself. Thanks again Michael.

Mitch [name]

Thanks!

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Posted in Feedback, Trend Following

Don’t Put Yourself in a Box Dreaming of One Market Alone; Diversification Is Critical

Feedback in:

Hi, my name is James [name] and I’m from Malaysia. I would like to inquire about the trend following training program especially on the premium flagship system + training. I am only interested in currencies and I have been trading the spot forex market for about a year now, but I have never traded fx futures or fx options so far. My question is do you have training on trend following system that is only for forex trading? I have read through your webpage on premium flagship training and you mentioned that currencies (fx) is one the markets covered in this training but then you also mentioned that the instruments/system used is for ETFs, leaps options and futures, then what about forex trading? I am really interested to join the trend following training program if you can have it specialize for forex trading. By the way I have also read through the amazing turtle traders stories, but may I ask [if] any one of the successful turtle traders are major forex trader[s]? I hope you can enlighten me on this issue and I look forward to your favorable reply.

Thank you.
Best regards,
James [name]

You can use futures, leaps or ETFs to trade currencies (FX). Currency markets can be traded across those 3 markets. I don’t recommend the heavily hyped FX market alone (that is pushed by brokers online). Trade on regulated exchanges. Better. Yes, you can be a trend following trader on currencies, but why limit yourself to currencies alone? Diversification is the free lunch and you need to take it.

Note: All trend followers trade currencies, FX, forex or whatever you want to call it.

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Posted in Feedback, Trend Following

Ep. 227: Justin Fox Interview with Michael Covel on Trend Following Radio

Synopsis: Michael Covel speaks with Justin Fox. Fox is the executive editor at the Harvard Business Review Group. He writes a blog for hbr.org (http://blogs.hbr.org/fox/) and a monthly column for Time magazine. Fox is also the author of “The Myth Of The Rational Market: A History of Risk, Reward, and Delusion on Wall Street”. Covel and Fox discuss Harry Markowitz, Bayesian statistics, and making smart decisions in an uncertain world using quantitative tools; stocks, beta, and the importance of making useful predictions; Commodities Corporation and trend following trading in the early 1970’s; why a market in which everyone was rationally anticipating the future would be a random market; Amos Hostetter; how the behavioral mindset started to unfold in the 1970’s; Eugene Fama and the efficient market hypothesis; the Capital Asset Pricing Model; why well-designed markets and well-informed investors are prone to manias and panics; and individuals making errors vs. the group getting it right. Justin Fox can be found on Twitter at @foxjust or on the web at byjustinfox.com. Want a free trend following DVD? Go to www.trendfollowing.com/win.

Justin Fox

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Posted in Economics, Interviews, Multimedia, Podcasts

Day Trading… Not My World

Feedback in:

Hi Michael, I see a few weeks ago you were after a new laptop 13 inch Air. Just trying to work out do you use that laptop on your travels to trade personally? Or have you got staff trading for you? You see the reason I ask is I know you are a trend trader and wondered if you trade on the go? And what time-frame do you use? Because I have been using daily time-frame, but now looking at 5 min time-frame because I believe even with small time frames like the 5 minute chart there are still trends, but just a lot smaller. But I know I will be paying more spreads, but there is a lot more action. Just wanted to know your thoughts. Thanks Michael.

All the best,
Simon

I have absolutely no feedback on day trading, 5 min bars etc. Not my world. And to paraphrase Ed Seykota, if you want to trade the really fast stuff, why not go for the speed of light?

Heavy sarcasm.

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Posted in Feedback, Systems Trading, Trading 101, Trend Following

All Podcast Episodes

Note: These episodes will all play by clicking on “listen”, but they are large MP3 files. You may want to “save as” and save each MP3 to your desktop. All episodes on iTunes too.

Note: These episodes will all play by clicking on “listen”, but they are large MP3 files. You may want to “save as” and save each MP3 to your desktop. All episodes on iTunes too.

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Posted in Interviews, Multimedia, Podcasts, Psychology, Trading 101, Trend Following

I Give You The Head Start Trend Following Advantage

A recent email exchange:

Michael, How well does your system perform? What is the rate if wins over losses? What is the largest gain and largest loss on all your trades? What is the average length of time in a trade? What is the average gain of all your trades? I am trying to get an idea if your system will benefit me.

Thank you.

Sincerely,
Marcus

Beyond details here trendfollowing.com/new_2997 a few extra points to the service I provide:

    1. Classic trend following systems.
    2. Winners will typically be 3-4 x the size of losers. Winners typically 30-50% (of course “expectation” is the issue, not “winners”).
    3. Portfolios can vary, performance will vary.
    4. Risk/reward are related, so the end user can try to achieve a greater or lesser return. Drawdown of course related to these choices, and will vary too.
    5. Trades can be stopped out in days or weeks. Winners could exceed 1 year.

Are you a trend following trader now?

Mike, I don’t know what it takes to be a trend following trader. I have read all of your books, and I still have yet to get an idea of what your system is like. Most I read is about how well people (like the turtle traders) do, but not very much substance. I have been scammed multiple times before so I am very hesitant to buy anything that has not been tested out.

Sincerely,
Marcus

If you think my world is a scam please don’t join up. Just want to be upfront. I am simply giving you a head start and charging for it. You could figure it out on your own, but might spend years. There is no Holy Grail, it all takes work, but I do help people get there faster with actual systems they can apply.

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Posted in Feedback, Trend Following
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