Paul Mulvaney is a trend trader profiled in my book The Little Book of Trading. His insight:

Mulvaney’s trend trading is profitable on 54 to 55 percent of days, but on only 25 percent of trades. Obviously those 25 percent of trades are more profitable than the 75 percent of trades that are losers. Many traders have a hard time accepting the numbers. If they only dig a little deeper they can see the profit margin.

More.

If there was a Hall of Fame for trend followers the owner of the Boston Red Sox would be in it. A piece of timeless wisdom from John W. Henry:

How are we able to make money by following trends year in and year out? I think it’s because markets react to news, but ultimately major change takes place over time. Trends develop because there’s an accumulating consensus on future prices, consequently there’s an evolution to the “believed true price value” over time. Because investors are human and they make mistakes, they’re never 100 percent sure of their vision and whether or not their view is correct. So price adjustments take time as they fluctuate and a new consensus is formed in the face of changing market conditions and new facts. For some changes, this consensus is easy to reach, but there are other events that take time to formulate a market view. It’s those events that take time that form the basis of our profits.

Smart.

If you have not yet read the origins of Trend Following, dig in (PDF).

Podcast #3 and feed are live.

Podcast #2 and feed are live.

Nell Sloane of Capital Trading Group offers insight into Integrating Managed Futures and Traditional Investments (PDF). Download and take a read.

Note: The vast majority of “managed futures” investments are trend following in nature.

I will be speaking here in NYC in April.

So you think you need to be born with an Asperger’s memory gift to win at trading?

Wrong! Read:

The Talent Code
Talent is Overrated
The Complete TurtleTrader

For example, here are some of the Turtle backgrounds:

Collin’s Commodities – Commodities Accountant
Rosati’s Pizza – Kitchen help
University of Notre Dame – Philosophy/French

Budget Copy Systems, Inc. – Vice President
P.S.G Inc. – Manger
University of California, Los Angeles (UCLA) – Political Science
University of California, Berkeley – Law

Caterpillar Tractor Co. – Open Consultancy
United States Air Force Academy – Philosophy/Math
American Graduate School of Intl. Mgmt.

Continental Grain Company – Grain Merchandiser
Johnson Graduate School of Management – Finance (MBA)
Catholic University of Louvaine – Applied Economics
Brown University – Economics/Geology

Cushman/Wakefield CBT Security – Security
Central Connecticut State University – Marketing
Chicago Grain Inc. – Runner Phone Clerk
Produce Grain – Phone Clerk
Correctional Alternative Center – Counselor for Inmates

Wilkinson and Lester CPA’s – Staff Accountant
Virginia Credit Union League – Auditor
University of Virginia – Accounting
Ferrum – A.A

C&D Commodities – Clerk Floor Manager
John Marshall Law School – Law
Miami University (Ohio) – Economics
Loyola University (Rome)

Clayton Brokerage – Account Executive
E.F. Hutton & Co. Account Executive
Self Employed – Music Teacher
Paul Bamberg – Physics Teacher
Susan Kaplan – Teacher of prep. Courses
Don Mills – Kitchen Worker
U.C.L.A Medical School – Medicine
Harvard University – Science
New England Conservatory of Music – Piano/Music Theory

Hull Trading Co.- Computer Programmer
American College of Switzerland – Natural Science
De Anza College – No major

More in my book.

Jim writes:

Once more we hear that Greece needs more money or it will fail. If you are like me, you are getting tired of hearing that story too. I really do not listen to that stuff when it comes to making my investment decisions. And I really feel sorry for the investors who do make their decisions based on what they hear and read.

Wise.

Courtesy of ZH comes David Rosenberg:

Q: Isn’t this still a “modern-day depression?”

Sure it is. And just as we saw in 1933, 1934 and 1935, the economy and the stock market can experience a brief cyclical recovery, especially given all the massive monetary intervention by the central banks, but the fragility and vulnerability never go away, and neither does the hardship for many. Yes, yes, the stock market has doubled off the March 2009 lows. Yet, since that time, more than 11 million Americans have joined the food stamp program, including 4.4 million in 2011 alone. That may not fit into your definition of depression, but it does for these folks, I am sure.

The labour force has contracted by over 800,000 since the recession ended — this too is unprecedented. Assuming that the 200,000 payroll gain in December was the real deal, it would take 30 more of these to get employment back to where it was when the recession began four years ago. Real per capita personal disposable income in the U.S. has not grown for six years — despite trillions of dollars of government stimulus. If that’s not a ‘depression’ outcome, then please come forward with your definition.

If you exclude the mountain of government social benefits, real income on a per person basis has rolled all its way back to where it was in 2001! Interest rates have been 0% for over three years and governments around the world have blown their fiscal finances out of the water in order to save insolvent banks and save economic activity from implosion. In fact, as a result, there has been such a radical decline in creditworthiness coming out of the Great Recession, that the pool of sovereign bonds that have unblemished AAA ratings has plunged to $4.5 trillion from $16.9 trillion (see page C12 of last Thursday’s WSJ). That is a 73% nosedive and a reminder for investors that in the name of owning “scarcity”, high-quality paper is noteworthy for its dwindling supply.

Don’t bet only off Rosenberg’s words as you try to make money in the markets. However, bet off his words, with sound strategy thought out in advance that doesn’t require you to parse mountains of fundamental data, because how else are you going to produce profit in the climate he describes? Do I think trend following is a wise to bet for the chaos he describes? Yes, I do. And if you want to call me nonstop redundant–go for it–but I am not stopping.

An excerpt from The Little Book of Trading:

One final important gem from Larry Hite is that being wrong is okay. He says he was never very good in school and not much of an athlete either. But he turned that to his advantage because he was able to grasp the idea that he could be wrong. In fact, it came as no surprise to him when he was wrong. Hite recalls with pride: “I’ve always built in an assumption of wrongness [in my trading]. I always ask myself: What is the worst thing that can possibly happen in this scenario? Then I use that worst-case scenario as my baseline. I always want to know what I’m risking, and how much I can lose. And sometimes, when you really look at it, there’s really not all that much risk [which is why you can get rich].”

More on Hite.

These days well read blogs are the engine of growth. In that world guys like Barry Ritholtz drive debates. He just listed his The 10 Most Popular Books Bought By Big Picture Readers in 2011 and my book Trend Commandments came in at #2 for the year. Very cool.