Not interested in trading your own money? There are plenty of trend following firms out there to choose from. Some feedback:

I’m reading your book Trend Following, and I’m a believer. I’m not interested in becoming an expert. I would rather have someone do the investing for me, but I don’t see on the website any links for investors who want someone else to manage their funds. Have you got any options for me?

Thanks,
David

My five books are filled with ideas for those who might manage your money. I am not currently in the recommendation game.

Some feedback:

Mike. So to be clear. You don’t sell the software itself just the code?

We teach the psychology, philosophy and rules. Those rules can be coded into dozens of different programs and software packages. The key is the rules though. That’s where it all starts.

Ok understood… By the way I should really introduce myself properly. I was a CEO and shareholder of an investment bank in the Middle East (I’m also a UK chartered accountant and a lawyer). I am now retired (53 not 73) and living in Singapore. I have made millions for myself trading FX but I use a sniper approach (don’t laugh). Very simply put I wait till price hits the most significant support and resistance areas (on weekly charts) and then just assume [the] probability is it will reverse direction. I then observe price action and divergences in the shorter time frames and swing the other way if it all stacks up. However, my positions are very large. Usually up to $15 million. The approach I use is obviously discretionary but I suppose I could try to code it (not sure how this could be done as the support and resistance lines are a visual check). I’m interested in your products because I have a 22-year-old son who wants to get into trading and investment full time and I want him to start his education with the right approach and the right people. You know very well there a lot of ‘useless’ trainers and systems out there in the market. Which brings to the subject of the ‘rules’. Are you providing the actual program codes (eg. for Tradestation or MT) or are you expecting your clients to find someone to code them up (which can be frustrating)??

Regards,
Peter

As for code… Yes, we are expecting clients to code the rules we teach [if that is their desire]. Why? There are too many different code formats out there. We do have an option for Flagship clients. We provide Tradestation® code for two separate trend following systems. Hope this helps.

A good email exchange with some FAQ’s:

Hi, I stay in India. The 1st most important thing which I would like to know is that classes are held online or on-site? Secondly, there are 4 Systems. How do I know which one I must buy. I understand the basics of the markets, but I do not have a good strategy in place, which is what I am looking for. Third, can the strategies taught be applied to Indian stocks since volatility is less when compared to asset classes such as forex, etc. Will things like stock selection be taught? Also, if you have a brief intro and performance results of the strategies, kindly forward it to me.

Regards,
Rahul

Both. But mostly it is home study with email support. First place to start is Flagship system/training. Strategies are for all markets. Volatility is always a factor and is always considered and accounted for with our systems. Stock selection is part of the training, yes. You can see an intro to materials and potential performance here:

Example 1
Example 2

Thanks for the quick reply. Are your strategies based on indicators or just price action? Secondly, how is the $2997 system different from that of $2497 one? Both pages mention that strategies are not meant for day traders? May I know how long should one look to hold the position using these strategies?

Regards,
Rahul

One version is for brand new traders. The other is for those who have some experience. The strategies used price based indicators. No day trading–ever. A good trend could last over a year. A bad trade could be stopped out in days or weeks.

May I know if I require any charting software or any basic EOD software is OK to do the analysis? Secondly, what is the minimum risk reward I must look at while taking a trade? Also, what is the hit rate for the strategy? Strategy wise, the brand new trader strategy and the pro strategy are the same, right? What time frame is best suited for the strategy? Is multiple time frame analysis done or just one time frame is analyzed?

Regards,
Rahul

This is long term trend following. EOD data is fine. EOW data can also work. Yes, weekly bars. I did give a time frame example last email? Hit rate? The question should be: “does the system have positive expectation?” In isolation alone percent winners tells a trader nothing. Trend following aims for 35-50 winners with winners being 3-4x the size of losers. Strategy for pro/new the same. There is no minimum risk/reward. Risk is adjustable. We teach that and how each user can make the adjustment. Software? You could put the rules we teach into EXCEL. Other third party programs like Tradestation can work. I can’t vouch for all programs.

Feel free to follow-up.

Feedback in:

Hi Mike, Enjoyed the new podcast. Have a point to make regarding Dalio or, for that matter, any investor: Literally every single investor seeks to capture tranches of total return trends. And total return trends are, of course, a direct result of trends in price plus reinvested income. Accordingly, all investment approaches, whether “fundamental”, “technical” or ouija board-oriented in how they frame their participation, seek to arrive at participating in chunks or tranches of positive return trends – Nothing more, nothing less. Some people – such as Dalio, Buffett – are very good at discerning (i.e., have unique intuition relating to) causal and/or correlation between some non-return metrics/conditions and return trends – but the gig is, nevertheless, about return trend participation. Whether the intuition of Dalio or Buffett would/will be successful in environments other than those in which they’ve participated is quite an open question. I’d most certainly give them better odds in other environments than I would the average investor but they also certainly are not infallible and their are environments where their intuitions would prove less than sharp (and I think they’d likely both acknowledge at least that).

Thanks,
Robert

You don’t know exactly what Buffett/Dalio do. Of course, we know that Buffett works a ton of derivatives, hot lines to the President, etc. That is far past the value legend. On other hand we know what trend followers do. That was my point.

Some feedback and my responses:

Shankar: Hi, Do you have any Indian students?

Covel: Yes.

Shankar: If yes how are they doing, how many?

Covel: I don’t have access to any student’s brokerage account, but you can read feedback here.

Shankar: Ok.

Covel: I would recommend that in the long run you might want to view yourself in search of a good trading education and research. Judging your potential success by the success or lack thereof from your neighbor will not help you find success. More here on the issues of taking responsibility for your success.

Trend following in Canada feedback:

Greetings Michael, My name is Abbas xxx and I am a 27 year old trend following advocate from Mississauga a small suburb just 20 miles outside of Toronto in Canada. Since I was 14 years old I knew I wanted to be in control of my own destiny and I developed an obsessive passion to learn as much as I could about the markets and what it would take to become a successful trader. My journey led me to the story of the turtles and the bet between Richard Dennis and William Eckhardt on whether or not trading was a learnable skill or if it was a special talent you had to be born with. I was so fascinated by the story that I wanted to learn as much as I could about the turtles and more importantly trend following. Trend following was a subject that was not covered by many resources and trying to learn more about the subject appeared to be quite the challenge until I found an author by the name of Michael Covel. My quest to master the body of knowledge that is trend following led me to your books and materials. Michael the work you have done to spread the word of trend following has changed many lives including my own. You have shed so much light on trend following that you have become to trend following what the sun is to our solar system. Every time I listen to your podcasts I always get goose bumps when you make your plea to your listeners to spread the word of trend following and help you assemble your team. Listening to you speak I wanted to do my part to spread the message of trend following and I see first hand how your voice has not yet even scratched the surface here in Canada. Then an idea came to me on how I could do my part to spread the message of trend following while being a part of team Covel. Michael I want to be an ambassador for trend following here in Canada; I want to spread the message through your materials…The message of trend following is almost non existent in Canada and I know there are many people whose lives could be changed in the same manner that mine was. Michael I would love to hear your thoughts on my proposition. Any feedback is welcome, I am not afraid to hear no, but I want to hear what you think.

Kind regards,
Abbas xxx

Thank you for your nice feedback. Let me consider options!

It appears many people enjoy my podcast. However, there are angry critics. That critic is no different than those who write the one stars on Amazon. And after witnessing the online review process up close since the 2004 publication of my book Trend Following, 95% of critics falling into (4) categories:

1. Angry people.
2. No clue about what they say.
3. Business competitors. Sometimes these critics pretend to be friendly in public, but use aliases in private to criticize. One business competitor literally wrote hundreds of expletive filled reviews on Amazon. Pathological? You bet!
4. Those fond of another trading ideology and or strategy that feel threatened.

Seth Godin offers wisdom about the critic archetype:

Last week, I saw an extraordinary play on Broadway. It got the longest standing ovation I’ve ever seen in a theater, and Alan Cumming deserved every minute of it. The New York Times critic, though, didn’t like the show.

What’s the point of his review, then? Clearly the audience, discerning in their own right, disagreed. Do mainstream critics exist to tell us what to like, to warn us off from the not-so-good, or are they there to punish those that would dare to make a piece of work that doesn’t match the critic’s view of the world? Perhaps the critic is saying, “people like me will have an opinion like this,” but of course, there just aren’t that many people like him.

Have you noticed just how often the critics disagree with one another? And how often they’re just wrong?

And yet we not only read them, but we believe them. Worse, we judge ourselves, contrasting our feelings with their words. Worse still, we sometimes think we hear the feared critic’s voice before we even ship our work out the door…

For me, the opinion of any single critic is becoming less and less meaningful as I choose what to view or engage with. And the aggregate opinion of masses of anonymous critics merely tells me that the product or content is (or isn’t) mass-friendly. I’m far more moved by the insistent recommendation of a credible, raving fan than I am the snide whispering of some people who just didn’t get it.

The math is simple: no matter how big a critic’s platform, what moves markets are conversations. And we are far more likely to have conversations about something we’re raving about than something we didn’t like (because when we don’t like it, our friends never experience it and the conversation dies). The win, then, is creating raves, not avoiding pans.

Every single book I’ve written has gotten at least a few one star reviews on Amazon. Every one. The lowest possible rating, the rating of, “don’t bother reading this, in fact it never should have been written.” Not just me, of course. Far better writers, writers like Fitzgerald, Orwell and Kincaid have gotten even more one-star reviews on their books than I can ever hope to.

No one has ever built a statue to a critic, it’s true. On the other hand, it’s only the people with statues that get pooped on by birds flying by.

True that. I am executing proper messaging when the angry critic appears. It is the gentle reminder that my path is true. If they ever stop–they don’t care. If they don’t care–the problem is far worse! So if you feel the need to email me and ask how I feel about critics don’t you have your answer? More importantly, if you cannot sort through the “opinions” yet won’t you feel better if you figure out the truth first on your own?

Some feedback:

Michael, congratulations on your work to date. I have your books and they are wonderful resources but I must say your work in the podcast is truly undervalued and trades way below fair value (one for the Ben Grahamites). I have noted you discussing the possibilities of Bridgewater/Dalio actually being the biggest trend followers on the planet. Clearly they don’t openly admit to this but there is plenty of anecdotal evidence to strongly suggest it. Anyway I found the following direct quotes from Dalio that firmly made my mind up. I’m sure you and your followers will also decipher them accordingly.

“Bad opinions can be very costly. Most people come up with opinions and there’s no cost to them. Not so in the market. This is why I have learned to be cautious. No matter how hard I work, I really can’t be sure. I wrestled with my realities, reflected on the consequences of my decisions, and learned and improved from this process.”

Keep up the truly outstanding efforts. More than appreciated.

Regards
Steven

Nice find Steven. When people wonder how some hedge funds might really trade they should consider the film Argo. Subterfuge ain’t a new concept. I don’t know Dalio’s exact strategy, but it is my understanding he calls it a mechanical no discretion all fundamental approach. Well…

Not everyone will get it. A reader in China writes:

Covel, How is your China trip? I found some news about your speech in China, some attendees said you just delivered a concept of trend following, no ideas about how following trends or techniques.

Everyone has an opinion. Some have educated opinions, others not. It’s all good. Audiences have all kinds of understandings. Richard Dennis often said you could publish rules in the paper and few would follow them. Sometimes I can tell people exactly how to be a trend follower and it goes past their current understanding. Maybe one day they will get it, maybe not.

Feedback:

Michael, I hope your travels are treating you well. There is one question I want to ask you and one recommendation. Let’s start with the recommendation, Jiro Dreams of Sushi. If you haven’t seen this documentary. You need to see it. I think it would be right up your alley. Now the question: Because you are systems based with your trading, do you follow a personal system? Routine? Something that guides decisions? Travel safe.

Regards,
Carson

PS– Have you heard of the book “Work the System?” Sounds sketchy, but it’s far from it.

I loved the Jiro documentary. My personal routine is inspired by work seen in Zen Habits and Seth Godin. They both inspire.

Feedback:

Hey there Mike. I was reading the hedge fund Market Wizards where the Kelly criterion was mentioned. To be honest it shocked me that any professional trader would take it seriously. It seems like it directs the trader to risk far more money than any professional trader would ever dare to risk. It tells the trader to risk as much as 20 to 30% of his trading account Mike! This sounds like trader suicide to me. Even after applying the “conservative” method of cutting it in half as one trader in the book suggested you would still be risking 10 to 15% of your trading account on each trade which again is far more than any professional I have heard of risks on his trades. As best I can tell, the Kelly criterion is a totally useless formula for serious traders and I can’t figure out how it even made it into the book. The only professional I have ever heard of who suggests such large bets is Larry Williams in his book in which he advises risking over 10% for some traders which shocked me when I read that book. I was just wondering what are your thoughts on the Kelly criterion?

Dave Druz and Ed Seykota wrote a good piece called “Determining Optimal Risk”. Worth a read if you haven’t checked it out already. Kelly also discussed heavily here.

Feedback in:

Michael, I heard on the podcast you are visiting my adopted city of Beijing where I have lived for the past 8 years. If you need anything while there, places to go eat, see, my friend has great Israeli restaurant there etc. Whatever you need let me know. My local China mobile number is below. We are out of town so can not meet but can help. Glad you enjoy Asia. I moved there from Wall Street about 8 years ago. Life never been the same ever since. Also, you will love this interview. Full link below. Best of luck with CLSA.

Miguel: Continuing from this definition of decision making you write about the Lancelot story where he’s a fighter and claims that the key to fighting well is not worrying about the outcome but rather focusing on having perfect concentration (minimal stress). How can you relate this story to decision making?

Dan: What is interesting about this story is that by not valuing his life Lancelot became much more rational in a standard way. Basically, the way we think about it is that emotion makes people irrational. Not bad necessarily, but irrational, and if you can disassociate yourself from your emotions you can make more rational decisions. That is exactly what Lancelot was able to do-So during a sword-fight where you want to fight to the best of your ability you don’t want any stress, and to do so you don’t want to think about anything besides the immediate fight. By detaching yourself from emotions you are able to do that.

Full interview here.

Thanks for the nice words and words of wisdom!

Some feedback:

Hi Mike, I’ve just listened to the two interviews from last week. Nice job, thanks once again. Golden thought from Jerry Parker (paraphrasing): “you have to love your system, everything about it, which includes loving the losses.”

That thought alone shifted my attitude toward my process, I tend to try for too much perfection. Great stuff!

Regards,
Mike

Indeed. Great stuff from Jerry Parker.

Feedback in:

Hi Michael, I just sent you a friend request. We’ve never met but I’m a fan of the podcast and your books. I’m working my way to building my own systemic approach to trading now (going into year three) and am starting to make some real progress. What you say about the process of trading is huge. The biggest thing I’ve struggled with is standardizing my process so that it is highly repeatable and consistent. Your thoughts have really helped me as I’ve worked towards this.

Thanks,
John

Thanks John for the feedback. Are your rules written down to be followed with rigid discipline or do you have discretion within your system? Have you automated your rules? Look forward to hearing more from you!

Feedback in:

Michael, first of all let me say I love the podcasts. I’ve been listening to them two times a day when possible trying to take in every bit of information. My question is on drawdowns. What is the difference between a trend following drawdown and a loss? Jesse Livermore stared cutting losses at 10% and William O’Neil wrote 7%. When you talk about Bill Dunn’s 40% drawdown how is that different? Are you referring to a downward trend after already being profitable? Say you were up 20% and a trend reverses then you go down 15%. I’m not totally clear on the difference. A brief background on myself. I’ve been trading for just over a year now. I read William O’Neil, then Livermore (because of O’Neil), then found your podcast, and now I’m halfway through your first book. Most recently graduate school has forced me to greatly reduce my trading aspirations until the end of the semester. Also, I’m a born and raised true San Diegan!

Thanks,
Bill S.

If you are at price level 100 and it goes down 40% that is a 40% drawdown. From whatever level of equity–either original capital or capital after an extended profit run. Thanks for the question. Others surely probably were wondering the same thing. Drawdown and loss are the same.