Trend Following (Updated Edition): Learn to Make Millions in Up or Down Markets (Paperback)

~ Michael W. Covel (Author)

Editorial Reviews

Product Description

"Michael Covel's Trend Following: Essential." --Ed Seykota, trend follower for 35 years and original Market Wizard "A mandatory reference for anyone serious about alternative investments." --Jon Sundt, president and CEO, Altergris "Michael Covel does an excellent job of educating his readers about the little-known opportunities available to them through one of the proven best hedge fund strategies. This book is like gold to any smart investor." --Christian Baha, founder and owner, Superfund "Covel has created a very rare thing--a well documented and thoroughly researched book on trend following that is also well written and easy to read. This is one book that traders at all levels will find of real value." --John Mauldin, Thoughts from the Frontline The Investment Strategy That Keeps on Making Money While Everyone Else Is Losing It: How Trend Followers Made a Fortune During the 2008 Stock Market Crash Did your buy and hold investments survive the crash of 2008? While many were getting hammered, trend followers were earning profits ranging all the way up to +40% for the month of October 2008 alone! Now, the #1 guide to trend following has been thoroughly updated to reflect 2008's cataclysmic events. Michael W. Covel reveals exactly how the trend followers achieved those amazing results. Using simple, up-to-the-minute charts from top traders, he doesn't just prove this strategy works: He shows why only a technical system based on following price trends can win over the long term. Best of all, he shows you exactly how to apply the same strategies in your own portfolio--so you, too, can keep on profiting no matter what happens next! For more than 30 years, trend following has been the one trading strategy that's consistently delivered extraordinary profits in bull and bear markets. While most investors were losing a fortune in the 2008 stock market collapse, stuck in buy and hold investments, trend followers were earning huge profits...up to a whopping +40% in the single month of October 2008! The proof's in this book: brand-new data you can view for yourself, plus all the information you need to know to utilize the same timeless strategies in your portfolio. In this fully updated edition, trend following expert Michael Covel introduces the traders and fund managers who've been using this strategy for decades, adding brand-new profiles such as David Harding, who manages $10 billion plus dollars through his London-based trend following firm. Then, Covel walks you through all the concepts and techniques you need to use trend following yourself. One step at a time, one simple chart at a time, you'll learn how to understand price movements well enough to profit from them consistently--in any market. Today, you need trend following more than ever. Read this book, and put it to work for you! *Real proof, real data, real results Includes over a decade of detailed performance charts, updated to include the Fall 2008 market crash *All the Information You Need...in One Number Why the market price still tells you all you need to know to trade--and always will--in both bull and bear markets *Pinpointing Targets of Opportunity What to trade, when to trade, and how much to trade *Meet Today's Leading Trend Followers Extraordinary trader profiles, from David Harding to John W. Henry to Ed Seykota Foreword by Larry Hite xiii Preface xvii Part I 1 Trend Following 3 2 Great Trend Followers 27 Part II 3 Performance Data 97 4 Big Events, Crashes, and Panics 123 5 Baseball: Thinking Outside the Batter's Box 181 Part III 6 Human Behavior 193 7 Decision Making 211 8 Science of Trading 221 9 Holy Grails 231 Part IV 10 Trading Systems 247 11 The Game 277 Afterword 285 Foreword to the First Edition by Charles Faulkner 299 Appendices Introduction to Appendices 305 A Trend Following for Stocks 307 B Performance Guide 347 C Short-Term Trading 375 D Personality Traits of Successful Traders 377 E Trend Following Models 381 F Trading System Example from Mechanica 385 G Critical Questions for Trading Systems 395 Resources 397 Endnotes 399 Bibliography 423 Index 431

From the Back Cover

“Michael Covel’s Trend Following: Essential.”

--Ed Seykota, trend follower for 35 years and original Market Wizard

 

“A mandatory reference for anyone serious about alternative investments.”

--Jon Sundt, president and CEO, Altergris

 

“Michael Covel does an excellent job of educating his readers about the little-known opportunities available to them through one of the proven best hedge fund strategies. This book is like gold to any smart investor.”

--Christian Baha, founder and owner, Superfund

 

“Covel has created a very rare thing--a well documented and thoroughly researched book on trend following that is also well written and easy to read. This is one book that traders at all levels will find of real value.”

--John Mauldin, Thoughts from the Frontline

 

The Investment Strategy That Keeps on Making Money While Everyone Else Is Losing It:
How Trend Followers Made a Fortune During the 2008 Stock Market Crash

 

Did your buy and hold investments survive the crash of 2008? While many were getting hammered, trend followers were earning profits ranging all the way up to +40% for the month of October 2008 alone!

 

Now, the #1 guide to trend following has been thoroughly updated to reflect 2008’s cataclysmic events. Michael W. Covel reveals exactly how the trend followers achieved those amazing results. Using simple, up-to-the-minute charts from top traders, he doesn’t just prove this strategy works: He shows why only a technical system based on following price trends can win over the long term.

 

Best of all, he shows you exactly how to apply the same strategies in your own portfolio--so you, too, can keep on profiting no matter what happens next!

 

For more than 30 years, trend following has been the one trading strategy that’s consistently delivered extraordinary profits in bull and bear markets. While most investors were losing a fortune in the 2008 stock market collapse, stuck in buy and hold investments, trend followers were earning huge profits...up to a whopping +40% in the single month of October 2008! The proof’s in this book: brand-new data you can view for yourself, plus all the information you need to know to utilize the same timeless strategies in your portfolio.

 

In this fully updated edition, trend following expert Michael Covel introduces the traders and fund managers who’ve been using this strategy for decades, adding brand-new profiles such as David Harding, who manages $10 billion plus dollars through his London-based trend following firm. Then, Covel walks you through all the concepts and techniques you need to use trend following yourself. One step at a time, one simple chart at a time, you’ll learn how to understand price movements well enough to profit from them consistently--in any market.

 

Today, you need trend following more than ever. Read this book, and put it to work for you!

• Real proof, real data, real results
  Includes over a decade of detailed performance charts, updated to include the Fall 2008 market crash
• All the Information You Need...in One Number
  Why the market price still tells you all you need to know to trade--and always will--in both bull and bear markets
• Pinpointing Targets of Opportunity
  What to trade, when to trade, and how much to trade
• Meet Today's Leading Trend Followers
  Extraordinary trader profiles, from David Harding to John W. Henry to Ed Seykota

See all Editorial Reviews

Product Details

• Paperback: 464 pages
• Publisher: FT Press; 1 Updated edition (February 25, 2009)
• Language: English
• ISBN-10: 013702018X
• ISBN-13: 978-0137020188
• Product Dimensions: 9.2 x 6.9 x 1.2 inches
• Shipping Weight: 1.9 pounds (View shipping rates and policies)
• Average Customer Review: 4.0 out of 5 stars  See all reviews (46 customer reviews)
• Amazon.com Sales Rank: #10,004 in Books (See Bestsellers in Books)

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  #5 in	Books > Business & Investing > Investing > Commodities
  #12 in	Books > Business & Investing > Investing > Options
  #39 in	Books > Business & Investing > Investing > Stocks

Customer Reviews

Most Helpful Customer Reviews

30 of 38 people found the following review helpful:

5.0 out of 5 stars Solid - A Lot of Info to Sink Your Teeth Into - A Keeper!, April 7, 2009

By	javajunki "javajunki" - See all my reviews (TOP 500 REVIEWER)

(What's this?)

Frankly, I didn't expect a lot from this book given the title. I tend to be more than a bit leary of those wild claims on how to make millions etc... Don't get me wrong, I like to make money from a good investment now and then myself but typically the bigger the claim the harder they fall. Fortunately, every once in awhle an author comes along that is able to effectively communicate complex information in an easy and enjoyable manner without insulting the intelligence of the reader. Covel is one such author.

The book demonstrates the authors knowledge and insight without being a 'me-me-me' book, it's HIGHLY engaging and readable, consumer friendly but equally likely to appeal to veteran investors and - best of all - doesn't scrimp when it comes to information. All too often authors try to make a book out of what really should be a glorified paper or article...this is not a fluffed up article but a real book packed with great info....no small feat when you consider I write and teach biz topics for a living. To put it into perspective, if a book can give me one new idea or spark of interest then I consider it time and money well spent. On the other hand, very few books are "keepers" - there is rarely enough good information to warrant keeping a book. This one is a keeper.

This book is a welcome change from the pure fluff from most investment books on the market today. Here's why...

1. A lot of information packed into a small space. The book does NOT have big font filled with redundant graphics or cute cartoons - it DOES have over 400 pages of dense text filled with solid information. Unlike most books where the reader is fortunate to find one or two solid nuggets of information - this contained quite a bit that sparked my interest.

2. Endnotes. Many investment authors have gone 'lazy' and provide little in the way of additional references or resources. This book includes them all.

3. Relevant. By far the most important factor of this book is the relevance to the current economic crisis. Undoubtedly, the idea that "die and hold" may not be the holy grail of the future in terms of investing will be a hard pill for many to grapple with - I will leave it to the reader to determine if they agree or not however, even if you were to disagree the book is STILL well worth the read! The case studies are equally important especially in the way the author uses them to support the position being made but so very enjoyable in their own right.

4. Quotes. What can I say--the quotes throughout the book were great! They added that little something extra to keep it enjoyable without detracting from the substance.

5. Key Points. Without insulting the reader, the author manages to provide a synopsis or key points throughout the book. It's a great way to review or look-up important bits later especially considering the book contains a great deal of great information.

Whether you are a novice or veteran investor you will likely find something of interest. The book does not try to be all things to all people so therefore you may disagree with some of the basic information or premise presented by the author - however, the book is still well worth the time to read.

Finally, I was not familiar with thie author prior to this book review but found it an exceptionally enjoyable read.

Bottom line - Good stuff and a keeper!

6 of 6 people found the following review helpful:

4.0 out of 5 stars The Trend Follower Manifesto, April 27, 2009

By	korova (Varosha) - See all my reviews

(What's this?)

Michael Covel is out to save you! He wants to free you from worrying about every little news item that shows up in the WSJ or on CNBC. He'll show you how to stop wasting time trying to make forecasts. And, best of all, he knows how to make money in both advancing and declining markets. Sound good to you?

Well, don't get *too* excited. Trend Following is not a how-to-guide. It doesn't contain any trading "secrets" or tricks. It's really a foundational text that thoroughly describes the philosophy and concepts underlying a trading system driven solely by price trends. Covel uses both hard data and anecdotal evidence, with a strong emphasis on behavioral finance concepts throughout, to make his case.

Keep in mind that if you end up being convinced by Covel, you will have to do a fair amount of additional work to implement his strategy. In other words, just reading Trend Following will not make you ready to start making trend-based trades, much as simply reading chemistry and physics textbooks won't make you a chemist or a physicist. You will need to determine which markets to trade, your parameters for opening and closing positions, and how much risk you are willing to assume. As such, this book is not for novice investors or for people who are not able to make a deep commitment to developing their own trading methodology.

Nonetheless, Trend Following is a book every serious investor should read. Even if you don't buy everything Covel says, it is always useful to question your assumptions, preconceptions, and past actions. No trading strategy is perfect. At a minimum, Trend Following will help you recognize the flaws and weaknesses in what you're currently doing.

Bottom line: four stars, with the caveat that Trend Following is most appropriate for people who have experience trading and are comfortable moving beyond basic mutual fund and retirement account investing.

-----
Two books for anybody who wants to learn more about behavioral finance:
Beyond Greed and Fear (Shefrin)
Why Smart People Make Big Money Mistakes And How To Correct Them (Belsky, Gilovich)

And for comparison, three well-known alternatives to trend following:
A Random Walk Down Wall Street (Malkiel): indexing, very passive compared to trend following
Unconventional Success (Swensen): wide diversification across asset classes, but with a buy-and-hold bias not found in trend following
The Only Three Questions That Count (Fisher): top-down forecasting, the antithesis of trend following

4 of 4 people found the following review helpful:

4.0 out of 5 stars A Philsophy Book, Not a Technical Manual, July 29, 2009

By	John Forman "Author -The Essentials of Trading" (Boston, MA USA) - See all my reviews (REAL NAME)

Trend Following is the sort of book that can either be very rewarding or very frustrating. If you pick it up thinking it's going to provide some secret methods and techniques for trading you are going to end up being one of the folks who ends up panning it because they didn't get what they expected. This is not a technical manual full of strategies. If you understand that going in you'll get a lot more out of it.

This book, to my mind is like a trading version of a text exploring a specific philosophy such as Taoism with something of a comparisson to Buddhism, for example. Trend Following describes the philosophy and highlights some of its promonent proponents. And just like most books on philosophy, it sets you up for further exploration rather than presenting you with a "how to" instruction.

I think if you have the philosophy mindset going in it will go a long way toward helping you find value in the book.