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Trend Following: How to Make a Fortune in Bull, Bear, and Black Swan Markets (Wiley Trading) 5th Edition, Kindle Edition
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Want to take the financial journey to a new investing philosophy that might very well affect the rest of your moneymaking life? No one can guarantee the yellow brick road, but Michael Covel promises the red pill will leave you wide freaking awake.
Trend Following reveals the truth about a trading strategy that makes money in up, down and surprise markets. By applying straightforward and repeatable rules, anyone can learn to make money in the markets whether bull, bear, or black swan—by following the trend to the end when it bends. In this timely reboot of his bestselling classic, Michael Covel dives headfirst into trend following strategy to examine the risks, benefits, people, and systems. You’ll hear from traders who have made millions by following trends, and learn from their successes and mistakes—insights only here. You’ll learn the trend philosophy, and how it has performed in booms, bubbles, panics and crashes. Using incontrovertible data and overwhelming supporting evidence, with a direct connection to the foundations of behavioral finance, Covel takes you inside the core principles of trend following and shows everyone, from brand new trader to professional, how alpha gets pulled from the market.
Covel’s newest edition has been revised and extended, with 7 brand new interviews and research proof from his one of kind network. This is trend following for today’s generation. If you’re looking to go beyond passive index funds and trusting the Fed, this cutting edge classic holds the keys to a weatherproof portfolio.
- Meet great trend followers learning their rules and philosophy of the game
- Examine data to see how trend following excels when the you-know-what hits the fan
- Understand trend trading, from behavioral economics to rules based decision-making to its lambasting of the efficient markets theory
- Compare trend trading systems to do it yourself or invest with a trend fund
Trend following is not prediction, passive index investing, buy and hope or any form of fundamental analysis. It utilizes concrete rules, or heuristics, to profit from a behavioral perspective. Trend Following is clear-cut, straightforward and evidence-based and will secure your financial future in bull, bear and black swan markets. If you’re finally ready to profit in the markets, Trend Following is the definitive treatise for a complex world in constant chaos.
From the Back Cover
"Michael Covel's Trend Following: Essential."
—Ed Seykota, profiled in Market Wizards
"Covel's Trend Following is the must-read for all investors. Why? Because every investor needs a trend to make money, and when the trend shifts investors need to follow it. Read it."
—Wesley R. Gray, PhD, CEO, Alpha Architect, and author of Quantitative Momentum
"While enjoying this book, be sure to look up another resource from Covel–his remarkable podcast. Michael has a gift for interviewing, and it is fun and educational to follow him into the offices of many serious traders."
—Dr. Alexander Elder, Author, The New Trading for a Living
"Covel's Trend Following has become an investment classic and a must read for anyone who wants to better understand how to profit from the financial markets using systematic and unbiased approaches."
—Cullen Roche, Founder, Orcam Financial Group, LLC
"Trend following: If it is going up, buy it. If it is going down, sell it. How could something seemingly so simple be so controversial? The answer lies in the definitions: What does going up mean? Going down? What's a trend? What's a turn? These questions have a wide variety of answers, largely dependent on the goals and risk/reward preferences of the answerer. In Trend Following Mr. Covel covers the waterfront. You'll find many definitions of trend following here, each with its advocates. You will be able to compare and contrast approaches and perhaps find one that suits you. At the very least, after reading this book you'll have the territory mapped and understand what trend following has to offer."
—John Bollinger, Founder, www.BollingerBands.com
"While financial television obsessively tracks every tick in the stock market, Michael Covel's Trend Following continues to draw attention to a strategy, diversified trend following, that generates unique returns for disciplined investors with a long-run time horizon."
—Tadas Viskanta, Founder and Editor, Abnormal Returns; Author, Abnormal Returns: Winning Strategies from the Frontlines of the Investment Blogosphere
From the Inside Flap
"When it is a question of money, everyone is of the same religion."
Want to take the financial journey to a new investing philosophy that might very well affect the rest of your moneymaking life? No one can guarantee the yellow brick road, but Michael Covel promises the red pill will leave you wide awake.
Trend Following reveals the truth about a trading strategy that makes money in up, down, and surprise markets. By applying straightforward and repeatable rules, anyone can learn to make money in the marketswhether bull, bear, or black swanby following the trend to the end when it bends. In this timely reboot of his bestselling classic, Michael Covel dives headfirst into trend following strategy to examine the risks, benefits, people, and systems. You'll hear from traders who have made millions, and learn from their successes and mistakesinsights you'll only find here. You'll learn the trend philosophy and how it has performed in booms, bubbles, panics, and crashes. Using incontrovertible data and overwhelming supporting evidence, with a direct connection to the foundations of behavioral finance, Covel takes you inside the core principles of trend following and shows everyone, from brand new trader to professional, how alpha gets pulled from the market.
Covel's newest edition has been revised and extended, with seven brand new interviews and research proof from his one-of-a-kind network. This is trend following for today's generation. If you're looking to go beyond passive index funds and trusting the Fed, this cutting-edge classic holds the keys to a weatherproof portfolio.
- Meet great trend followers and learn their rules and philosophy of the game
- Examine data to see how trend following excels when the you-know-what hits the fan
- Understand trend trading, from behavioral economics to rules-based decision making to its lambasting of the efficient market theory
- Learn trend trading philosophy and do it yourself or invest with a trend following fund
Trend following is not prediction, passive index investing, buy and hope, or any form of fundamental analysis. It utilizes concrete rules, or heuristics, to profit from a behavioral perspective. Trend Following is clear-cut, straightforward, and evidence based. If you're finally ready to profit in the markets, Trend Following is the definitive treatise for a complex world in constant chaos.--This text refers to the hardcover edition.
- ASIN : B06Y63RDS2
- Publisher : Wiley; 5th edition (April 10, 2017)
- Publication date : April 10, 2017
- Language : English
- File size : 16913 KB
- Text-to-Speech : Enabled
- Screen Reader : Supported
- Enhanced typesetting : Enabled
- X-Ray : Not Enabled
- Word Wise : Enabled
- Sticky notes : On Kindle Scribe
- Print length : 611 pages
- Best Sellers Rank: #222,121 in Kindle Store (See Top 100 in Kindle Store)
- #105 in Stock Market Investing (Kindle Store)
- #125 in Analysis & Trading Investing Strategies
- #216 in Investing Basics
- Customer Reviews:
About the author
Reviewed in the United States on February 11, 2022
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Top reviews from the United States
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I stumbled upon Turtle traders sometime in 2009 after losing more than half of my wealth in 2008. Before coming to a conclusion on how awful investor I would have been, I would like to tell that I had years of experience working in Investment banks and had pretty good idea of the markets and drank the same cool aid which my fellow traders drank. But unlike the big banks I didn't have the government save me when sh*t hit the fan.
Now 9 years later, thanks to Mike and his books, I trade in 30 different markets while staying on a small island (literally) where nothing interesting happens. Due to him I was able to cut out the noise. I am not on Facebook, Twitter, Instagram, Reddit or any other mass hysteria channels. I don't watch CNBC or Bloomberg, unless there is nothing interesting on Netflix to watch and I need some entertainment. I made more money in times when everyone was bleeding and just to test my models even traded cryptos and made a bloody fortune there as well.
What people don't get is that this book is not a handbook of trading. It is more like a map which will help you develop the thought process to become a system trader. Our problem today is we want handouts, ready formulae for milking the cash cow. But that's not how the world works. No one will give you their money making formula in a book. You have to go out and figure it out yourself. What this book can help you is to figure out the right path. The interviews in the new edition is pure gold. If you know what those legendary traders are saying, you will know they are giving out the secret in plain words, its up to the reader to comprehend.
Finally I would like to say this book is like The Bible. Some people think its a storybook, some get inspired and some find God.
P.S: I know many of the reviews book is not actionable and its true coz its not supposed to be actionable. Now if you decided to take the red pill and go down the rabbit hole, its going to take a lot of hard work. First thing (and the most difficult one) will be to throw out all your beliefs and start from scratch. Brush up or learn more about Statistics and Probability (tons of books and free courses out there) which is absolutely necessary. Learn more about Game Theory which I feel is very important. Then if you are still alive and want to get some more, I suggest these books for further reading
1. Thinking, Fast and Slow This is the base of Trend Following, understanding human behaviour.
2. Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts How to make decisions when you have limited variables you can control and no whatsoever no control on the outcome.
3. Trend Following with Managed Futures: The Search for Crisis Alpha (Wiley Trading) A book by Chief Scientist of ISAM and legendary Trend Follower which will be your induction to the world of Managed Futures
4. Following the Trend: Diversified Managed Futures Trading (Wiley Trading) A wonderful read on actual Trend Following
5. Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals (Wiley Trading) This one gets bit technical but this is the real deal. This book will dissect TA and help you decide how to evaluate strategies. This is a no BS book but you should be open to receive the knowledge
6. Trading Systems: A New Approach to System Development and Portfolio Optimisation This one is bit old but this one helped me a lot when I was building up my first system and the methods still hold good and will continue to hold good for any person starting out on the journey.
It has the aura of sophistication by talking about things like "Pyramiding and Martingale", "Sharpe"... There is even pseudo code of a mean reversal strategy (how ironic!) that doesn't look like it's really working. In terms of actual trend following strategies: Discussed is a moving average crossover strategy, which is a the classic trend following system that gets taught in every beginner's book, except that this strategy will shred your money in a ranging market, which isn't discussed.
There is also a channel breakout strategy that is barely genius. The chapters are all written by different people, as far as i can see, managers in investment firms and hedge funds. Do you really think that they are going to give away their trend following systems? Exactly, they don't. Those would probably also go over the head of an average reader, and those guys don't have time or motivation to really lay those details out (which are probably anyway not executable without huge, expensive data-streams and super-computers).
Even though it HAS this aura of academic / hedge fund insider sophistication, simple things like a rigorous proof that trends actually exist is not given (by showing for example the existence of day to day autocorrelations in returns). Why do we need that? Can't we SEE that there are trends in the market? It's not that simple. Every random walk has phases that look like trends, yet they can only be defined after the fact. Stocks have random wiggles. At what point can you say with certainty you get out because the trend has ended? Stock don't just go flat after the trend. They often reverse. Research has shown that it is not that simple to buy a stock once you can see with clarity that it has developed a trend. In fact at the point where it seems to be obvious for everyone, the trend tends to break down more often than not. Don't be fooled by historical data! It's all hindsight bias. It's really not as easy as jump on the trend when you see it and get out when it ends. Movements are way more random than they appear to the eye. The human eye sees patterns where there aren't any.
Maybe if a novice reads that book, he will find it inspiring, and probably sophisticated, because it does give off a sophisticated flair. If you want concrete actionable advise, buy a real trading book. Bulkowski is a good start.
Another word of caution: Most trend followers, including the hedge funds in the book, trade futures like oil, grains or the E-mini S&P 500, not stocks! And that for a good reason: Commodities have some intrinsic demand and therefore potentially SOME tendency to trend. We are talking about buying individual oil contracts that cost > $50.000. ONE E-mini S&P 500 trades currently at >> $100.000. At the same time trend following systems have huge drawdowns, low win rates and therefore require massive diversification. So you need deep pockets, excellent discipline and the willingness to trade huge individual futures contracts. So this whole game is anyway not really for the everyday Joe. Read the book "The way of the turtle". Then you will understand.
P.S.: I think I know now why you won't find any information on a solid trading system in the book. Because he actually sells it on his website for $2,997. That's right. The book is supposed to make trend following tasty to you so that you buy his "system". If this system really works, or is just another way of pulling money out of your pocket, well, you will find out! Let me know!
In this edition Covel also adds interviews with some of the world's top trend following traders. This is incredibly helpful for someone developing their own systems not because of any hot tips on programming your own system but because it gives you an inside look at how some of the best think, approach problems, and what they seem to consider important and what they don't. If you read this interviews and don't walk away with a deeper understanding of what to focus on in your systems you just weren't paying attention.
The last section of the book includes curated papers from traders around the world. This is incredibly helpful as it gives some examples of how to approach back testing and system design at a very tactical level and nicely rounds out the rest of the book. It also provides evidence that trends are a feature of markets that history suggests will not be arbed away.
There are many books out there that talk through very specific trading rules or systems. Others describe discretionary traders with some magic sauce that can't be replicated. Trend Following gives you a framework to develop repeatable processes that make money in markets.
Top reviews from other countries
Readers looking for quick takeaway strategies will be disappointed as this will require some work on their part. The insights in this book are more valuable than any off-the-shelf strategy would ever provide. No matter whether you are a 'trend follower' or trade more active strategies this book will help you build effective habits.
On another note, the Trendfollowing podcast by M Covel is one of the best trading/interesting podcasts out there, on a variety of topics and would highly recommend you check it out if you haven’t done so already, you can thank me later.
To your success!