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Trend Following: How Great Traders Make Millions in Up or Down Markets
 
 

Trend Following: How Great Traders Make Millions in Up or Down Markets (Paperback)

by Michael W. Covel (Author) "A market is simply a place where buyers and sellers gather to trade and exchange goods, buying and selling for any number of reasons ..." (more)
2.9 out of 5 stars  See all reviews (8 customer reviews)
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Trend Following: How Great Traders Make Millions in Up or Down Markets + Way of the Turtle: The Secret Methods that Turned Ordinary People into Legendary Traders + Market Wizards: Interviews with Top Traders
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Product details

  • Paperback: 448 pages
  • Publisher: Financial Times/ Prentice Hall; New edition edition (16 Mar 2007)
  • Language English
  • ISBN-10: 0136137180
  • ISBN-13: 978-0136137184
  • Product Dimensions: 22.8 x 17.6 x 3 cm
  • Average Customer Review: 2.9 out of 5 stars  See all reviews (8 customer reviews)
  • Amazon.co.uk Sales Rank: 130,078 in Books (See Bestsellers in Books)

    Popular in this category:

    #24 in  Books > Business, Finance & Law > Professional Finance > Investments & Securities > Commodities
  • See Complete Table of Contents

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Review

A recent interview with Michael Covel on Bloomberg Radio (6.5 MB MP3 audio file) about trend following. "Please read [Trend Following] whether you think you have an interest in trend following or are not quite sure. I guarantee you will be happy that you took the time. It, of course, covers how trend following works, how it's done, and who can do it, and it doesn't beat around the bush with generalities. Again, get this book. Covel has hit a homerun with it."
Gail Osten, Editor-in-Chief
Stocks, Futures & Options Magazine
Official Journal for Personal Investing in Stocks, Futures and Options "A mandatory reference for anyone serious about alternative investments."
Jon Sundt, President and CEO of Altegris "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, CEO, Superfund "A most interesting book -- definitely a 'must have' on your shelf. Pull out the plastic and get it!...Trend Following is well constructed, well written and an excellent distillation of the research undertaken by the author. Backed up by trading 'legends' like Ed Seykota, it convincingly argues that the most successful trading systems are based on trend following...While you may read the book in bed, especially the first time, it is best read at a desk with a notepad handy. While seeming to come from the perspective of technical analysis it is still a very good book on trading psychology...The book is both a great read and an insightful textbook for all traders and investors."
Garnett Znidaric
Your Trading EdgeMagazine/strong>
Australia "Michael Covel's Trend Following: Essential."
Ed Seykota
Trend Follower for 35 years, Incline Village, NV
The Trading Tribe
Ed was originally profiled in The Market Wizards by Jack Schwager "Michael Covel's book is the definitive guide to trend trading. Backed by real world results from some of the biggest and best money managers in the United States, his book will put you on the path to successful trend trading."
Larry Connors
CEO, TradingMarkets.com "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. It touches on a wide variety of the principles and practices which make for successful trend following. This is one book that traders at all levels will find of real value."
John Mauldin
Millennium Wave Investments, Arlington, TX
Author of Bull's Eye Investing and editor of Thoughts from the Frontline "I think the book did a superb job of covering the philosophy and thinking behind trend following (basically why it works). You might call it the Market Wizards of Trend Following."
Van K. Tharp, Ph.D.
Author of Trade Your Way to Financial Freedom
President, International Institute of Trading Mastery, Inc.
Van was originally profiled in The Market Wizards by Jack Schwager.


Robert (Bucky) Isaacson, Managed Money and Trend Following Pioneer for 30+ Years

This is a valuable contribution and some of the best writing on trend following I've seen. --This text refers to the Hardcover edition.

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A market is simply a place where buyers and sellers gather to trade and exchange goods, buying and selling for any number of reasons. Read the first page
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2.9 out of 5 stars (8 customer reviews)
 
 
 
 
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19 of 19 people found the following review helpful:
3.0 out of 5 stars Interesting, 31 Dec 2005
By PureSymmetry (london) - See all my reviews
  
Great piece of background reading, good for the beginner trying to work out what type of trading strategy to use. Trend Following appears to be the most profitable type of technical analysis strategies and Covel does go into the whys and wherefores of how they work. Though if you're interested in system development, strategies etc go for any of Van tharps, William ONeil, Martin Zweig and Vic Sperandeo books.

If you're interested in background reading I also recommend the Reminiscences Of a Stock Operator, Market Wizards and New Market Wizards. Trade Well!

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13 of 13 people found the following review helpful:
4.0 out of 5 stars Worth it in the end, 2 Dec 2007
By T. Richards (London) - See all my reviews
(REAL NAME)   
It took a fair amount of effort to wade through the large amount of baloney, hype and hero-worship which this book contains. For example, what is a chapter about baseball doing in a book about trading strategies? However, there are definitely nuggets of useful information in this book, and the appendices at the end contain some actual recipes for trading strategies with some backtest results.
Ultimately Covel succeeds in what he is trying to do, which is to popularise the idea of trend-following. The idea is that you only enter a market when there is a trend (as defined by a breakout signal, of which there are many to choose from) and then ride the trend as long as possible. He gives examples of successful funds which manage money using these techniques (although the performance charts showing compounded returns don't always look quite as good when inspected carefully), so it seems it can be done. The book also shows that the discipline of risk-management and sticking to your knitting are more important than the source of the signals themselves.
Nor does Covel shy away from explaining that large losses (or 'drawdowns' as he prefers to call them) are possible. In fact in trendless markets a trend-following system is almost guaranteed to lose money as it buys high and sells low on 'false signals'.
In sum, a decent introduction to trend following. Pedants like me will be annoyed by some of the grammatical and spelling errors and there are a few inconsistencies too. One thing that really needs to be protested is the implication that anyone involved in financial markets who is not trend-following must be a fool. Buy-and-hold is derided, the example of Warren Buffett being refuted by the odd arguments that 1) he is just one man and 2) he also uses derivatives.
Let's imagine what the world would be like if everyone bought and sold like a trend-follower. First of all, there wouldn't initially be any market movement because everyone would be waiting for a signal. Then, if there was a change in price, every trend-follower would immediately chase it in the same direction to either zero or infinity. In fact there would be no market because if everyone was a trend-follower then there would be no-one willing to take the other side of the trend-followers' trades. To say it a slightly different way, with no notion of fundamental value, prices can get to silly levels (imagine bonds trading higher than the sum of their cashflows for example). In fact, the only reason trend-following has a chance of working is because of the existence of natural buyers and sellers (ie 'non-traders') who have business reasons for transactions, as well as value investors and arbitrageurs. Trend followers hope that these market participants are 'greater fools', and this may well be true while there are not a huge number of trend followers in the market.
Which brings me onto the final point- beware of becoming a trend-follower just as a successful book about trend-following is popularising the idea. It is clear that with a greater proportion of trend-followers in the market, the returns will be less (since trading is a zero-sum game as Covel repeatedly points out, if everyone was a trend-follower then for every winner there must be a loser).
I understand that Covel is already working on a book called 'Swing Trading: How to make money in sideways markets'
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5 of 5 people found the following review helpful:
2.0 out of 5 stars not a serious text, 9 Nov 2008
By Michael G. Pokrass - See all my reviews
(REAL NAME)   
If you are serious about creating a trend following method then don't buy this book. The text demonstrates that Covel is a salesman, not a trader. His business model is based on making money by selling the idea of trend following. He is not trading with trend following himself -- rather writing hagiographies about trend followers without revealing any details -- giving generalized statements instead... The content is simplistic and basically garnered from other books on trading (e.g. Market Wizards). Note his annoying and frequent self-marketing references to his websites. After reading this you will be equipped to talk about trend following at dinner parties, but that's about it...

I recommend Perry Kaufman's books if you are a serious student attempting to create a trading system.
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Most Recent Customer Reviews

1.0 out of 5 stars Worthless
Very disappointing. Amazon suggests this as a likely book if you have been browsing "how to" trading books. Read more
Published 4 months ago by Mr. Michael Buckner

2.0 out of 5 stars disappointed
i was expecting ideas, methods, tactics and the like, but no.
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Published 4 months ago by rsacramento

3.0 out of 5 stars vague
not really for beginners and gives general ideas with general discussion to traders very little detail of use to a beginner starting off trying to develop a strategy
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4.0 out of 5 stars Insightful!
This is a book very much in the tradition of Jack Schwager's Market Wizards. Like Schwager, author Michael Covel interviewed a number of great traders and attempted to capture the... Read more
Published on 28 April 2005 by Rolf Dobelli

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