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

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 Edge Magazine/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.

--This text refers to an out of print or unavailable edition of this title.

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 Edge Magazine/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. --This text refers to an out of print or unavailable edition of this title.

This enjoyable and well written book is destined to become a classic. --This text refers to an out of print or unavailable edition of this title.

"You might call it the Market Wizards of Trend Following." --This text refers to an out of print or unavailable edition of this title.

THE INVESTMENT STRATEGY THAT WORKS IN ALL MARKETS...WITH PROOF TO BACK UP THE PROMISES

• Reveals the trading strategy that made John W. Henry rich enough to buy the Boston Red Sox.
• Contains 50+ pages of easy-to-understand charts, actual results from top Trend Followers.
• Shows how to apply trend following in your portfolio–one step at a time, in plain English.

“Trend Following will replace Market Wizards as the must-read bible for a new generation of traders.”

—Jonathan Hoenig, Portfolio Manager, Capitalistpig Hedge Fund LLC/Fox News Contributor

 

“Michael Covel’s Trend Following: Essential.”

—Ed Seykota, Trend Follower for 35 years and Original Market Wizard

 

“Investment books that have a lasting appeal offer insight that resonates with a large number of investors. We believe Michael Covel’s Trend Following will be such a book.”

—Richard E. Cripps, Legg Mason Chief Market Strategist

 

“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

 

“Please read [Trend Following] whether you think you have an interest in trend following or are not quite sure…Covel has hit a home run with it.”

—Gail Osten, Editor-in-Chief, Stocks, Futures & OptionsMagazine

 

“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, author of Bull’s Eye Investing

 

For more than 30 years, one trading strategy has consistently delivered extraordinary profits in bull and bear markets alike: Trend Following. Just ask the billionaire traders who rely on it...traders like John W. Henry, whose trading profits bought the Boston Red Sox!

 

In Trend Following, New Expanded Edition, you’ll meet them...and discover exactly how to use trend following in your own portfolio. This expanded edition includes more than 50 pages of easy-to-understand performance charts. It is the book multi-billion-dollar hedge funds have

made mandatory reading for their staffs.

 

Michael Covel goes right to the source, presenting powerful insights straight from the world’s top trend followers, and debunking Wall Street myths and misinformation from well-known pros who ought to know better. You’ll learn how to manage risk, employ market discipline, and, when the moment is right, swing for the home run.

• Real proof, real data, real results
  

• Decades of actual performance charts from professional money managers

• All the information you need...in one number
  Why the market price tells you all you need to know to trade

• Pinpointing targets of opportunity
  What to trade, when to trade, and how much to trade

• How it’s done: classic case studies
  Who profited from the global scandals of the last 15 years…and how they did it

• Meet today’s leading trend followers
  Extraordinary trader profiles, including top traders from the past 30 years

MICHAEL W. COVEL is the founder and President of Trend Following™. A researcher of the most successful trend following investment managers, he has been in the alternative

investments industry consulting on trend following to individual traders, hedge funds, and banks for ten years.

 

From his writing to public speaking, Covel pulls no punches. Passionately educating his clients in order to find that “edge” has made Covel a widely respected expert in the field. He writes for numerous industry publications and is continually quoted and interviewed by Barron’s, Bloomberg, and RobTV, to name but a few. An experienced and successful entrepreneur, he is a frequent guest on national TV and radio shows and regularly gives presentations at international hedge fund conferences from Hong Kong to Tokyo, advising listeners on proper trading, decision-making, risk management, and trend following. Covel is also Managing Editor at TurtleTrader.com, the leading trend following news and commentary resource since 1996.

 

Living and working in Virginia, he is a lifelong baseball fan.

 

Contents

 

This book is the result of an eight-year "hazardous journey" for the truth about Trend Following. It fills a void in a marketplace inundated with books about finance and trading but lacking any resource or, for that matter, practically any reference to what we believe is the best strategy to consistently make money in the markets. That strategy is known as Trend Following. Trend Following seeks to capture the majority of a trend, up or down, for profit. It trades for profits in the major asset classes• stocks, bonds, currencies, and commodities. However simple the basic concepts about Trend Following are, they have been widely misunderstood. Our desire to correct this state of affairs is what, in part, launched our research. We wanted to be as objective as possible, so we based our writing on the available data:

• Trend followers' month-by-month performance histories.
• Trend followers' published words and comments over the last 30 years.
• News accounts of financial disasters.
• News accounts of the losers in those financial disasters.
• Charts of markets traded by trend followers.
• Charts of markets traded by losers in the financial disasters.

It is a pleasure to recognize the colleagues, mentors, finance writers, traders, and friends who contributed directly and indirectly to this book.

William W. Noel, III and Justin Vandergrift must be singled out for special mention. They were the core members of our original Trend Following research team. The book would not have come together without their hard work.

I am particularly grateful to those traders - Ed Seykota, Bill Dunn, Daniel Dunn, Mark Rzepczynski, Pierre Tullier, Jason Russell, Easan Katir, Jonathan Hoenig, and Paul Mulvaney - who were generous with their feedback under tight writing deadlines. And thanks also to Martin Bergin of Dunn Capital Management for an initial introduction to Bill Dunn.

The support of Charles Faulkner must be acknowledged as well. He shared his intellect, enthusiasm, and most of all, his time, reading and critiquing various drafts. His advice kept me out of trouble, and his patience was extraordinary.

Celia Straus, Jerry Mullins, Withers Hurley, Elizabeth Ellen, Justice Litle, Barry Ritholtz, Mark Rostenko, Tom Rollinger, Arthur Maddock and Bob Spear also made valuable contributions.

Throughout years of research, I've benefited repeatedly from the trading wisdom and experience of John W. Henry, Salem Abraham, Peter Borish, Jonathan Craven, Mark Hawley, John Hoade, Shaun Jordan, Carol Kaufman, Jane Martin, Leo Melamed, Larry Mollner, Kim Hunter, Gibbons Burke, Chuck LeBeau, and Leon Rose. I want to especially thank Jerry Parker for answering questions early in my career.

And thank you to the following publications and writers who generously allowed us to quote from their work: Michael Mauboussin, Sol Waksman and Barclay Managed Futures Report, Futures magazine, Managed Account Reports, Michael Rulle of Graham Capital Management, Technical Analysis of Stocks and Commodities magazine, and Winton Capital.

I am also indebted to the following authors whose works continue to be treasure troves of information and insight: Morton Baratz, Peter Bernstein, Clayton Christensen, Jim Collins, Jay Forrester, Tom Friedman, Gerd Gigerenzer, Peter Todd, Daniel Goleman, Stephen Jay Gould, Alan Greenberg, Larry Harris, Robert Koppel, Edwin Lefevere, Michael Lewis, Jesse Livermore, Roger Lowenstein, Ludwig von Mises, Lois Peltz, Ayn Rand, Jim Rogers, Jack Schwager, Denise Shekerjian, Robert Shiller, Brett Steenbarger, Van Tharp, Edward Thorp, Brenda Ueland, and Dickson Watts.

This book could only have come to fruition with the editorial guidance of Jim Boyd at Financial Times Prentice Hall, as well as the able assistance and attention to detail of Dennis Higbee, who copyedited. I also want to thank Donna Cullen-Dolce, Lisa Iarkowski and John Pierce for their remarkable production and marketing skills. And to Paul Donnelly at Oxford University Press, I owe a special debt of gratitude for seeing the potential of our initial proposal.

Michael Covel
Trend Following --This text refers to an out of print or unavailable edition of this title.

"Michael Covel's Trend Following- Essential." --Ed Seykota, Trend Follower and Original Market Wizard "Trend Following by Michael Covel? I'm long this book." --Bob Spear, Developer of Trading Recipes Software "Michael Covel's Trend Following is a breakthrough book that captures the essence of what really makes markets tick. Diligently researched and comprehensive in scope, it will replace Market Wizards as the must-read bible for a new generation of traders." --Jonathan Hoenig, Portfolio Manager, Capitalistpig Hedge Fund LLC, Fox News Contributor "Michael Covel has written the definitive book on Trend Following. With careful research and clear insight he has captured the essence of the most successful of all trading strategies. Michael knows his subject matter and he writes about it with passion, conviction and enthusiasm. This enjoyable and well written book is destined to become a classic." --Charles LeBeau, author of Technical Traders Guide to Computer Analysis of the Futures Markets "Trend Following is an engrossing and educational journey through the principles, pitfalls, players and psychology of aggressive technical trading of the investment markets. Rich in its wisdom and historical study." --Gerald Appel, President of Signalert Corporation and Publisher of Systems and Forecasts Newsletter "Conventional wisdom says buy low and sell high, but what do you do now that your favorite market--be it a stock, bond, or commodity--is at an all-time high or low? For a completely different perspective, from people who actually make money at this business, take a look inside. Michael Covel has written a timely and entertaining account of Trend Following--how it works, how to do it, and who can do it. While it's not for everybody, it might be for you." --Charles Faulkner, NLP Modeler and Trading Coach, featured in numerous books including The New Market Wizards For 30 years, one trading strategy has consistently delivered extraordinary profits in bull and bear markets alike- Trend Following. Just ask the billionaire traders who rely on it. In this book, you'll meet them . . . and you'll discover how to use Trend Following in your own portfolio. Even if you're not a billionaire. Yet. Michael Covel rigorously analyzes historic performance data proving that Trend Following trading works. He goes right to the source for insight from some of the best trend followers ever. How to limit risk, employ discipline, and swing for the home run are all part of Trend Following. Covel also debunks commonly accepted Wall Street Holy Grails such as buy and hold and the use of fundamentals for trading decisions. The proof is in the results--Hard performance data over decades from professional money managers All the information you need . . . in one number--Why a stock's price tells you all you need to know to trade Pinpointing targets of opportunity--What to trade, when to trade it, and how much to trade How it's done- classic case studies--Who profited from the global scandals of the last 15 years . . . and how they did it Meet the Trend Followers--Extraordinary trader profiles, including Bill Dunn, John W. Henry, and Ed Seykota The First Book on Trend Following How did John W. Henry become rich enough to buy the Boston Red Sox? How do traders like Ed Seykota, Bill Dunn, Jerry Parker, and Keith Campbell consistently generate immense profits in both bull and bear markets? The answer is Trend Following- the only long-term trading strategy proven to consistently make money. Now, one of the field's leading experts pulls back the curtain on Trend Following, showing you exactly how and why from A to Z. Michael Covel demonstrates why market prices contain all the information you need to make buy and sell decisions. Trend Following works. The proof? The billionaires who live by it. --This text refers to an out of print or unavailable edition of this title.

MICHAEL W. COVEL

is the founder and President of Trend Following™. A researcher of the most successful trend following investment managers, he has been in the alternative investments industry consulting on trend following to individual traders, hedge funds, and banks for ten years.

 

From his writing to public speaking, Covel pulls no punches. Passionately educating his clients in order to find that “edge” has made Covel a widely respected expert in the field. He writes for numerous industry publications and is continually quoted and interviewed by Barron’s, Bloomberg, and RobTV, to name but a few. An experienced and successful entrepreneur, he is a frequent guest on national TV and radio shows and regularly gives presentations at international hedge fund conferences from Hong Kong to Tokyo, advising listeners on proper trading, decision-making, risk management, and trend following. Covel is also Managing Editor at TurtleTrader.com, the leading trend following news and commentary resource since 1996.

 

Living and working in Virginia, he is a lifelong baseball fan.