Trading the Trend (Collection) [NOOK Book]


World-renowned trading strategist Michael Covel helps you master and profit from trend following: the only strategy proven to work in any market environment!

Trend following is the only investment strategy repeatedly proven to work in any market environment! Now, in two remarkable eBooks, the world's #1 trend following author reveals why it works so well, and shows how you can apply it to earn exceptional, consistent profit in your own trades. In Trend Following (Updated ...

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Trading the Trend (Collection)

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World-renowned trading strategist Michael Covel helps you master and profit from trend following: the only strategy proven to work in any market environment!

Trend following is the only investment strategy repeatedly proven to work in any market environment! Now, in two remarkable eBooks, the world's #1 trend following author reveals why it works so well, and shows how you can apply it to earn exceptional, consistent profit in your own trades. In Trend Following (Updated Edition): Learn to Make Millions in Up or Down Markets, MichaelCovel teaches all the fundamental concepts and techniques you'll need, demonstrating how to understand price movements well enough to consistently profit from them. Covel presents updated profiles of top trend followers who've kept right on profiting through the toughest markets. He even presents simple charts created from their actual trades: powerful visual support for the power of trend following! Next, in Trend Commandments: Trading for Exceptional Returns, Covel distills the essential wisdom of this strategy into fascinating, bite-sized pieces that any investor can understand and use: real moneymaking insights from true winners, backed by real performance results. Learn how one of the biggest names in trend following made over 20% in August 2010 alone… and why this strategy keeps making big money when everyone else is dropping like a stone… and how to escape the cycle of "panic, fear, hope, and return-to-panic" in today's age of non-stop financial crisis!

From world-renowned trend following expert and author Michael Covel

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Product Details

  • ISBN-13: 9780133094664
  • Publisher: Pearson Education
  • Publication date: 7/4/2012
  • Sold by: Barnes & Noble
  • Format: eBook
  • Edition number: 1
  • Pages: 675
  • Sales rank: 953,652
  • File size: 9 MB

Meet the Author

Michael Covel is president of Trend Following™, a privately owned research firm that, since 1996, has trained more than 6,000 trend following traders from over 70 countries. His best-selling books include The Little Book of Trading, Trend Commandments, The Complete TurtleTrader, and the classic Trend Following. Covel has appeared on leading business media outlets ranging from Bloomberg to Fox Business, and presented live to audiences in Austin, Baltimore, Chicago, Dallas, Hong Kong, Houston, Jekyll Island (GA), La Jolla, Las Vegas, Macau, Miami, Mobile (AL), New York, Paris, São Paulo, Stanford, Tokyo and Vienna (Austria). Covel's original online creation,®, has drawn millions of visitors. worldwide. His first film and directorial debut is the documentary Broke: The New American Dream.

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Table of Contents

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

Foreword xiii

Preface xvii

Acknowledgments xxi

Part I 1

1 Trend Following 3

The Market 3

Winning Versus Losing 4

Investor Versus Trader 6

Fundamental Versus Technical 7

Discretionary Versus Mechanical 11

In Plain Sight 12

Change 15

Modus Operandi: Price 17

Follow the Trend 18

Loss 22

Conclusion 23

2 Great Trend Followers 27

David Harding 29

Bill Dunn 32

John W Henry 45

Ed Seykota 58

Keith Campbell 67

Jerry Parker 71

Salem Abraham 74

Richard Dennis 78

Richard Donchian 85

Jesse Livermore and Dickson Watts 90

Part II 95

3 Performance Data 97

Absolute Returns 98

Fear of Volatility and Confusion with Risk 99

Drawdowns 106

Correlation 111

Zero Sum Nature of the Markets 114

George Soros and Zero Sum 116

4 Big Events, Crashes, and Panics 123

Event #1: 2008 Stock Market Bubble and Crash 126

Day-by-Day Analysis 136

Event #2: 2000–2002 Stock Market Bubble 138

Event #3: Long-Term Capital Management Collapse 151

Event #4: Asian Contagion 164

Event #5: Barings Bank 168

Event #6: Metallgesellschaft 172

Final Thoughts 175

The Always “New” Coming Storm 178

5 Baseball: Thinking Outside the Batter’s Box 181

The Home Run 182

Moneyball and Billy Beane 185

John W Henry Enters the Game 186

Red Sox 2003–2007 188

Part III 191

6 Human Behavior 193

Prospect Theory 194

Emotional Intelligence: Daniel Goleman 200

Charles Faulkner 201

Ed Seykota’s Trading Tribe 202

Curiosity Is the Answer, Not Degrees 204

Commitment to Habitual Success 206

7 Decision Making 211

Occam’s Razor 212

Fast and Frugal Decision Making 213

The Innovator’s Dilemma 216

Process Versus Outcome 218

8 Science of Trading 221

Critical Thinking 222

Chaos Theory: Linear Versus Nonlinear 224

Compounding 229

9 Holy Grails 231

Buy and Hold 232

Warren Buffett 234

Losers Average Losers 235

Crash and Panic 238

Analysis Paralysis 241

Final Thoughts 243

Part IV 245

10 Trading Systems 247

Risk, Reward, and Uncertainty 248

Five Questions for a Trading System 253

Your Trading System 265

Frequently Asked Questions 266

11 The Game 277

Slow Acceptance 278

Blame Game 279

Understand the Game 280

Decrease Leverage; Decrease Return 281

Fortune Favors the Bold 282

Afterword 285

Acceptance 285

Inefficient Markets 288

Trend Following Critics 290

Critic Geetesh Bhardwaj 294

Final Thoughts 296

Foreword to the First Edition by Charles Faulkner 299

Appendices 303

Introduction to Appendices 305

A Trend Following for Stocks 307

Does Trend Following Work on Stocks? 307

Short Selling 318

Tax Efficiency 318

The Capitalism Distribution: Observations of Individual

Common Stock Returns, 1983–2006 331

Charts 338

B Performance Guide 347

Trend Following Historical Performance Data 347

Abraham Trading Company 347

Campbell & Company, Inc.—Financial Metals & Energy—

Large Program 349

Chesapeake Capital Corporation—Diversified Program 352

Clarke Capital Management, Inc.—Millennium Program 354

Drury Capital, Inc.—Diversified Trend Following Program 355

DUNN Capital Management, Inc.—World Monetary Assets 356

Eckhardt Trading Company—Standard Program 359

John W Henry & Company, Inc.—Financials and Metals Program 361

Millburn Ridgefield Corporation—Diversified Program 363

Rabar Market Research, Inc.—Diversified 366

Sunrise Capital Partners LLC—Expanded Diversified 368

Superfund 370

Transtrend B.V.—Diversified Trend Program—Enhanced Risk (USD) 371

Winton Capital Management Ltd—Diversified Winton Futures Fund 372

Risk Disclaimer 374

C Short-Term Trading 375

D Personality Traits of Successful Traders 377

E Trend Following Models 381

F Trading System Example from Mechanica 385

System Background Information 385

System Details 386

A Canadian Dollar Trade 388

System Performance 389

Summary 392

G Critical Questions for Trading Systems 395

Resources 397

Endnotes 399

Bibliography 423

Index 431

TREND COMMANDMENTS: Trading for Exceptional Returns

Acknowledgments 1

Ignition 3

Expectations 9

Jargon 11

Show Me the Money 15

Blowing Bubbles 25

Speculari 29

Fundamentals Are Religion 33

Everything Flows 39

Systematic Trend Following 41

Change 45

No Prediction 47

Price Action 51

Place Your Bet 55

Trading Systems 59

Trade Everything 65

Drawdown 69

Entry 73

This Way to the Egress 75

Losers Average Losers 79

Home Run 81

Robust 85

Push the Button 87

Wash, Rinse, Repeat 91

Zero-Sum 95

Crash and Burn 97

Inefficient Markets 101

Benchmark 105

Haters 109

The Root of All Evil 113

Panicky Sheep 117

IQ vs EQ 123

Commitment 127

Decide Now 131

Science 135

Statistical Thinking 137

Aha! 143

Hero Worship 147

Buy and Hope 151

Convert 155

Oracle of Omaha 157

A Seinfeld Moment 161

Snow Job 165

Twit Me a River 169

Goldline 173

Intoxication 175

Parliament of Whores 181

Crowded House 185

Black Box 187

Lucky Monkey 189

Honest 193

Under the Radar 199

Ethos 201

Games People Play 205

Blood Hound 207

Epilogue 211

Extras 213

Surprise, Surprise, Surprise 215

Origins 221

Cheat Sheet 235

Quick Commandments 239

Bibliography 242

Endnotes 246

About Trend Following & Michael Covel 265

Index 267

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