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Trading the Trend (Collection)

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Trading the Trend (Collection)

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Description

  • Copyright 2013
  • Pages: 675
  • Edition: 1st
  • eBook (Watermarked)
  • ISBN-10: 0-13-309463-4
  • ISBN-13: 978-0-13-309463-3

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

Sample Content

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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