Sunday Musings: Trend Following At Its Finest

Not too long ago, I reviewed Michael Covel’s book “The Complete Turtle Trader,” which detailed the teaching of a trend following strategy, or trend tracking as I like to call it, by Richard Dennis.

As you may recall, Richard, a wealthy Chicago trader, decided to teach randomly selected students the art of unemotional trend following and proving in the process that successful investment skills could be taught to anyone.

Prior to that review, I had read Michael Covel’s book “Trend Following,” which is a masterpiece on the subject and features many techniques which I have used myself over the past 20 some years. If you have come to the conclusion that trend following is the way to go with your investments, you owe it to yourself to read this 400-page mother of all investment books. Here’s what you can expect to find out:

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!

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.

Keep in mind that there are different ways to incorporate a trend following strategy. Many of the featured top pros are CTAs (Commodity Trading Advisors), who use leverage with their approach to obtain superior results. However, you can apply many of the methodologies in a more conservative manner, as I do, and use these same techniques with no load mutual funds and ETFs.

No matter which way you go, the key issues remain discipline and controlling market risk, which every successful trend follower will use with utter abandon. Despite me having used many of the approaches in my advisor practice for a long time, I found this book invaluable in clarifying my own thoughts and, at the same time, be a guide to further improving my system.

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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