Trend Following (Updated Edition) | Michael W. Covel

Summary of: Trend Following (Updated Edition): Learn to Make Millions in Up or Down Markets
By: Michael W. Covel

Introduction

In ‘Trend Following (Updated Edition): Learn to Make Millions in Up or Down Markets,’ author Michael W. Covel presents a trading approach that has consistently proven successful over time, despite being overshadowed by more conventional trading strategies. Emphasizing the simplicity and humility of trend following, Covel introduces readers to a range of successful practitioners and their key insights. Through detailed profiles, learn how these trend followers rely on straightforward principles, disciplined systems, and an unwavering focus on the present state of the market to make their fortunes. Put conventional wisdom on the back burner and explore the counterintuitive, yet highly effective, world of trend following.

The Power of Trend Following

Trend following is a powerful and consistent trading style that defies conventional wisdom. While most traders attempt to predict and beat the market using either fundamental or technical approaches, trend followers simply react to market movements. This allows them to capture the big, rich middle of significant trends, sacrificing profits at both ends. By understanding and following simple universal laws, trend followers have achieved consistent success over time.

The Humble Trend Followers

Trend followers understand that guessing wrong is a possibility and accept that losses will occur, unlike analysts and commentators who often pride themselves on being being first or right. For trend followers, what matters in trading is what the market is doing, not what it will do. They believe that emotional detachment is key to minimizing losses and often rely on mechanical trading rules to eliminate the risk of emotional decisions. When opportunities arise, they take them. Lastly, trend followers acknowledge that prices can only stay put, go up or go down and that no one knows where a price rise or fall will stop. Trend followers are a humble group that allows the market to dictate their moves.

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