Average Reviews:
(More customer reviews)This is a very valuable book because it distills the wisdom of some of the world's greatest traders into one place. Michael Covel has spent 15 years studying the methodology, risk management, and psychology of legends like Ed Seykota, Larry Hite, previous turtle traders, Paul Tudor Jones, Salem Abraham and many others. He has also studied the entire history of trend following and the writings of historical figures like Jesse Livermore, Richard Donchian, and Charles Dow.
This book is compilation of the principles that real life trend followers used to make and keep millions, and for some billions in the market. Any trader should be able to pick up this book and get inside the minds of these market wizards.
The problem is that many people do not "get" trend following. They ignore the success of these traders and want to opine about how it does not work, or complain that the draw downs are to large, or that these are only the "survivors" what about the trend following losers? I would like to say these are not the authors opinions these are proven principles, the success of this style of trading has been proven, draw downs occur for all traders (except for frauds like Bernie Madoff), and I do not know of any trend followers who blew up that used proper risk management.
I can say from personal experience of successful trading and my own track record of capital growth at a cumulative total of over 200% in an 8 year period when the market was essentially flat, that trend following works. The principles of Covel's book Trend Following was a major early influence for me. The principles I learned from Covel's book along with the Nicolas Darvas books showed me the importance of reversing my positions and stopping losses when a trend reversed. I went to cash in January of 2008 in my main two accounts as the trend reversed and that allowed me to avoid the entire market meltdown.
This book is easy to read and understand and gives you all the rules you need to begin to build your own trading plan. It does not try to predict the future or tell you what to trade, it shows you HOW to trade successfully.
The principles of this book match my own book. I have also spent many years studying the most successful traders and read over 165 of the top trading books on the market and traded successfully for 12 years. Michael Covel and myself have come to the same conclusions on what leads to success in the markets.
1. Do not try to predict, react to actual price movements.
2. Keep your risk at no more than 1% or 2% of total equity per trade to avoid the risk of ruin.(This is a baseline, risk varies by system)
3. Always trade in the direction of the immediate trend.
4. Always have an exit strategy before you enter a trade.
5. Trade the probabilities not opinions or hunches.
6. In every trade have a limited down side but an unlimited upside.
7. You must have the discipline to follow your tested system 100%.
8. The only people that really always win with the buy and hold strategy is mutual funds by charging management fees.
9. You must be committed to your trend trading strategy for the long term.
10. Watch financial news networks for news and entertainment, read Trend Commandments to learn how to trade.
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