The first monologue of the new year! Covel goes on to review four things that have recently hit his desk that highlight the misinterpretations of trend following and trading in general. The first, regarding a speaking gig in Beijing, concerns itself with distinguishing between reality and unreality. The second comes from Teller, of Penn and Teller fame. Covel goes on to discuss whether a trading system should be specifically designed to suit your personality--something Covel doesn't necessarily agree with. He gives examples of the Turtles, AHL of London, Larry Hite, Ken Tropin--all traders who have different personalities but are similar in their systematic approaches. It's not about whether trend following trading "fits" your personality--it's about the fact that it works and there is performance data that proves it. The third example comes from a listener, and Covel discusses time decay and "choppy markets". The fourth comes from Jim Rohrbach, who put a piece out in late December in which he caught a radio show that stated "the stock market is always right". Paraphrasing Rohrbach, Covel notes that the market does what it wants to do. When the market doesn't do what a trader thinks it should do, they insist the market is wrong. We may not like or agree what the market is doing any any particular time, but it's futile to say the market is wrong or to invest opposite the market. It's as simple as being long when the market is going up, and being short when it's going down. Of course, you need rules to deal with that: choppy markets, knowing when to exit, and keeping losses to a minimum--that's what Covel teaches. Free DVD: www.trendfollowing.com/win.
Michael Covel speaks with traders Chris Kacher and Gil Morales, authors of the new book "In The Trading Cockpit with the O'Neil Disciples: Strategies that Made Us 18,000% in the Stock Market". Their book is a step-by-step instruction guide to implementing Morales and Kacher's trading methods. Covel starts off by asking Kacher and Morales about the "fiscal cliff", why quantitative easing is not the answer to economic growth, and why all of this isn't necessarily relevant to making money. None of it matters if the Dow ultimately goes from 13,000 to 26,000. Regardless of your political views you shouldn't be sitting on the sidelines if that happens. Ultimately, the trend is your friend. In a pure trading mindset, all this news, the fiscal cliff, the debt limits--they aren't necessarily relevant to making money. Covel, Kacher, and Morales go on to talk about their new book, "In The Trading Cockpit with the O'Neil Disciples"; the "O.W.L." ethos, and the story behind it; reversion to the mean mentality, and how it can often be the kiss of death for traders and investors; trading psychology, the idea that "you must lose to win", how the least important statistic is your percentage of gains v. losses in your trading account; dealing with emotionalism and why clients often want to hear something that will make them feel better; teaching people to let go of the news and simply watch the price action; why people think that "this time is different", put their trust in the central economy, and why trend following will survive into the future; understanding that investing is always a process of changing along the way; and what mental clutter in the way of fears, biases, concerns and more can build up in the mind and get in the way of clear and decisive decision-making. Dig in! Free DVD: www.trendfollowing.com/win.