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Trend Following with Michael Covel

Bestselling author Michael Covel is the host of Trend Following Radio with 6+ million listens. Investments, economics, decision-making, human behavior & entrepreneurship--all passionately explored. Guests include Nobel Prize winners Robert Aumann, Angus Deaton, Daniel Kahneman, Harry Markowitz & Vernon Smith. Also: James Altucher, Dan Ariely, Jean-Philippe Bouchaud, Kathleen Eisenhardt, Marc Faber, Tim Ferriss, Jason Fried, Gerd Gigerenzer, Larry Hite, Sally Hogshead, Ryan Holiday, Jack Horner, Ewan Kirk, Steven Kotler, Michael Mauboussin, Tucker Max, Barry Ritholtz, Jim Rogers, Jack Schwager, Ed Seykota, Philip Tetlock & Walter Williams. All 600+ eps at trendfollowingradio.com/rss.
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Bestselling author Michael Covel is the host of Trend Following Radio with 6+ million listens. Investments, economics, decision-making, human behavior & entrepreneurship--all passionately explored. Guests include Nobel Prize winners Robert Aumann, Angus Deaton, Daniel Kahneman, Harry Markowitz & Vernon Smith. Also: James Altucher, Dan Ariely, Jean-Philippe Bouchaud, Kathleen Eisenhardt, Marc Faber, Tim Ferriss, Jason Fried, Gerd Gigerenzer, Larry Hite, Sally Hogshead, Ryan Holiday, Jack Horner, Ewan Kirk, Steven Kotler, Michael Mauboussin, Tucker Max, Barry Ritholtz, Jim Rogers, Jack Schwager, Ed Seykota, Philip Tetlock & Walter Williams. All 600+ eps at trendfollowingradio.com/rss.

Oct 6, 2017

Jerry Parker was one of the original TurtleTraders trained by Richard Dennis. He has had unbelievable success over his four decade career. Jerry has a straightforward way of breaking down how trend following works.

Trend following has typical highs and lows. During the lows, there will always be people pronouncing it dead. Trend following systems are built to protect capital by using diversification and built in stop-losses to counter down periods. Said another way, there is “crash protection” built into a robust trend following strategy. On the flip side, trend following systems are built to exploit the market when it is trending up.

How easy is it to get into different markets with a trend following strategy? The great thing about systematic trading is you become an instant expert in any market. As long as you have the data, you can jump right in and trade. When you are looking at price alone, you come to find that stocks are all the same – Tesla and Coffee are traded identically.

What is the most important thing to keep in mind when trading a trend following system? Having the proper leverage is key. No system is immune to risk of ruin. Sometimes you need to adjust your leverage, reduce your risk, and do whatever you can to stay in the game. Trend following, at it’s core, is a boring strategy. It is simple and that is why it works. Choose an algorithm and from there you can choose how simple you want to make your system. But everything starts with an algorithm.

Are there any resources Jerry recommends? Cliff Asness is a great resource. He is a smart, funny, and humble person that teaches valuable information to anyone that wants to listen. After all, the best way to gain knowledge is to probe the minds of successful people and learn everything you can from them.

In this episode of Trend Following Radio:

  • Diversification
  • Becoming an expert in all markets
  • Risk aversion
  • Why the idea of “simple” works
  • Fall targeting
  • Buying markets on the cheap
  • Learning from experts
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