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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 www.trendfollowing.com/podcast.
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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.

Sep 26, 2012

Michael Covel dives into the topic of cutting your losses, opening with a quote from "The Boxer" by Simon & Garfunkel: "The fighter still remains". It's a personal fight and personal responsibility for all those out there. And if you trade to money the fight to understand the topic of losses should be at the top of your list of concerns. Most people want to hear "instant profits"; they want to run away from discussing losses. However, knowing how to strategically approach losses is one of the most important concepts to understand as a trend following trader. Covel shares a note from a fan who made a connection between Covel's work and some of the ideas found in famed quarterback Joe Montana's book, "The Winning Spirit": "In training for success, we shouldn't hide from failure. Just like football players in the film room, we study failure. We want to see how it happens and which strategies work to keep us from making the same mistakes again." This doesn't just apply to trading: The loss cutting can be a relationship, a business, a family member--it can be anything. How do you know when to cut your losses and get out? Covel goes on to talk about the concepts of opportunity costs and sunk costs. When you've spent the money and it turns out to be "gone" you can't fret about it. It's over--it's a sunk cost. An opportunity cost is equally important: If you are doing A, you can't do B. It's a choice. If you invest your time, energy, or money in one relationship or one business, you can't spend your time, energy, or money with another. There is a cost to choosing one opportunity over another. Covel expands on these concepts relating them to familiar companies like Microsoft and Apple. Covel goes on to discuss how people have difficulty letting bygones be bygones; why people have difficulty with stop-losses in trading; and why having a system that forces you to take losses is the foundation of trend following trading success. A special offer from Michael Covel? Free DVD telling the story of a small town guy who made a trend following fortune. Delivered to your home or office: http://trendfollowing.com/win.

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