Trend Following: How to Make a Fortune in Bull, Bear, and Black Swan Markets

I usually don't write book reviews as I don't like to feed the mass hysteria, but I had to pay my respects to Mike without whom I would have been still stuck working for the man and would have lost whatever was left after the 2008 fiasco. I stumbled upon Turtle traders sometime in 2009 after losing more than half of my wealth in 2008. Before coming to a conclusion on how awful investor I would have been, I would like to tell that I had years of experience working in Investment banks and had pretty good idea of the markets and drank the same cool aid which my fellow traders drank. But unlike the big banks I didn't have the government save me when sh*t hit the fan. Now 9 years later, thanks to Mike and his books, I trade in 30 different markets while staying on a small island (literally) where nothing interesting happens. Due to him I was able to cut out the noise. I am not on Facebook, Twitter, Instagram, Reddit or any other mass hysteria channels. I don't watch CNBC or Bloomberg, unless there is nothing interesting on Netflix to watch and I need some entertainment. I made more money in times when everyone was bleeding and just to test my models even traded cryptos and made a bloody fortune there as well. What people don't get is that this book is not a handbook of trading. It is more like a map which will help you develop the thought process to become a system trader. Our problem today is we want handouts, ready formulae for milking the cash cow. But that's not how the world works. No one will give you their money making formula in a book. You have to go out and figure it out yourself. What this book can help you is to figure out the right path. The interviews in the new edition is pure gold. If you know what those legendary traders are saying, you will know they are giving out the secret in plain words, its up to the reader to comprehend. Finally I would like to say this book is like The Bible. Some people think its a storybook, some get inspired and some find God. P.S: I know many of the reviews book is not actionable and its true coz its not supposed to be actionable. Now if you decided to take the red pill and go down the rabbit hole, its going to take a lot of hard work. First thing (and the most difficult one) will be to throw out all your beliefs and start from scratch. Brush up or learn more about Statistics and Probability (tons of books and free courses out there) which is absolutely necessary. Learn more about Game Theory which I feel is very important. Then if you are still alive and want to get some more, I suggest these books for further reading 1. Thinking, Fast and Slow This is the base of Trend Following, understanding human behaviour. 2. Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts How to make decisions when you have limited variables you can control and no whatsoever no control on the outcome. 3. Trend Following with Managed Futures: The Search for Crisis Alpha (Wiley Trading) A book by Chief Scientist of ISAM and legendary Trend Follower which will be your induction to the world of Managed Futures 4. Following the Trend: Diversified Managed Futures Trading (Wiley Trading) A wonderful read on actual Trend Following 5. Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals (Wiley Trading) This one gets bit technical but this is the real deal. This book will dissect TA and help you decide how to evaluate strategies. This is a no BS book but you should be open to receive the knowledge 6. Trading Systems: A New Approach to System Development and Portfolio Optimisation This one is bit old but this one helped me a lot when I was building up my first system and the methods still hold good and will continue to hold good for any person starting out on the journey.

The new edition of Trend Following is a must have addition to any investment library. Where most other trading books review specific systems or techniques, Covel starts with the model of why trend following works and how it compares to other approaches. He backs up his views with case studies of successful trend followers with the notable addition of David Harding in this edition. In this edition Covel also adds interviews with some of the world's top trend following traders. This is incredibly helpful for someone developing their own systems not because of any hot tips on programming your own system but because it gives you an inside look at how some of the best think, approach problems, and what they seem to consider important and what they don't. If you read this interviews and don't walk away with a deeper understanding of what to focus on in your systems you just weren't paying attention. The last section of the book includes curated papers from traders around the world. This is incredibly helpful as it gives some examples of how to approach back testing and system design at a very tactical level and nicely rounds out the rest of the book. It also provides evidence that trends are a feature of markets that history suggests will not be arbed away. There are many books out there that talk through very specific trading rules or systems. Others describe discretionary traders with some magic sauce that can't be replicated. Trend Following gives you a framework to develop repeatable processes that make money in markets.

Although I purchased this newest edition when it first came out, it took me a while to finish it. Not only because of the length but because there are so many ideas, information and illumination that I often went off on tangents of additional research and exploration. Some previous reviewers stole my lines but I'll go ahead and say them anyway... If previous editions were a wonderful introduction and overview of trend following, this 5th edition is the trend following bible. Unlike other bibles, this one has tons of proof to support the trend following philosophy. From interviews with top-performing traders who have used trend following to make fortunes to in-depth studies of trend following techniques, some of which go back as far as 800 years. For those of us who didn't do so well in Statistical Analysis 101, your eyes may glaze over in some parts of these studies but for the real quants out there, you'll love digging into the meat of it. Some of these studies and other ideas presented in this book even lead me to make some tweaks in my own trend following techniques. I highly recommend this book both to the novice trader looking for a solid foundation and to the seasoned professional who would like to improve their trading. Not every detail of a trading system is laid out for you. You're not going to get push-button riches. You might have to actually get off your butts and do some work but you'll have your start in the right direction if you pay attention.

The book is very interesting and complete as it talks about what trend following is and how the CTA industry works - as opposed to other types of investments. It's inspiring but it doesn't teach you how to be a trend follower yourself. Althought it mentions a very simple trend following strategy, it doesn't give you details on how much capital would you need to start and it doesn't go deep on Money Management either. It became clear to me that trend following works, but I didn't really learn the details on how to use it by trading it myself.

This is a great book. I think everyone is always looking for an edge when it comes to investing or trading. I’ve read many books on trading that claim to have the next magic formula and that your guaranteed to make money. They also do a great deal of predicting markets and telling you what they think is going to happen. Once you wrap your head around trend following you realize there is no magic formula and that listening to anyone who thinks they can predict the future is a big waste of time. If you have been around long enough to experience a significant downturn in the market, you start to realize you need a better approach. I know I did. What I really like about Michael is he is up front and straight forward about the thought process that goes into trend following. It really makes you think differently and realize the things you should be paying attention to are not mindless predictions and magic formulas, but things in your control like your own mind set, risk management, position sizing, etc. Once I grasped the concepts and started concentrating on the things in my control, I soon realized it’s really making me a much better investor. I think the value you get from this book is excellent. In addition, you have access to Michael's podcast which is free and also excellent. Highly recommended.

I discovered Michael Covel years ago, with his website, and have purchased, read, and re-read his prior books, including the prior edition of Trend Following, and his podcasts are diversified, often thought provoking, and usually quite fun. I have recommended this current book and edition frequently to my friends and colleagues. The key here, is that there is no magic, there is no trying to predict the future. Rather, that there are patterns and trends which can be identified, and are reproducible, despite changes in technology, because one thing doesn't change. What doesn't change is how we humans react and respond to different inputs. This human behavior can be recognized, in the form of these trends identified (in the cases of investing in stocks or commodities) by the prices and the price change over time. Accompany these trends with good money management, and there is a process which has been used to create quite bit of wealth. It is within the reach of any of us to learn these concepts. Even if you have the prior version, the current version is completely refreshed, and substantially added to. I recommend it highly.

Finding actionable advise in this book is like squeezing water out of a rock. If you are new to this and want to learn how to make profit in the markets, don't get this book. How to identify the beginning and the end of a trend or how you can find effective entry and exit points is not explained. This book is so full of platitudes and pseudo wisdom like "No one is dumb who is curious. The people who don't ask questions remain clueless throughout their lives" -Neil deGrasse Tyson. Wow! So profound! It has the aura of sophistication by talking about things like "Pyramiding and Martingale", "Sharpe"... There is even pseudo code of a mean reversal strategy (how ironic!) that doesn't look like it's really working. In terms of actual trend following strategies: Discussed is a moving average crossover strategy, which is a the classic trend following system that gets taught in every beginner's book, except that this strategy will shred your money in a ranging market, which isn't discussed. There is also a channel breakout strategy that is barely genius. The chapters are all written by different people, as far as i can see, managers in investment firms and hedge funds. Do you really think that they are going to give away their trend following systems? Exactly, they don't. Those would probably also go over the head of an average reader, and those guys don't have time or motivation to really lay those details out (which are probably anyway not executable without huge, expensive data-streams and super-computers). Even though it HAS this aura of academic / hedge fund insider sophistication, simple things like a rigorous proof that trends actually exist is not given (by showing for example the existence of day to day autocorrelations in returns). Why do we need that? Can't we SEE that there are trends in the market? It's not that simple. Every random walk has phases that look like trends, yet they can only be defined after the fact. Stocks have random wiggles. At what point can you say with certainty you get out because the trend has ended? Stock don't just go flat after the trend. They often reverse. Research has shown that it is not that simple to buy a stock once you can see with clarity that it has developed a trend. In fact at the point where it seems to be obvious for everyone, the trend tends to break down more often than not. Don't be fooled by historical data! It's all hindsight bias. It's really not as easy as jump on the trend when you see it and get out when it ends. Movements are way more random than they appear to the eye. The human eye sees patterns where there aren't any. Maybe if a novice reads that book, he will find it inspiring, and probably sophisticated, because it does give off a sophisticated flair. If you want concrete actionable advise, buy a real trading book. Bulkowski is a good start. Another word of caution: Most trend followers, including the hedge funds in the book, trade futures like oil, grains or the E-mini S&P 500, not stocks! And that for a good reason: Commodities have some intrinsic demand and therefore potentially SOME tendency to trend. We are talking about buying individual oil contracts that cost > $50.000. ONE E-mini S&P 500 trades currently at >> $100.000. At the same time trend following systems have huge drawdowns, low win rates and therefore require massive diversification. So you need deep pockets, excellent discipline and the willingness to trade huge individual futures contracts. So this whole game is anyway not really for the everyday Joe. Read the book "The way of the turtle". Then you will understand. P.S.: I think I know now why you won't find any information on a solid trading system in the book. Because he actually sells it on his website for $2,997. That's right. The book is supposed to make trend following tasty to you so that you buy his "system". If this system really works, or is just another way of pulling money out of your pocket, well, you will find out! Let me know!

First I want to thank you for the work you do. For it is such a wonderful thing you do. Presenting the information that is out there for each of us to understand and comprehend. Like F. Scott Fitzgerald said, "... the test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function." Can we say Trend Following and (EMT) efficient market theory! Everyone has to challenge where they are with their own thoughts on the subject. Your books have been such a wealth of information. I own most of them, Trend following 4th and the new 5th edition is such a great book. I could not finish it, because when I sit down to read it is too late in the day and I pass out. So, I bought the audio book version since I'm in my car a lot. This way I will get it done. I have been reading 12 to 24 books a year since 2007. The only book that has challenged my thinking out side of yours has been Rich Dad Poor Dad. Keep up the good work and I will keep buying each new version or book you print.

The book is an amazing refresher with a lot of new information since the earlier book. Trend following is a strategy goes against human psychology and hence it is not easy to make people understand specially in my country India. I have been applying this for last 10 years on India asset classes equities, commodities and currencies as international futures trading is not allowed to Indian citizens. The book is a must read for all investors, traders, fund managers alike and provide important lesson why buy and hold can devastate portfolios in a Japan style bear market. As previous book, it doesnt contain any ideas on how to make money but that is something the least of botheration to a trend follower. Thanks Michael to make people understand TREND FOLLOWING and request you to visit India some time so that there can be more understanding to this in India.

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Great book with great insights.

3 days after receiving this book, throw it straight into trash. Over promising and brain washing style statements without providing practical knowledge whatsoever. Book title itself is a click bait. Don't buy if you are someone trying to learn how to trade!

Hi, The book is really worth reading if you are interested in market strategies around trends and momentum. However, I got my book in a soaked paperbox from Amazon. It’s just a shame Amazon can’t do a better job ruining my experience with this great book. The book I got is just a wreck !!! Poor work by Amazon !!!