FAQ | SUCCESS STORIES | ABOUT | SUPPORT | CONTACT US
join us on facebook, twitter, and linkedin

  • Buy and hold is dead. It's over. Game, set, match. Trend followers were the only ones who made money in the greatest market melt down since the Great Depression. Do you know how they did it? Michael Covel

Trend Following: Break Down the Complexity

Michael Covel (March 29, 2005)

Trend Followers know the world is non-normal. There is chaos to the markets and life. Larry S. Liebovitch and Daniela Scheurle offer insight:

For such a long time we thought that most data must have a normal distribution and therefore that the mean is meaningful. With the perfect vision of hindsight, this is a bit odd. Much of the world around us is not normal. It consists of fractals, for example, mountain ranges, river basins, and broccoli. These fractals have an ever larger number of ever smaller pieces. Yet, we insisted on modeling many things as if all of their pieces had only one size. Similarly, it is also a bit odd that we thought for so long that if we knew the rules of the world that we could completely predict its future. The endless variety of chess games, the patterns of snowflakes, and the complexity of human relationships might have suggested something different to us.

Larry S. Liebovitch and Daniela Scheurle

We will never cease with the "no prediction is possible" message. Liebovitch and Scheurle back basic Trend Following beliefs.

However, the Trend Following critics always make it more complex than need be:

The point is not that we have been so wrong for so long. The point is that it is so difficult to see the simplest things as they really are. We become so used to our assumptions that we can no longer see them or evidence against them. Instead of challenging our assumptions we spend our time in studying the details, the colors of the threads that we tear from the tapestry of the world.
Larry S. Liebovitch and Daniela Scheurle

A good example of too complex? Read:

http://www.fool.com/School/Valuation/PriceBookDSOAndTurns.htm

Why go the direction of balance sheet reading when you can just trade the price? How does reading a balance sheet help you?

Science is hard because it is hardest to see what is most obvious.
Larry S. Liebovitch and Daniela Scheurle

Per Bak

>

Trend Following is sophisticatedly simple. This notion is reinforced by the late Per Bak in areas that have nothing to do with trading:

Is the answer to the universe's greatest mystery hidden in a pile of sand? Theoretical physicist Per Bak thinks it may be. He believes science's greatest challenge is to figure out how the universe's complex phenomena emerge from laws of physics, laws so simple that they all can be written down on a single piece of paper. So he studies emergent, complex phenomena - like traffic jams and mass extinctions and avalanches - by looking at their parts.
http://www.paulagordon.com/shows/bak/

Keith Campbell, one of the oldest trend followers, has long stated his Trend Following trading rules could be written down on a single sheet of paper. The key ultimately is finding the discipline and psychology to stick with it.

Per Bak concludes with wisdom all trend followers will immediately grasp:

>

What interests Professor Bak is life. Economics. History. How can you start with quarks and gluons and get humans and astrophysics and earthquakes? So he studies grains of sand. And the cars that make up traffic. He looks at the parts to understand the whole. (It's known as bottom-up science, as compared to traditional top-down physics.) Say goodbye to a nice, steady, equilibrium perspective, says Professor Bak. Equilibrium equals death. Things do not rock along smoothly, change in small increments. Change is catastrophic. We must learn to adapt because we cannot predict.
http://www.paulagordon.com/shows/bak/

Watch New Trading Film: Broke The New American Dream



About Michael Covel | Press

amazon.com

Complete TurtleTrader
Order now!

The Complete Turtle story. Legend, lessons & results.

amazon.com

Trend Following
Order now!

Now available: the new 2009 edition. Order online today.

Get started

If you would like to find articles by category simply choose from the list below.

Watch Videos From Michael Covel

View More

  • Intro to Michael Covel's documentary film "Broke: The New American Dream".

  • Trailer for Michael Covel's documentary film "Broke: The New American Dream".

  • Greed is good says Michael Covel.

  • Michael Covel talks about 2008 trend following performance.

More Details

TurtleTrader® Systems Trading Courses

Do you want to learn how +100% returns were made in 2008 across all types of markets? Do you want to learn the right buy and sell decisions to make potential millions? Michael Covel has assembled some of the most profitable trend following trading systems available. Here you will find full descriptions of the training, frequently asked questions and pricing options for all investors.

Broke: The New American Dream

The new documentary film directed by Michael Covel. Covel traveled 75,000 miles completing over 100 interviews ranging from Nobel Prize winners to single moms. Full cast.

Michael Covel's Books

All versions and translations of both of Michael Covel's books are available for immediate purchase.

About Michael Covel

Michael Covel is an author, director and entrepreneur who founded the internationally known website TurtleTrader® in 1996. Covel's first book was the bestselling "Trend Following" (FT Press, Apr. 04, Nov. 05, Feb. 07 & Feb. 09). His second book "The Complete TurtleTrader" (HarperCollins, Oct. 2007 & Feb. 09) is the definitive inside look at legendary trader Richard Dennis and his student traders "The Turtles". In 2009 Covel released "Broke: The New American Dream" a film documentary investigating the 2007-2009 market crisis and crash. Not afraid of a crowd or controversy, Covel is known for engaging and provocative speeches presented to audiences in Tokyo, Paris, Macau (China), Vienna (Austria), Hong Kong, Dallas, Miami and São Paulo (Brazil). He has been quoted and interviewed by likes of The Wall Street Journal, Barrons, New York Post, Globe and Mail and Bloomberg.

Purchase Questions

Call or Email or Facebook for fast response to all pre-purchase questions. Read the reviews of products and check out press coverage. Michael Covel's network can be found on Linkedin too. Covel's training is used by new traders, college students, and experienced traders across 71 countries.

Free Weekly Email Newsletter

Opt-in/Opt-out email update reaching over 15,000 readers.

Connect with Michael Covel on Linkedin, Facebook and Twitter | Email and Phone Contact