Trend Following: How to Make a Fortune in Bull, Bear and Black Swan Markets is a valuable and insightful book written by Michael W. Covel. This book explores the principles and benefits of trend following strategy, which is a practice of buying and selling securities based on the momentum of price trends.
Covel explores the workings of trend following, starting with the basic premise that price is a direct indicator of market sentiment. The book doesn’t merely focus on theories, but rather gives real-life examples and explores how top trend followers have made fortunes using this approach. Covel highlights several legendary trend followers, such as Richard Donchian, Bill Dunn, and the Turtles, to demonstrate the effectiveness of this strategy in different market environments.
“Trend Following” doesn’t propose a quick-rich scheme but rather outlines a disciplined and systematic approach to trading that disregards traditional predictions or market timing. It emphasizes the importance of flexibility in changing market conditions, the value of good risk management, and the ability to take a loss without emotional distress.
This book provides valuable insights to both beginners and experienced traders. It is an excellent resource for anyone interested in learning about trend following, offering critical lessons, principles, and practical applications of the strategy. It emphasizes the importance of making data-based decisions, the ability to embrace uncertainty, and the wisdom of following market trends rather than trying to predict them. With these lessons, Covel prepares traders for the dynamic world of trading, ensuring they are well equipped to make informed decisions.
