Do you remember the 1983 comedy starring Eddy Murphy, Trading Places? The movie inspired Richard Dennis to try to teach novices to trade in just a few weeks. His trainees were known as the Turtle Traders…and one of them is still trading today using the same trend-following methods he learned years ago.
Author, filmmaker, and cofounder of TrendFollowing.com, Michael Covel makes the case for how trend-following trading removes emotion from the trading process and why it performs well even when markets drop — especially equity index markets.
Michael’s books and teaching materials have established him as an authority on trend following. He describes trend-following trading as Daniel Kahneman’s book, Thinking, Fast and Slow, applied to trading. “It’s all Kahneman’s work that he got from behavioral finance, behavioral economics, prospect theory, getting the Nobel for that work. Trend following is that in action as a trading strategy.”
In today’s episode you’ll learn:
- About trend-following trading
- How Michael first became interested in this decades-old style of trading
- About the Turtle Traders
- How trend following removes emotion from the investing process
- How trend following enables traders to trade on nothing more than ticker-tape information, even in foreign markets
- That there are, indeed, non-insiders who made money, legitimately, in October of 2008
- Why trend-following strategies work well, even when markets drop
- Why Michael has chosen to live in Asia
Listen to this episode on iTunes
What was your biggest insight from this week’s episode? Let Jay know in the comments or on Twitter: @jaykimmer.
LINKS FROM TODAY’S EPISODE
- Read the full transcript from Michael’s interview
- TrendFollowing.com
- Find Michael on Twitter
- Find Michael’s books at Amazon
- Trend Following Trading Podcast
- Michael’s documentary Broke: The New American Dream
DETAILED SHOW NOTES
- [0:00:44] Jay’s introduction of Michael Covel
- [0:01:29] Mike’s introduction to trend following and how he became a believer in the method
- [0:04:31] Where the movie Trading Spaces and Turtle Traders fits with trend following
- [0:09:30] Jay and Mike discuss the impact of emotions on trader’s decisions
- [0:13:07] Jay and Mike on today’s bull market and why a trend-following trader won’t try to predict its end
- [0:14:52] Should you really care where your money comes from?
- [0:17:24] Why trend-following principles work in foreign markets
- [0:20:50] How and why Mike chooses to live in Asia
- [0:23:01] The trend-following perspective bleeding over into real life
- [0:29:45] Michael share some background on the documentary film he created in the midst of the Great Recession
- [0:33:29] Where to learn more about Mike’s podcast and the courses he offers
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