Trend Following By Michael W. Covel
Covel has made it his mission to increase the exposure of trend following as a trading methodology and I have to declare my bias in that I am a trend trader and as such applaud his mission. Trend following is basically the idea that when a trend is established all the astute trader needs to do is hope on the bus for superior returns. It is considered a low risk and potentially very high reward trading methodology.
Of course the trick is defining the trend with moving averages generally considered to be the easiest route.
The book is very much in the tradition of Jack Schwager's Market Wizards. Like Schwager, Covel interviewed a number of great traders and attempted to capture the essence of each trader's approach to trading and as with Market Wizards he succeeds hugely.
It is a very readable and engaging book and Covel really lays out the process of trend following adding lots of examples and backing up his claims with well documented research.
So what are the draw backs of this book? Well in truth the marketing department that added the following comment on the front cover "Covel walks you through the process,one step at a time, in plain English.”. This statement is not correct in that the expectation created is that he’ll present an end-to-end trend following trading systems - and he doesn’t.
That said this does not detract from the book if you bought it for the right reasons - that being wanting to learn about the idea’s, concepts and methodologies that feed into trend following. If you’re buying the book to be handed a trading system on a plate – this is the wrong book for you. This book aims (and to my mind succeeds) in presenting and proving the case for trend following and presenting some basic tools - then leaving the system design up to the individual.
