Friday, October 19, 2012

Michael Covel: A Smart Turtle Trader


"Frankly, I don't see markets; I see risks, rewards, and money." - Larry Hite

Michael Covel is the head of Trend Following, which is an institution that boasts students in more than 70 countries. He’s written very popular books, including The Little Book of trading, Trend Commandments, The Complete Turtle Trader, etc. Those books were translated into many tongues. His also made a film whose title is, Broke: The American Dream. He’s known in most parts of the world, where he’s done live presentations.

For Michael, trading isn’t the only calling; teaching also is a calling. His institution has been teaching trend followers since 1996. Michael Covel has vigorously espoused trend following; a great trading and investment strategy. This strategy allows speculators to make money from bear and bull markets. It’s been proven that the art of following the trend is a permanently successful trading method. For more information on how you can benefit from Michael’s trading ideas, you can visit his websites at:, and

There are many useful trading hints and techniques we can learn from Michael. Below are some points.

A. It’s possible to imitate top traders, provided we’re disciplined enough to do so. This isn’t hypothetical. Top traders have common attributes that are timeless. If you can study their trading styles and apply them, you’ll soon become a real trading expert.

B. There are losers and winners in the markets. There are losers who refuse to go out of the market that’s moving against them. There are winners who know when to buy and when to sell. They also know how to deal with negative positions. Herd mentality isn’t always a good thing. Trading alongside the trend remains one of the smartest thing you can do in the market. For example, going long when the markets are predominantly bearish can be suicidal. With that kind of market situation, one will just need to go short. Hundreds of billions of dollars have been made by following the flow of the markets.

C. Personally, I don’t believe in the Efficient Markets Hypothesis. Merlin Rohtfield doesn’t believe that the theory is correct. Numerous permanently victorious market wizards across the globe have proven that theory wrong. Ultimately, Michael Covel also thinks that theory is against any beneficial trading knowledge. Efficient market dogma has been proven wrong by impressive track records.

D. Great traders are made, not born. You need no unique gene, or heavenly miracle or inborn ability or special secret or PhD to become a consistently winning trader. Your wishes and opinions aren’t known or respected by the financial markets. These markets can’t be wrong, but you can be wrong. You don’t need to wait for a position that’s moving against you to come back to your entry price. You can manage your risk and minimize your losses in the markets. That’s the only thing you can control.

E. The buy-and-hold strategy is no longer useful. It’s useful only if you’re immortal or you’re a magician who can turn back the hands of the clock.

Going against the trend is very dangerous, no matter what those who think otherwise may say. Many traders feel that an overextended bearish market could be ready to rally and do so protractedly. But the reality is that it might still fall by 600, 800, 1000, 1300 points before it even goes up. One of the major reason traders buy renowned and world-famous stocks is that analysts talk about them and investors are often aware of them. If the overextended market continues in the direction that people don’t expect, then investors get whacked. As a result of this, everybody would be looking forward to strangling the prime economic forecaster, as investors holding other instruments are apprehensive. Invariably, you’d see some suave ape who’s shown on the screen or other type of media, often a forecaster whose studies were published in the previous year and adjusted some days prior to the occurrence, safeguarding his studies by reducing the likelihood while announcing that he still prefers the scenario since it remains overextended. Or it might be that the stock displays a temporary halt in its journey and some speculators feel it’s now great to enter contrary to the established trend and realize gains in counter-trend or mean reversion trading. They may not realized, yet they’ve fallen in love with a wrong direction and would go on opening positions against the trend, usually with heavy losses, till they receive a margin call or forfeit their portfolio.

This article is ended by a few quotes from Michael:

1. “Speculation isn’t evil. Think about what drives a market: millions of investors speculating to make money. That’s evil? That’s life! Recent college graduates speculate that a high-paying job will come after graduation. That’s evil.”

2. “Zero sum battles are life. Someone has to lose for you to win. Forget trying to be loved. Need a friend? Get a dog. If you’re going to win, someone else will lose. Does survival of the fittest make you uneasy? Stay out of the zero sum game.”

Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

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