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Trading Book Reviews

Book Review: Trend Commandments

[easyazon-link asin=”0132695243″][/easyazon-link]I’ll admit to not being 100% sure how to describe [easyazon-link asin=”0132695243″]Trend Commandments[/easyazon-link] by Michael Covel. I’ll give it my best shot, though.

First of all, I’ll say it’s a pretty fast, easy read. The book is structured in a kind of series of articles or essays fashion. There are lots of them, and each “chapter” is only a couple pages. I read them straight through from front to back, but I see no reason why they couldn’t be read out of order if desired. The page count is about 240 in the print version I have, but it reads much more quickly than that because of its structure.

Like Covel’s earlier book, Trend Following, this is an unabashed endorsement of the trend trading approach. I’ve described that former book as being like a philosophy text which includes the discussion of the subject matter by numerous practitioners. Trend Commandments is also very philosophy oriented, though focuses pretty exclusively on the author’s own views on the subject, views informed by years interacting with the sorts of practitioners featured in the first book.

This is not a practical manual.

That needs to be made very clear. Covel does not describe trend following systems. You won’t find advice on indicators or methods for identifying trends. He does speak on the subjects of risk management, as well as market diversification. In the latter case there is a specific listing of markets that could/should be included in a trend trading strategy. The risk discussion is only really in terms of generalities.

So the bottom line is that if you’re looking for a book that lays out one or more trading systems you’ll want to look elsewhere. This book won’t fulfill that requirement (Covel’s The Complete Turtle is better in that regard, but I’d actually recommend Way of the Turtle as a more practical trend trading manual). If, however, you’d like to understand the mentality which underlies the trend following approach to trading, this is definitely a book worth reading (I’m planning on doing some future blog posts related to ideas brought up in the book). Just be prepared for a very unapologetic criticism of other approaches and mindsets found in the markets and media.

By the way, the “commandments” only really come in at the very end of the book in the form of a long (definitely not just ten) list of quotes from noted traders.

Make sure to check out all my trading book reviews.

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Trading Book Reviews

Book Review: Trend Following

[easyazon-link asin=”013702018X”][/easyazon-link]Earlier this year, Michael Covel and his publisher, the FT Press, released an updated edition of the book [easyazon-link asin=”013702018X”]Trend Following[/easyazon-link]. I read the original book back in 2005 when I was working as Content Editor for Trade2Win and was preparing to interview Covel for an article on the site. For those not aware of it, Covel is also the author of The Complete TurtleTrader, which is a look at the history of the group of traders known as the “Turtles”, who employed a trend following strategy, so it all kind of comes together. This new edition expands the discussion to cover market events of the past couple years and adds one or two additional successful trend following money managers to the discussion.

Trend Following is a study of a trading philosophy. It actually reminds me quite a bit of books about philosophical movements in the way it presents the basic tenants and introduces the reader to a number of high profile practitioners. It explains the mindset of this type of trading, though the specific implementation is left for the reader to work through, just as in philosophy texts.

Some have compared Trend Following to the [easyazon-link asin=”1592802974″]Market Wizards[/easyazon-link] books, given the number of high profile traders and money managers profiled in it, a couple of whom (Richard Dennis and Ed Seykota) were in the original Wizard book too. I personally don’t think the two books are all that similar, however. Covel’s work is not a collection of interviews, though there certainly are plenty of quotes from those he profiled in the book (and many others), and of course his work is narrowly focused on one specific approach. Also, where the people were the main thrust of the Wizards books, they are actually only the supports for the main premise of Trend Following.

This is the type of book that in many ways gets a barbell type of review set. Those readers looking for specific strategies will not find them and will thus be disappointed. Readers seeking to understand what the trend following approach to trading is all about, however, will find the book extremely worthwhile. It does a great job of explaining all the ins and outs of this philosophy, outlining the benefits and addressing the criticisms. The book is full of statistics and visuals to help underscore the points being made, and the discussion is well done on many intellectual levels.

There is no doubt in my mind that anyone reading [easyazon-link asin=”013702018X”]Trend Following[/easyazon-link] with the right mindset (not looking for the holy grail) will come away with more than enough information to help them decide if the trend following approach is the one for them. The lack of specific trading techniques for trend following is of no issue to my mind given how easily one can find those types of strategies, or develop them for themselves.