Rating: - Hard Cold Reality Makes A Stimulating Read
What's great about this book is that it goes straight for jugular of anyone who can't stop themselves from making predictions about the markets. Like those chart reading traders who think they can actually forecast the market direction. Prediction with charts is a losing game. If 100 traders stare at a chart, they come up with 100 different subjective interpretations. This book may actually make them realize that pretending they have unique skill through years of ink blot study is just blowing smoke.

Better yet this book is not based off hypothetical testing or experiments in what may work. It uses real performance data from guys who have traded for decades as trend followers. If you worship technical indicators as "it" don't read this book unless you want a hard cold splash of reality. If you worship technical indicators as some market tonic -- go ahead -- but don't forget the best in the business do nothing of the sort.

One of my favorite parts is the description of the hundreds of millions of dollars trend followers won at the same time Long Term Capital Management was imploding and losing their shirts. Wow, what an example of risk and volatility in stark terms.

But ultimately it is the no holds barred condemnation of fundamental analysis that sticks with me. Trend followers don't waste their time trying to understand forces influencing market participants (fundamental analysis) They care about the market price and what they should do in response to market price movement. Isn't that a goal for all of us? Round of applause for the diligent research and clear writing.

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Rating: - Overrated
I've read close to 100 trading books on various trading methods--fundamentals, technicals, options trading, etc. I trade and I would consider myself a trend follower--of sorts.

The author does make a good point--trend following is a valid and underestimated methodology. It is the method that discretionary traders like Edwards and Magee would advocate.

Trend following is based on events that the market underestimates. Price action does not follow the normal distribution, as the statisticians would have it. Events that are statistically improbable are much more frequent than chance would allow. Trend following technical analysis attempts to catch these moves.

The author underestimates the drawbacks of a strict trend-following methodology--large draw-downs, with a large percentage of losing trades. This drawback--low reliability is also a strength--most market participants are not interested in profitable system with a large number of losers. A more severe drawback--a large amount of capital is needed to trade such a system to handle the inevitable drawdowns.

He fails to address this issue by simply suggesting that if you take enough trades, eventually one will go your way and make up for your losses. Maybe so. But who would be willing to suffer draw-downs in the range of 30% or more, waiting for one or 2 big trades to come? Not many. Increased market volatility makes trend following systems profitable, but more risky.

If you examine _The Encyclopedia of Trading Strategies_ you will see that most mechanical systems degrade over time. Volatility breakout systems used to be very popular. But with increased volatility, simple breakout systems give more frequent losing trades, rendering them unprofitable for the test period.

The author overestimates the performance of mechanical systems, most of which are trend following. Historical testing tells you what has happened, not what is going to happen. This was the mistake of Long Term Capital Management. Trading, like poker, is a people game played with money. It isn't a number's game (like blackjack) the quants would have you believe it is.

Trading requires you to anticipate changes in investor expectations. Technical AND fundamental analysis helps you understand the forces that are influencing market participants. Understanding fundamentals can help you filter out the frequent false signals from technical models, while technical analysis serves as an excellent risk management and timing tool.

There are many ways of profiting in the market. Trend following is one. It isn't the best one, nor is it the only one. I'd argue traders would be better served focusing on classical technical analysis (chart patterns), and then spending most of their time learning how to manage risk. You can still make money with these "old" concepts, and gain practical experience with the psychology of trading.

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Rating: - Great Read
I've invested thousands of dollars in trading courses over the last 10 years. Ranging in topic
from delta neutral to swing trading and finally spread trading. This book was a tremendous benefit
both to my outlook on trading and just a final understanding of what it takes to be profitable.

The book is a Market Wizards of sorts. It covers major 'trend followers' and provides the background
of these players. Although each trader is not interviewed personally the author covers their backgrounds
and more importantly their successes over the years.

Read this book with an open mind - take a chance and let the material sink in. I hope you will find a
calming sensation and a feeling of ease. I hope you will find your outlook on the financial markets will benefit
from the no non-sense approach to this technique. Mine did.

Great read, put in on the self next to your copy of Market Wizards.

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Rating: - Trend Following Buys High & Sells Low
The biggest mistake people make is thinking they can buy low and sell high. It is just the opposite. A great thought from the book from John W. Henry makes the point:

"How can someone buy high and sell low and be successful for two decades unless the underlying nature of markets is to trend? On the other hand, I've seen year-after-year, brilliant men buying low and selling high for a while successfully and then going broke because they thought they understood why a certain investment instrument had to perform in accordance with their personal logic"

I chuckle at people that continue to think they can buy low. You can't buy low or sell high and be a winner. That is the point Covel drives at. It is John Henry's point. It is a big point of the book Trend Following.

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Rating: - Excelent book title
...It's an excellent book that can be summed up by it's title.

If you are a trader, you can buy the book, but in the end you realize that if you just look at the front cover and trade with the trend you will do fine without reading the rest of the pages. The book contains intellectual discourse that is quite satisfying but add little to help your actual trading. The title is it.

If you are *not* a trader, and want to read an intellectual discussion on how great traders trade in general, then this is a good book to read.