This article reviews the book Trend Following: How Great Traders Make Millions in Up or Down Markets.
By: Michael W. Covel
This book is often regarded as one of the best books ever written by traders focused on technical analysis. At The Stock Trader Blog, we believe that an understanding of both technical and fundamental analysis is paramount for consistent success in the financial markets.
Covel, the author of Trend Following, has a very binary viewpoint of financial markets. In the beginning of the book, the author essentially makes the argument that numbers on financial statements can be made up by anyone. Therefore, technical analysis is the only fool-proof method. We think the reader is better off with not weighing the introduction too much.
Psychology in Trend Following: How Great Traders Make Millions
To start off, this book does a phenomenal job of getting the reader into the mindset of a successful trader. Many of the techniques and metrics discussed in this book have real-world application. Trend Following: How Great Traders Make Millions in Up or Down Markets provides a wide range of examples of successful trend following by money managers in the professional traders in the past. Undoubtedly, there have been great fortunes made by adhering to trend following principles.
Technical analysis, at its core, provides a meaningful way to interpret price movements along with other quantitative data. If you would like to read one of our contributor’s articles on the modern applications of technical analysis, visit Modern Applications of Technical Analysis. If supplemented with an understanding of fundamental analysis, this book offers a great lesson on trading psychology for traders of all ages.
We rate this book a 4.4/5.0. The usefulness of this book largely depends upon the reader’s additional knowledge of financial markets. The reader should understand the principles of fundamental analysis along with general knowledge of how the stock market works.