Trend Following Kitap Alıntıları – Michael W. Covel

Basit düşünen biri şöyle der: Ne aradığımı biliyorum. Etraflıca düşünen biri ise şöyle söyler: Arıyorum fakat onu bulana kadar ne aradığımı bilemeyeceğim. / Edward de Bono

Bilinenden bilinmeyene doğru ilerlemedikçe insanoğlu hiçbir şey öğrenemez. / Claude Bernard

İyi bir trend takipçisi kurallara ve sistemlere sıkı sıkıya bağlı olacak (disiplinli), heyecan hevesiyle (nevrotizm) bir alım-satıma düşünmeden çıkmayacak, uyarım için değil (düşük açıklık) kâr için alım-satım yapacaktır.

Belki de gerçek dünyayla baş etmek zorundasınız ve gerçek dünya hem belirsiz hem de oynak.

Gelecekteki şok, insanlara çok kısa zamanda çok fazla değişim yaşatarak aşıladığımız yıkıcı stres ve yön kaybı olacak. / Alvin Toffler

Hiçbir şeyi riske etmezseniz, daha fazla riske girersiniz. / Erica Jong

Günümüzde dünyadaki sorunların en büyük nedeni, aptal insanların her şeyden fazlasıyla emin olmaları, zeki olanlarınsa çok fazla kuşku duymasıdır. / Bertrand Russell

21. yüzyılın cahilleri okuma yazma bilmeyenler değil, öğrenemeyenler, öğrendiklerini unutanlar ve yeniden öğrenenler olacak./ Alvin Toffler

Başkalarını tanımak bilgilendirir, kendi kendinizi tanımak ise aydınlatır. Başkalarına efendilik etmek güç gerektirir; kendi kendinin efendisi olmak ise kuvvetli olmayı./ Lao Tsu

Trend takipçileri oyunu tanınmak için değil, yalnızca kazanmak için oynarlar.

Göremedikleri çözüm değil. Sorunu göremiyorlar./ G. K. Chesterton

Bir yanılgıdan kurtulmak sizi gerçeği bulmaktan daha fazla akıllandırır./ Ludwig Borne

Buradayız ve şu andayız. Bunun ötesindeki tüm insani bilgiler saçmalıktır./ H.L. Mencken

Başkalarını memnun etmeye çalışmaktan vazgeçip, kendinizi memnun etmeye yoğunlaştığınızda, yavaş yavaş yaşamdaki tutkunuzun ne olduğunu anlamaya başlarsınız. / Ed Seykota

Olacak, olabilir, olmalı duygularını bir tarafa bırakıp ne olduğuna bakar ve sayılara dökerseniz, diğer çoğu insandan daha büyük bir avantaja sahip olabilirsiniz.

İnsanları daha az, fikirleri daha çok merak edin./ Marie Curie

Herhangi bir alanda sivrilen insanlar yakalanması gereken anı, her değişimde fırsatlar bulduğunu anlayanlardır. Onlar ana karşı daha hassastırlar./ Charles Faulkner

Hayatta kalan türler en güçlüler veya en akıllılar değil, değişime en fazla uyum sağlayanlardır./ Charles Darwin

Devletler, kontrollerine aldıkları muhalefet hareketlerini, ayaklanmaları ya da devrimleri, dışında kaldıklarından daha kolay engeller.

Eğitimin pahalı olduğunu düşünüyorsanız, cehaleti deneyin. / Derek Bok

“Başkalarını tanımak bilgilendirir, kendi kendinizi tanımak ise aydınlatır. Başkalarına efendilik etmek güç gerektirir; kendi kendinin efendisi olmak ise kuvvetli olmayı.”

Eğer yaşanmakta olana başkaldırıyorsanız ve gençseniz, yaşadığınız her ne olursa olsun serüvendir.

Eğitimin pahalı olduğunu düşünüyorsanız, cehaleti deneyin.
Derek Bok

Eğitim sayesinde yeni fikir öncüleri ve yaratıcı dahiler değil, müritler, taklitçiler ve alışkanlıklarından vazgeçmeyen insanlar yetiştirilir. Okullar ilerleme ve gelişme yuvaları olmaktan çok geleneklerin ve değişmeyen düşünce tarzlarının korunduğu yerdir.

Bir temel değer analisti bir hisse senedinin ardındaki ekonomiyi doğru bir biçimde değerlendirebilir ama kitlelerin aynı bilgiyi nasıl işleyeceğini tahmin edebileceğini düşünmüyorum.

Servet cesurları tercih eder.

Büyük ödüller istiyorsanız, büyük riskler alın.

Yanlış sorular soran insanlarla karşılaşırsanız, yanıtlar konusunda kaygılanmanız gerekmez.
Hunter.S.Thompson

Eğitim almış olmak başka, eğitimli olmak başka birşeydir.
Lee Kuan Yew

Bilinenden bilinmeyene doğru ilerlemedikçe insanoğlu hiçbir şey öğrenemez.

Şans çok çalışmanın ödülüdür. Ne kadar çok çalışırsanız, o kadar şanslı olursunuz.

Tekrar tekrar ne yapıyorsak öyleyizdir. O halde mükemmellik bir davranış değil, alışkanlıktır.

Yaşam kişinin cesaretiyle orantılı olarak daralır ya da genişler..

Tekrar tekrar ne yapıyorsak öyleyizdir. O halde mükemmellik bir davranış değil, alışkanlıktır.

Günümüzde dünyadaki sorunların en büyük nedeni, aptal insanların her şeyden fazlasıyla emin olmaları, zeki olanlarınsa çok fazla kuşku duymasıdır.

21. Yüzyılın cahilleri okuma yazma bilmeyenler değil, öğrenemeyenler, öğrendiklerini unutanlar ve yeniden öğrenenler olacak.

Başkalarını tanımak bilgilendirir, kendi kendinizi tanımak ise aydınlatır. Başkalarına efendilik etmek güç gerektirir; kendi kendinin efendisi olmaksa kuvvetli olmayı.

The vertical thinker says, “I know what I am looking for.” The lateral thinker says, “I am looking but I won’t know what I am looking for until I have found it.”

Luck is a dividend of sweat. The more you sweat, the luckier you get.

• It doesn’t matter what you think, it’s what the market does that matters.
• What matters can be measured, so keep refining your measurements.
• You don’t need to know when something will happen to know that it will.
• Successful trading is a probabilistic business, so plan accordingly.
• There is an edge to be gained in every aspect of your trading system.
• Everyone is fallible, even you, so your system must take this into account.
• Trading means losing as well as winning, something you must learn to live with.

• Trend followers are right for the trend and wrong at each end. • Seykota: “A system should support and reflect the attitude of a trader.”
• Seykota: “There is no best system any more than there is a best car. There might however be a best car for you.”
• Seykota: “If you can’t afford to lose, you can’t afford to trade.”
• Money is only a means of keeping score.
• Taking losses should be easy. You should have them quantified before ever entering the market.
• Trust your trade. If you can’t trust it, don’t trade.
• The exact turning point, the top or bottom, can’t be known until it is over and a matter of record.
• After you take your signals and enter, trading becomes a waiting game.
• The more volatile the market, the less you risk. The less volatile the market, the more you risk.

We approach markets backwards. The first thing we ask is not what can we make, but how much can we lose. We play a defensive game.

The time to think most clearly about why and when to exit is before getting in. In any trading system, the most important thing is to preserve your capital. A sell strategy gives the opportunity to not only preserve capital, but to also redeploy into more opportune markets. When do trend traders actually get out of a losing position? Fast! This is a fundamental element of trend following.

Bottom line, because trend followers never know which trend will be their big winner, they accumulate small losses trying to find it. It’s like sticking the toothpick in the cake to find out if it’s done. They are testing the market to find out if the little trend will grow into a big trend.

I learned you are not trading a commodity, you are buying and selling risk. As a technical trader, that’s the only way to look at it.

Ed Seykota lays out a basic risk definition from a trading perspective: “Risk is the possibility of loss.” That is, if we own some stock, and there is a possibility of a price decline, we are at risk. The stock is not the risk, nor is the loss the risk. The possibility of loss is the risk.

Volatility, risk, and profit are closely related. Traders pay close attention to volatility because price changes affect their profits and losses. Periods of high volatility are highly risky to traders. Such periods, however, can also present them with opportunities for great profits.

Trend followers don’t worry about what the markets are going to do tomorrow. They don’t concern themselves with forecasts, fundamental factors, or technological breakthroughs. They can’t undo the past and can’t predict the future.

But there is hope. If you study risk, you will find there are two kinds: blind risk and calculated risk. The first one, blind risk, is suspect. Blind risk is the calling card of laziness, the irrational hope, something for nothing, the cold twist of fate. Blind risk is the pointless gamble, the emotional decision, and the sucker play. The man who embraces blind risk demonstrates all the wisdom and intelligence of a drunk stepping into traffic. However, calculated risk builds fortunes, nations, and empires.

Calculated risk and bold vision go hand in hand. To use your mind, to see the possibilities, to work things out logically, and then to move forward in strength and confidence is what places man above the animals. Calculated risk lies at the heart of every great achievement and achiever since the dawn of time. Trend followers thrive on calculated risk.

Playing it safe is dangerous. Far more often than you would realize, the real risk in life turns out to be the refusal to take a risk.

Trend followers understand that life is a balance of risk and reward. If you want the big rewards, take the big risks. If you want average rewards and an average life, take average risks.

If you don’t risk anything, you risk even more.

• Wall Street works hard to make what they do, which is nothing more than buying and holding, appear complex and sophisticated.
• Why would you be a buy-and-holder when the best in the business don’t do it that way?
• Stop your search for “value.” Even if you locate value, that alone does not ensure your ability to make money in the market.
• The buy-and-hold dream as a retirement solution is toast.
• Stock tips don’t work. They are incomplete. They indicate only the buy side of the equation. When do you sell?

If you want a guarantee, buy a toaster.

Defining risk in terms of number is critical. If you can’t think in terms of numbers, don’t play the game.

I have no special talents. I am only passionately curious.

If you can’t measure it, you probably can’t manage it… Things you measure tend to improve.

From error to error, one discovers the entire truth.

• Seykota: “Gigerenzer’s ‘fast and frugal heuristics’ is another name for ‘rules of thumb.’ One pretty good one is: Trade with the Trend.”
• Do not equate simplicity with unsophisticated thinking.
• As science looks closer, it is beginning to acknowledge that intuition is not a gift, but a skill. Like any skill, it is something you can learn.
• Occam’s razor: If you have two equal solutions to a problem, pick the simplest.
• Fearless decision makers have a plan and execute it. They don’t look back. Along the way if something changes, their plan has flexibility built into it so they can adjust.
• Murray N. Rothbard, of Mises.org, states: “…if a formerly good entrepreneur should suddenly make a bad mistake, he will suffer losses proportionately; if a formerly poor entrepreneur makes a good forecast, he will make proportionate gains. The market is no respecter of past laurels, however large. Capital does not ‘beget’ profit. Only wise entrepreneurial decisions do that.”
• Mark Cuban: “With every effort, I learned a lot. With every mistake and failure, not only mine, but of those around me, I learned what not to do. I also got to study the success of those I did business with as well. I had more than a healthy dose of fear, and an unlimited amount of hope, and more importantly, no limit on time and effort…The point of all this is that it doesn’t matter how many times you fail. It doesn’t matter how many times you almost get it right. No one is going to know or care about your failures, and neither should you. All you have to do is learn from them and those around you because… All that matters in business is that you get it right once. Then everyone can tell you how lucky you are.”

Everything should be made as simple as possible, but not simpler.

Charles Faulkner quotes Ed Seykota as saying, “I’ve made phenomenal amounts of money for very simple decisions but I was willing to make them. Somebody had to.” Faulkner then comments, “Others are looking for highly complex ways of interacting with the markets, when most of the time it’s only the simple ones that are going to work.”

Heart, guts, attitude, and the ability to tolerate uncertainty are core to long-term winning.

To be uncertain is to be uncomfortable, but to be certain is to be
ridiculous.

Nature operates in the shortest way possible.

While fundamental analysis may help you understand how things work, it does not tell you when, or how much. Also, by the time a fundamental case presents, the move may already be over.

People who make decisions for a living are coming to realize that in complex or chaotic situations—a battlefield, a trading floor, or today’s brutally competitive business environment— intuition usually beats rational analysis. And as science looks closer, it is coming to see that intuition is not a gift but a skill.

• Don’t sacrifice your position for fluctuations.
• Don’t expect the market to end in a blaze of glory. Look out for warnings.
• Don’t expect the tape to be a lecturer. It’s enough to see that something is wrong.
• Never try to sell at the top. It isn’t wise. Sell after a reaction if there is no rally.
• Don’t imagine that a market that has once sold at 150 must be cheap at 130.
• Don’t buck the market trend.
• Don’t look for the breaks. Look out for warnings.
• Don’t try to make an average from a losing game.
• Never keep goods that show a loss, and sell those that show a profit. Get out with the least loss, and sit tight for greater profits.

If you’re going to chase success, the basic principles, the basic psychological requirements are the same, no matter what you do in life. You still have to wake up every day with a deep desire to be successful. You have to be consistently focused every day. You can’t just wake up and say, “Hey, I’m going to give a little bit of effort today and see what happens. If it doesn’t work out for me, I can say I tried and complain to my wife or girlfriend.” You can’t just jump around because the newspaper or some TV analyst says, “Here’s some get rich quick scheme or Holy Grail.”

Having an education is one thing, being educated is another.

“I am reminded of an experience that Seykota shared with a group. He said that when he looks at a market, that everyone else thinks has exhausted its uptrend, that is often when he likes to get in. When I asked him how he made this determination, he said he just put the chart on the other side of the room and if it looked like it was going up, then he would buy it… Of course this trade was seen through the eyes of someone with deep insight into the market behavior.”

• Lack of discipline: It takes an accumulation of knowledge and sharp focus to trade successfully. Many would rather listen to the advice of others than take the time to learn for themselves. People are lazy when it comes to the education needed for trading. Think about Bernard Madoff. People just wanted to believe.
• Impatience: People have an insatiable need for action. It might be the adrenaline rush they’re after—their “gambler’s high.” Trading is about patience and objective decision making, not action addiction.
• No objectivity: We are unable to disengage emotionally from the market. We “marry” our positions.
• Greed: Traders try to pick tops or bottoms in the hope they’ll be able to “time” their trades to maximize profits. A desire for quick profits blinds traders to the real hard work needed to win.
• Refusal to accept truth: Traders do not want to believe the only truth is price action. As a result, they follow other variables setting the stage for inevitable losses.
• Impulsive behavior: Traders often jump into a market based on a story in the morning paper. Markets discount news by the time it is publicized. Thinking that if you act quickly, somehow you will beat everybody else in the great day-trading race is a grand recipe for failure.
• Inability to stay in the present: To be a successful trader, you can’t spend your time thinking about how you’re going to spend your profits. Trading because you have to have money is not a wise state of mind.
• Avoid false parallels: Just because the market behaved one way in 1995 does not mean a similar pattern today will give the same result.

Not surprisingly, any discussion of why investors are their own worst enemies must start with the concept of a sunk cost. A sunk cost is simply a cost that has already been incurred that you can’t recoup. Thinking in terms of sunk costs lets you see a loss for what it actually is—a loss.

However, trend followers know if you don’t cut your losses short, that if you don’t exit with a small loss, there’s a good chance losses will get much larger. The more you struggle with your small loss, the larger it might become and the harder it will be to deal with it later. The problem with accepting a loss is that it forces us to admit we were wrong. Human beings don’t like to be wrong.

He also determined that people dislike losses so much that they make irrational decisions in vain attempts to avoid them. This helps explain why some investors sell their winning stocks too early, but hold on to losers for too long. It is human nature to take the profit from a winner quickly on the assumption that it won’t last for long, but stick with a loser in the futile hope it will bounce back.

Knowing others is wisdom;
Knowing the self is enlightenment.
Mastering others requires force;
Mastering self needs strength.

It is far better to grasp the universe as it really is than to persist in delusion, however satisfying and reassuring.

History does not repeat itself; people just keep forgetting it. No matter how many stock market bubbles there have been, or will be, investors and their advisors always treat the current one as permanent, sometimes even calling it a “new era.’” In the meantime, others, myself included, have abandoned all hope of people permanently remembering the lessons of history.

• John W. Henry: “Life is too dynamic to remain static.”
• If you have realistic confidence in your method and yourself, then temporary setbacks don’t matter. Going for the home run can allow you to come out ahead in the long run.
• Thinking in terms of odds is a common denominator of baseball and trend following.