Skip to content Skip to main navigation Skip to first column Skip to second column Contact Us: Andrew TrendFollowingMentor. Home Page. My Story I first started trend following 18 years ago. I wanted to know who was succeeding and what they were doing. My broker told me the most successful client of his company was a dentist. He was not a Harvard graduate nor a partner in Morgan Stanley. Yes, he was a dentist! He let that money compound over time. The dentist was the exception. That is: do stocks have superior trends versus the other markets?
So they have great trends, but the currencies and the bonds and the commodities, leverage-adjusted, risk-adjusted, are just as good. So there is nothing to be lost from trading more markets, trading these particular markets, trading shorts. It is obviously this free lunch, and we need to take advantage of it. Meb: I was gonna type up an article the other day, because I love the esoteric markets. Not surprisingly, it saves your hide in these bubbles because you ride them up and then get out at some point. I was pinning the article at the time because Bitcoin was going straight through the roof at the time.
This has all the classic attributes of a bubble. Just use the long-term moving average. It got you out.
Then I was gonna update it the other day because Bitcoin has now entered this long uptrend again and had a great year last year. I know our friends at Long Board were on an earlier podcast. They were talking about trading. Man, what was it?
Carbon credits or something? Is it onions? Maybe it is for some people, but I definitely think that what separates successful from unsuccessful is not getting out of your winning trades too quickly. It may not be robust or legit. I can at least say I have a rule. So the whole human nature of not giving back profits is destructive. Trying to manage any one particular trade is not what we do. So it is the plague of all humans to want to book that profit and figure out a way to do it, legitimately, but the only legitimate way is to just follow the robust system and follow those rules and hang in there and be bold.
Be bold with your profits. Be cowardly with your losses. But we have a tendency to do the opposite. Meb: I think you had a philosopher quote on your website, from like the s, s, 17th century or something. Meb: Along those same lines. Meb: Yeah. We talk about… When we talk about trend following too, we tell people. But most individuals and institutions have about a two to three-year time frame, looking at performance, which is exactly the wrong time frame.
Have you seen that, kind of as a money manager for both individuals and institutions?
Do you try to spend a lot of time educating them on not being their own worst enemy? And have you seen that sort of consistently bad behavior and timing? Jerry: Oh, no. But I just wonder sometimes. Is it even possible to have optimal trading be a business? They have bad ideas. They lead you astray. They want you to create a system that does bad things. It takes small profits. So no. So they all do the same thing. But behaviorally, none of it existed during a bear market.
We may never have a bear market again. So one way is that people obviously do lock-ups, but lock-ups is kind of tough because… Or give a fee discount if people either are long-term clients or if they lock up.
If we have a big run, you need to redeem out. So many people… It just drives me nuts every time I hear it. So you mentioned some of his books. What other sort of research and books have been sort of an inspiration to you over the years? Or do you have any favorites, in general, that listeners may like?
I think that reading interviews and biographies of famous people and traders and getting to the core of what drives them and thinking on it, putting it away, coming back to it months or a year later, and to see how you can have it jive with what you know to be true and how you want to do things in the future. Zweig was just so humble and smart. But I do think that there is a difference, material difference, between technical analysis and trend following. Trend following is a systematic approach.
I was the last person to know. All I had to do was just follow my system. But how do I get rid of the whipsaws?
Let me know how to do it. Then they also had, at the time, offered the ability to write a paper. So they then announced they were getting rid of the paper requirement.
So I, on like December 29th… This is 10 years ago now. I turned in an abstract on just… It was basically, literally, just like trend following on markets, because I had no idea what I was gonna write about. So I ended up writing my first white paper. So I got to update it.
But the funny takeaway was, the first time I wrote it, the title was… Man. I posted a few from people that wrote…famous traders that will remain nameless on the blog. Then it became the most-read paper, I think, on the entire database. So what would you recommend to a young trader or an investor that wants to get involved in trend following?
What would be your suggestions there on either resources or just, in general, thoughts? Jerry: I would say do what I did and win the lottery and get a great mentor. I just think people like Richard Dennis and Bill Eckhart are rare, people who have this sort of skepticism about everything. Life is hard. Trading is hard. Learn next to a master, over time. Read and start crafting and creating your own philosophy of how things work. I think having that sort of attitude, especially as it relates to managing and trading money, is a good attitude to have.
So fair for warning what you ask for. Do something of value.
The best way you can do it is to show up and be of value. Or anything that I could do?
Commodity Trading Money Management (Trend Following Mentor) - Kindle edition by Andrew Abraham. Download it once and read it on your Kindle device, . He invested in a robust trend following concept $, dollars in Druz, Tactical Investment Management Corporation, Commodity Trading Advisor.