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There is an old Japanese legend that carries more weight than any Ivy League finance degree. It says that if you find yourself on the wrong train, you should get off at the nearest station.

It sounds like common sense. But in the markets, common sense is the rarest commodity. Most people treat a wrong trade like a marriage. They realize they’ve entered a position that is moving against them. The “story” they bought into isn’t coming true. But instead of getting off, they stay in their seat. They start looking for a reason to stay.

The Cost of the Return Trip

They think, “If I just wait long enough, it will turn around.” Or, “I can’t leave now, I’ve already lost 10%.”
The longer you stay on the wrong train, the more expensive the return trip becomes. This isn’t just about geography. It is about your capital, your time, and your psychological health. In trading, the “return trip” is the profit you need to make just to break even.

If you lose 50%, you don’t need a 50% gain to get back to zero. You need 100%. That is the math of the “Big Boy” trap. It is the belief that you found a secret door to wealth that doesn’t require discipline or the acceptance of loss.

The Discipline of the Exit

Trend followers don’t wait for the conductor to explain why the train is going the wrong way. If the trend breaks, we exit. We take the small loss. We don’t protect our ego. We protect our capital.

Precision is for surgeons. In the markets, precision is a trap. Most people are paralyzed by the fear of being wrong. They want to be perfect before they start. But the legends don’t win because they have a secret map to the truth. They win because they fail more than you do. They simply have the discipline to get off the wrong train before it takes them to a place they can’t afford to be.

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How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

• Trend Following Podcast Guests
• Frequently Asked Questions
• Performance
• Research
• Markets to Trade
• Crisis Times
• Trading Technology
• About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.

Subscribe to Trend Following Radio on iTunes

My guest today is Ross Greene. He is a clinical child psychologist. Greene’s research has been extensively published in academic journals and he and the CPS model have been mentioned in popular media. He advocates against punitive, exclusionary disciplinary practices, including detention, suspension, expulsion, corporal punishment, restraint, and seclusion.

The topic is his book The Kids Who Aren’t Okay: The Urgent Case for Reimagining Support, Belonging, and Hope in Schools.

In this episode of Trend Following Radio we discuss:

• American education system challenges
• Meeting kids where they are
• Meritocracy vs equity
• Behavioral issues and classroom disruption
• Nature vs nurture in learning

Mentions & Resources:

• Ross Greene
• The Kids Who Aren’t Okay: The Urgent Case for Reimagining Support, Belonging, and Hope in Schools
• Lives In The Balance

Listen to this episode:

• Listen to this podcast on iTunes. (Please leave a rating!)
• Listen on Spotify.
• Libysn RSS.
• Download as MP3 by right-clicking here and choosing “save as.”
• Free Video.

Jump in!

Feedback in:

Hi Michael,

Thank you for your email. I’ve been listening to some of your podcasts and I wanted to learn more about your strategy.

What’s your biggest trading challenge right now? What’s keeping you from achieving the consistent profits?

Well I suppose it is having a system, strategy or process that actually shows growth. I have been trading for over 14 years. I have been on trading courses, read trading books, signed up to traders’ programmes, and I have nothing to show for it. My investment pot is smaller now than when I started. I have tried forex, crypto, shares, indices, day trading, long term trading. Everything has failed.

I’m hoping that your Trend Trading strategy can be the one to give me faith that I can be a successful investor. And it needs to happen soon because I’m not in the prime of my life, but it would be nice to see that I can provide for my family a bit more than a pension.

Marce C.

I’m here to help!

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How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

• Trend Following Podcast Guests
• Frequently Asked Questions
• Performance
• Research
• Markets to Trade
• Crisis Times
• Trading Technology
• About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.

Feedback in:

Dear Michael,

“Trend Following” and “The Complete TurtleTrader” shaped how I think about systematic trading — the idea that a clearly defined, mechanistic edge, executed with discipline, can compound into real returns over time. Your podcast, with over 1,300 episodes featuring everyone from Ed Seykota to Jerry Parker, is the most comprehensive oral history of systematic trading that exists. You’ve spent two decades documenting what separates real systematic edges from noise.

I’m [nmae], 16, from McKinney, Texas. I’ve analyzed 16 years of CBOE S&P 500 options data and found that daily changes in IV skew (25-delta put minus ATM call) predict index returns at 1-5 day horizons with a t-stat of -3.87. The Q5-Q1 quintile spread is 14.2 bp/day. The mechanism: dealer gamma hedging of institutional put demand creates temporary directional pressure on the underlying.

The signal I’ve found operates at a much shorter timescale (1-5 days) than the trend-following systems you’ve written about, but the underlying philosophy is identical: identify a persistent market structure that creates predictable price behavior, define rules around it, and execute systematically. The mechanism — dealer hedging forcing directional moves — is structural, not behavioral, which is why I believe it persists. Your books emphasize that the best systematic strategies exploit a counterparty who trades for reasons other than profit (hedgers, index rebalancers). In my signal, the counterparty is options dealers who hedge not because they want to, but because risk management requires it. That’s exactly the kind of forced, non-discretionary flow that creates durable edges.

I’m actively seeking a summer internship at a CTA, systematic trading firm, or quant fund. Through your podcast and your teaching across 76+ countries, you’ve built relationships with hundreds of systematic traders and fund managers worldwide. If you know of any firm that might consider a high school student with completed systematic trading research, I’d be deeply grateful for any introduction or guidance.

Thanks for the nice note, but I have no connection to that time frame. Zero!

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How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

• Trend Following Podcast Guests
• Frequently Asked Questions
• Performance
• Research
• Markets to Trade
• Crisis Times
• Trading Technology
• About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.

The headlines are back to screaming. One morning, it is a trade tariff threat from Trump. By the afternoon, it is a retaliatory strike between Israel and Iran. The market whipsaws 3% in a single session, and the “experts” rush to the microphones. They are desperate to explain exactly why it happened.

Most traders treat the news like a crystal ball. They believe that if they can just understand the geopolitical chessboard, they will find the shortcut to profit. They think that if they can time the next escalation or the next policy shift, they have cracked the code.

That is a losing battle. It is a game played by people who want to be smart rather than profitable.

The Illusion of Control

You cannot “time” a war. You cannot “know” the internal logic of a world leader. When you trade based on fundamentals or the 24 hour news cycle, you aren’t trading the market. You are trading your own ability to predict the unpredictable.

The victims of the news cycle ignore the most fundamental law of the markets. If you don’t know where the yield is coming from, you are the yield.

The desire to “know” is a human impulse that trend following is designed to kill. We don’t care about the macro thesis. We don’t care about the “why” behind a price move. We care about the price itself. Price is the only truth in a world of political noise. It is the aggregate of every fear, every greed, and every geopolitical move. It is all distilled into a single, unarguable number.

Reacting vs. Predicting

Trend following can’t guarantee a profit at any single moment in time. What it can do is provide a smart process to handle total uncertainty. We don’t predict. We react.

When the geopolitical trend breaks, we exit. We don’t wait for an explanation or a peace treaty. We follow the system. We cut the loss. While the rest of the world is busy debating the news, the trend follower is busy following the math. Stop trying to solve the world’s problems. Start following the trend.

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How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

• Trend Following Podcast Guests
• Frequently Asked Questions
• Performance
• Research
• Markets to Trade
• Crisis Times
• Trading Technology
• About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.

Subscribe to Trend Following Radio on iTunes

Please enjoy my monologue Screw Your Brain on Tight with Michael Covel on Trend Following Radio.

Listen to this episode:

• Listen to this podcast on iTunes. (Please leave a rating!)
• Listen on Spotify.
• Libysn RSS.
• Download as MP3 by right-clicking here and choosing “save as.”
• Free Video.

Jump in!

Feedback in:

Hi Michael,

I listened to your podcast recently about value and decided to email you.

I read a few of your books years ago, but recently started thinking about trend following and trading again. I always used to think if you own a quality name like Nike or Oracle you could buy a bunch and never look again until retirement. Maybe even pass them on to your kids and grandkids. Your podcast definitely woke me up to the reality that happens with individual stocks. If we give up and just ‘buy the index’ we get paltry returns. My estimate is that the index tends to about keep up with the M2 money supply. So inflation.

I know you have several books but I don’t know where to start. What are some good ‘how to’ ideas for someone like me?

I know psychology is a big component so I recently purchased and read a few books from Van Tharp. They were very beneficial.

Do you have kickstart course for someone like me?

Best,
Sean

Right here!

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How can you move forward immediately to Trend Following profits? My books and my Flagship Course and Systems are trusted options by clients in 70+ countries.

Also jump in:

• Trend Following Podcast Guests
• Frequently Asked Questions
• Performance
• Research
• Markets to Trade
• Crisis Times
• Trading Technology
• About Us

Trend Following is for beginners, students and pros in all countries. This is not day trading 5-minute bars, prediction or analyzing fundamentals–it’s Trend Following.