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The Little Book of Trading: Trend Following Strategy for Big Winnings by Michael W. Covel

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Chapter Nine

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You Can't Know Everything

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Eric Crittenden and Cole Wilcox

THE ESSENCE OF AGNOSTICISM IS NOT KNOWING ONE WAY or the other, and not attempting to put a firm belief onto what you do not know. These days I am so used to the concept of making money in up markets and down markets, regardless of the market, that I sometimes forget how foreign that concept is for the average trader or investor. It's like a rollercoaster, up and down, up and down, up, up, down, down—with no predictable pattern as to when up will happen or down will happen. The idea is to wait and let the market move in a direction–either way–and then follow it. Eric Crittenden and Cole Wilcox exemplify this critical principle in their trend following trading.

Over the years, many hedge funds, commodity trading advisors, proprietary traders, and global macro funds have successfully applied trend following methods to profitably trade in global futures markets. Very little research, however, has been published regarding trend following strategies as applied to individual stocks (even though 100 years ago trend following started on stocks). Oh sure, many trade stock indexes that have been around for decades, but there has been less focus on trend trading individual stocks.

Crittenden and Wilcox noticed there were ...

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