To The Moon

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I just finished this book today as I have been discovering trend following, you may find my previous article on how to trade using trend following strategy.

How To Trade Using Trend Following Strategy

It make me wanted to find out more on how I can better adopt a mindset that can have me manage my risk and reward much better.

This book, Trend Following Mindset will be an excellent read for those who like this trading methodology or not.

This book is not only about how to trade, rather, it is a compilation of the series of interviews between the author Michael W. Covel and Tom Basso (You can find out more about him if you google him).

Highlights of the book

This is what I found to be important take-away of the book after reading

1. Importance of a good mental state for good long-term returns; (I am both a short-term and long-term investors, this really will help me in my long-term side)

2. Debate on when to change or do away an investment models. This is not much mentioned in this book, but it is a good overview

3. Analysis from Tom Basso as he conclude that markets are 62% (Sideways), 29% (Bull) and 9% (Bear). What I feel is that we must align our own expectations and models with how the market behave.

Psychology in Investing/Trading

I do believe that psychology played an important in our investing or trading journey. am not sure how many of you do share the same thoughts.

Money Management have been mentioned to us many times in many investing book or some videos we saw or attended.

I would rank psychology well before Money Management. What I like is another part of non-financial aspect that we need to have to become a successful trader or investor.

That is to look after your health. In keeping our body and mind in good shape, this help us to be sharp and alert, so this will minimize any unnecessary mistakes.

Detailed Insights on Trading (from Mr. Basso’s career research)

This book also cover areas that include algorithmic trading, currency investing, using financial leverage, asset allocation and timing the market.

I found this topic “Timing the market” rather interesting, as Mr. Basso took contrarian view to the general belief that timing based strategies does not work.

He mentioned that he never feel comfortable buying or holding stocks. He say we should consider to have some form of timed investment in our well-diversified portfolio.

I do agreed that we need to have some timed investment in our portfolio, but it would depend how diversified our portfolio has grown into. Maybe I can comment or agree better if my portfolio reach a certain size.

Golden Rules of Investing

Mr. Basso do share his own 10 rules regarding hedge funds. One advice I do look into is his advice for investors to look out for independent calculations of assets.

This mean to consider whether the particular funds historic returns are repeatable, and most importantly is the annual accounts are properly audited.

Something I would like to share is investors should remember that very low probability risks should not be considered synonymous with having “no risk”.

This is important to remember because low risk, high severity events do happen and can cause very huge losses.

Summary

This is what I personally have gathered after reading this book, maybe you would like to find out yourself by reading this book.

Appreciate if you could share your thoughts in the comment section on whether do you think what the author has discovered from interview with Tom Basso on the mindset we should adopt on trend following useful?

Do like, share and comment on this article if you find this trading thought useful.

@TigerStars appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.