Jul 24, 2015
Today’s podcast guest is Chris
Clarke, ex-Goldman Sachs executive director and founder of Lawrence
Clarke Investment Management. Clarke has been developing trading
systems for decades.
The conversation today gets into the
psychology of systems trading. Trend following is inherently simple
to understand, and does not require above-average intelligence once
the system is in place. Yet so many people, including most fund
managers, tend to downplay trend following and keep seeking the
“holy grail” – a magical system that will supposedly make them
money without any downside. An interesting metaphor for this that
Chris offers is that of weight loss. Although the theory of it is
simple (diet and exercise), most people keep seeking the magic
bullet that will make them achieve results without following the
system. Much the same with trading.
Another topic that Michael Covel and
Chris Clarke talk about is understanding the difference between
risk and drawdowns. Drawdowns are normal, and will be there for as
long as trend following as a strategy exists, and the markets keep
trending. Ultimately, trend following is about human nature, and
that’s not about to change.
In this episode of Trend Following
Trusting the system once you choose
Being prepared to trade no matter
which way the markets go
The importance of edge, and why most
Looking at the math behind trading
Drawdowns vs. risks
Want a FREE trend following DVD? Get it here.