The first edition of Trend Following hit the streets in April 2004. Almost immediately, the book made a splash landing in the top 500 of all books available at Amazon.com. Soon the success of the book brought me in contact with an assortment of even more Wall Street pros. Late that same summer, Richard Cripps, the Chief Market Strategist at Legg Mason, wrote a review of Trend Following. Following his review, he invited me to their Baltimore headquarters for lunch with his colleague, Timothy McCann. We had a great conversation regarding my book and the Legg Mason Equity Compass, a systematic trading model for stocks. After our conversation, Richard escorted me up a flight of stairs to a non-descript door. I had no idea where I was headed. Upon entering the room, I was surprised to find it filled with what I could only guess were young investment banking associates listening to a speaker who stood before them at a podium. Michael Mauboussin, Legg Mason's Chief Investment Strategist, smiled and motioned for me to sit down. I quickly recognized that the speaker was Bill Miller, the renowned fund manager of the $20 billion dollar Legg Mason Value Trust. Bill Miller has beaten the S&P 500 Index for 14 straight years. Miller continued to speak for a few more minutes, and then introduced me to the audience and invited me to the podium. Until that moment, I had no idea I would be asked to speak. For the next hour, Miller, from one side of the room, and Mauboussin, from the other side, alternately peppered me with questions about trend following, risk management, and technical analysis. As I continued to field questions, I realized that the audience was primarily fundamentally trained, but very curious and open to hearing about new ideas and concepts.

After the presentation, I thanked Miller for the opportunity to make my case. I asked him how he found out about my book. He said: 'I read a lot. I surf Amazon.com for all types of books. I came across yours, bought it, liked it, and told all my people at Legg Mason that they should read it.' At that moment, I knew Trend Following was catching on in a big way. Forget sales - I knew that if the book's message had struck a chord with Bill Miller, I was on to something.

(However) as every author knows, especially first-time unknown authors writing about relatively obscure subjects such as trend following trading, you spend a significant amount of your time on the road promoting your book. Since I fit the definition of 'first-time unknown author' to a tee, that's exactly what I did, with no idea whether Trend Following would sell ten or ten thousand copies. To my delight, the book has sold tens of thousands of copies and is being translated into a surprising number of languages. But as a result of the book's success, I soon found myself point man for confusion about the strategy and performance of trend following style traders. With each forecast of doom, usually in the form of book review, column, and/or interview, I tried to 'set the record straight.'

I'd usually start by addressing the assumption that generates much of the confusion in the first place - the efficient market hypothesis. The hypothesis essentially says that you can't find an edge to beat the market, and simply sticking with a benchmark or index is the best path to take for profit. Proponents of the efficient market hypothesis argue that because markets are efficient and prices fully reflect all information, traders who consistently outperform the market do so out of luck, not skill. Of course, in the real world, markets are both efficient and inefficient, some more than others. In the real world, there are traders who do beat the market by a wide margin, and many of them are trend followers. But great trend trading does not translate into only up years. 2004 and 2005 have showed both the typical trend following drawdown and the typical trend following recovery. What accounts for the patience, discipline, and commitment to long-term success as a trend follower? It may ultimately be about making a profit, but it is also an understanding and keen appreciation for the scientific method. Just as scientists start with a hypothesis, trend followers start with a certain view of the world. Their divergent view sees the world in trends. Facing the reality of any and all market environments head on is the philosophical foundation of trend following.

Note: Above excerpt from November 2005 Trend Following: How Great Traders Make Millions in Up or Down Markets, New Expanded Edition.

Michael W. Covel is the founder and President of Trend Following. A researcher of the most successful Trend Following investment managers, he has been in the alternative investments industry consulting on Trend Following to individual traders, hedge funds and banks for ten years. His best selling book, Trend Following: How Great Traders Make Millions in Up or Down Markets, New Expanded Edition (Prentice Hall, November 2005) is a complete and concise guide to trend following. It includes interviews with great trend followers who have won millions if not billions in the market. The trading world has embraced the book with endorsements from Van K. Tharp, John Mauldin, Ed Seykota and many more. Trend Following is now in its fifth printing, and is currently available in a Japanese translation with Chinese, German, French, Korean and Russian translations soon to follow. Teaching and sharing unique insights about Trend Following trading and alternative investments has earned Mr. Covel respect as a rational and logical voice in uncertain times. Mr. Covel also writes for numerous industry publications including Your Trading Edge, Stocks, Futures and Options Magazine and International Petroleum Finance and is consistently quoted and interviewed by a variety of financial publications.

Mr. Covel is also Managing Editor at TurtleTrader.com, the leading Trend Following news and commentary resource since 1996. Thousands of visitors from more than 70 countries as well as hundreds of trading professionals engaged in years of debate and interchange making the site the rich archive of trading information, data and opinion that it continues to be today. TurtleTrader, one of the largest & strongest trading community on the web with over 7.5 million unique visitors since its inception, also functions as a resource center for the Trend Following Educational Course.