Ep. 1319: Richard Weissman Interview with Michael Covel on Trend Following Radio

·41 min·4 clips

Cocoa's explosive 2024 trend, which few foresaw, became a massive profit driver for trend followers.

Michael Covel hosts Richard Weissman, a repeat guest and author of 'Trade Like a Casino', on his podcast. Weissman introduces the casino paradigm as a model for trading, emphasizing three core elements: developing a positive expectancy method, adhering to robust risk management, and maintaining the discipline to follow the system. He argues that while math suggests only the first two are needed, human psychology requires the third. The discussion delves into trend following as a proven edge, with examples like cocoa's 2024 price surge and sugar's 2023 trend, which Weissman's fund capitalized on. They explore diversification in trend following, contrasting it with buy-and-hold strategies and noting how trading many uncorrelated markets smooths returns. Weissman shares his experience consulting for commercial trading houses like ADM and Cargill, where traders sometimes use technical analysis as psychological comfort rather than predictive tools. He recounts starting his CTA, Tape Reader LLC, after a mentee proposed handling operational headaches, leading to a fund that has performed well, with 2024 returns around 30% largely due to cocoa. The conversation touches on biases against trend following, such as investors focusing on drawdowns or dismissing models after removing outlier wins. Covel and Weissman reflect on the psychology of traders attracted to absolute return strategies and the underappreciation of trend following despite its long-term success, citing firms like Dunn Capital with a 50-year track record. They conclude with practical advice for listeners and Weissman's contact information.

As heard by us

A disciplined market discussion that keeps risk limits and stops ahead of seductive trading stories.

Richard Weissman's conversation with Michael frames trading first as a problem of risk, not as a hunt for perfect entries and exits. Introduced as an author and trader, Weissman links Trade Like a Casino, Find Your Edge, Manage Risk, and Win Like the House to a simple…

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Why you'd press play

You want to know whether your trading edge survives when the market stops behaving politely.

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