5 Top traders reveal their secrets and track records
Trend Following Performance Examples
Have you really examined the historical track
records of some top trend followers? The data on the following spreadsheets was
the foundation of my book Trend
Following. It is still an eye-opener for me to examine “numbers” of top
traders.
Chesapeake Capital
Who or what is Chesapeake Capital?
“Jerry Parker founded Chesapeake Capital
Corporation, a global investment manager headquartered in Richmond, Virginia, in
1988. Chesapeake provides investment and portfolio management services to both
private and institutional investors worldwide. Mr. Parker began his portfolio
management career in 1983 when he was accepted into the
Turtle Program,
a select investment training program developed by a successful Chicago portfolio
manager. When the program ended in 1988, after almost five years of trading
proprietary capital, Mr. Parker decided to continue his professional money
management career by forming Chesapeake. Chesapeake’s specialized investment
approach offers investors the potential to participate in, and profit from,
price trends not typically available through traditional portfolio strategies.
Chesapeake’s investment portfolios are not biased toward long or short positions
and, therefore, can profit in both rising and falling market environments.
Chesapeake actively monitors, and has the potential to invest in, over 90
markets worldwide. These can range from tangible assets, such as coffee, crude
oil and gold to global financial instruments, such as German government bonds,
U.S. stock indices and global currencies.”
Performance spreadsheet download.
Clarke Capital
Michael Clarke runs Clarke Capital Management (CCM):
“Concerning risk control, CCM’s systems
calculate daily the normal risk for all open positions, as well as the normal
risk for any new positions which might be put on. This is calculated as the
difference between the closing price and the closest adverse direction stop.
Stop signals for all models are always taken. With regards to entry signals, I
generally try to take all signals, especially when they occur over a series of
days at ever more “favorable direction” prices, i.e. the previous entries are
already profitable.”
Performance spreadsheet download.
Drury Capital
Bernard Drury, a top trader, took a typical not
so typical route to trading success. An excerpt from Futures magazine:
“So, how does this Russian language major do
it? Not surprisingly, he attributes his success to lots of hard work and a
little good fortune. Just out of Dartmouth College, Drury took a job as a trader
in the grain markets at the Minneapolis Grain Exchange thinking the
international aspect of trading would put his Russian skills to use. Though he
never needed to speak the language, he grew more interested in the trading
industry. His next job took him to Washington, D.C., where he worked as a writer
analyzing the grain markets and how agricultural policies affected them. For
more than eight years, he watched the grain markets and learned to anticipate
certain responses to news and events, a skill that would come in handy later. “I
was eager to get back to trading. So in 1990, I moved back to Chicago to trade
for myself,” Drury says. It’s no surprise that he stuck to what he knew and
traded grain spreads. “It was serendipitous that I chose to study for the MBA
while I was in Chicago because, as part of a class project, I did research on
the managed futures industry,” he says, describing how that in-depth look turned
his attention to a new aspect of trading. “I am lucky I did that class project
because it encouraged me to set up a CTA firm of my own.”
Today, Bernard has left the fundamentals behind
and is a successful trend following trader.
Performance spreadsheet download.
Dunn Capital
What’s it like to work at Dunn Capital, one
of the most successful money managers of all time? You’d be surprised. How many
of you have been to the sleepy retirement community of Stuart, Florida? You mean
Dunn Capital doesn’t operate on Wall Street? Not even close.
Lesson? Location has little to do with success.
Dunn’s office is on a quiet street, located
off a waterway, in the heart of a retirement village. You are 30 miles by
highway from West Palm beach in a two story white building that is shared by an
assortment of doctors and other small business owners. There is no receptionist
to greet you when you enter Dunn’s office. Your only recourse is to walk down a
hallway to see if anyone is in. To say the least the atmosphere is casual and
laid back. Lesson? Pretentious environments and
intense activity has little to do with success.
Performance spreadsheet download.
Rabar Market Research
Paul Rabar was a Turtle. His company is Rabar
Market Research:
It is well known that over a period of
several years, Richard Dennis traded an initial stake of $1,200 into
$300,000,000. By at least some measures, he thereby achieved the greatest
performance in the history of the markets. To do so, his methods must have been
different from or contrary to those of other traders in some important respects.
The concept of contrarianism is perhaps the most important of those imparted by
Dennis. Because each futures market is a zero-sum game, even a marginally
profitable trader must extract capital from other market participants and,
therefore, must use methods that are different from those of other market
participants. Contrarianism in one form or another, whether or not a trader
consciously identifies it as such, is the first requisite for profitability.
Performance spreadsheet download.
Conclusion
Trend followers come in different shapes and
sizes, but the numbers on those spreadsheets should inspire confidence in all
those looking to either invest with a trend follower or become one.
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 (Prentice Hall, May, 2004) 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.