Pod Insights Michael Covel's Trend Following Ep. 1353: No Risk No Return with Michael Covel on Trend Following Radio About this episode Please enjoy my monologue No Risk No Return with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive. --- I’m MICHAEL COVEL, the host of TREND FOLLOWING RADIO, and I’m proud to have delivered 10+ million podcast listens since 2012. Investments, economics, psychology, politics, decision-making, human behavior, entrepreneurship and trend following are all passionately explored and debated on my show. To start? I’d like to give you a great piece of advice you can use in your life and trading journey… cut your losses! You will find much more about that philosophy here: https://www.trendfollowing.com/trend/ You can watch a free video here: https://www.trendfollowing.com/video/ Can’t get enough of this episode? You can choose from my thousand plus episodes here: https://www.trendfollowing.com/podcast My social media platforms: Twitter: @covel Facebook: @trendfollowing LinkedIn: @covel Instagram: @mikecovel Hope you enjoy my never-ending podcast conversation!
Transcript 0:00 Speaker 00 No risk, no return. This is life. If you sit back and you wait, you might get lucky. You might get a lottery ticket. You might meet the next Warren Buffett. Your neighbor might give you a chance to get in on something early that has no guarantee, and you become a billionaire. The odds of these things are not great. But if you adopt this no risk, no reward mindset, you're not looking for perfection. You just keep trying consistently every day. What do I mean by trying? Trading.
0:41 Speaker 00 A strategy that will not have a high percentage of winners. Meaning you will take a trade, you will place a trade. 60% of the time, you might be taking a small loss. It goes nowhere. And you might get some winners 35, 40% of the time. And those winners, they make up for all those losers you had before. And then, hopefully, they give you some profit. That is the trend following mindset. It's the venture capital mindset. It's the mindset of Jeff Bezos at Amazon. It's the mindset of any successful entrepreneur. Because prediction is shit. Look, no risk, no return is not just a slogan. It is life.
1:25 Speaker 00 It is the markets. It is a fundamental rule. Before you could even get into the fundamental rules of the strategy of trend following, you need to have a philosophical fundamental rule. And that is no risk, no return. Look at something like MicroStrategy, now renamed Strategy. Look at that chart for the last 25 years. Two big ups. That first big up came way down. And then once, Michael Saylor adopted a Bitcoin strategy. His share price has gone to the moon again. Now, were these two events separated by almost 20 years? Predictable?
2:10 Speaker 00 No, they were not. But what you could do is have a plan that says when a particular market in your tracking portfolio starts to take off, you get in. No questions asked. You just get in. Why do you get in? Because it's moving up, you're long. Moving down, you're short. But Mike, that seems so simple. There's got to be some smart guy on the internet that knows more. And if I just listen to him and I just give my soul over to some nameless huckster who says he can predict direction, my life will be so easy. Come on.
2:55 Speaker 00 That's not the way it works. Any student of history knows you take your shots and you see what happens. But it's pretty damn hard to predict anything. Think about it this way. Who caught the move of MicroStrategy or any big market move? Nvidia? Who missed it? Why do some people capture life-changing returns while others watch from the sidelines? It's about strategy. It's about mindset. It's about philosophy. It's about no risk, no return. Look, there is something called the illusion of safety. Most investors, most traders, they crave safety.
3:39 Speaker 00 They don't want to risk a damn thing. Predictable. They really think there are predictable returns. And in the middle of a bull market, everybody becomes smart. Everybody becomes wise. They can't even imagine volatility. Or if there is some volatility, they just think, well, it'll go away and everything will come back to my direction. These people with the mindset of this illusion of safety. They think there are safe stocks, safe strategies. The reality is no investment is safe. Whatever the hell you mean by safe. Even if you put money into an interest-bearing account in America right now, today,
4:20 Speaker 00 the sons of bitches in Washington DC are devaluing your currency left and right. So yeah, you get a little interest income while they're screwing you up the backside with inflation on the other side. And what's inflation? Just increasing the money supply. Does any of that sound safe? In fact, I might make the argument that the safety is back to what I started with today. No risk, no return. That's the safety. Being the person out there on the front, not knowing what the hell's gonna happen when you take that move, risking something. That is the safety. They don't teach us that. You can go through a lifetime and not understand that.
5:03 Speaker 00 You can go through a lifetime and never have anybody talk to you about this. You can go to college, you can go to grad school and walk away and your brain is mush. And you still don't know a damn thing. But safety is not the game. Volatility is the game. Markets are gonna be volatile. And you gotta have rules to handle volatility. If the volatility increases, what do you do exactly? That's what I've helped people with for decades. And you're gonna have drawdowns. What does a drawdown mean? A drawdown means if you started with a hundred bucks, there's a very good chance at some point in time, you're gonna have 70 or 60.
5:45 Speaker 00 Yeah, you could lose a lot of money before you make money. Now, some people might say, "Mike, but you don't make any sense. Why would somebody with a trend-following strategy go from 100 to 60?"
6:00 Speaker 00 I thought they had stop losses. If they lose 2%, that sounds like 98. 100 to 98, I lose 2%, I get out. I'm safe at 98. Why would I stay until 60? Well, you're not staying until 60. Your drawdown comes from many small losses over many markets that add up. It's not sitting there like a dumbass and watching one market drop by 50%. That's not the game. You don't do that. You have rules for that. But if you are tracking many markets, and it's a trendless period or a volatile period, you could have many markets, stocks, commodities, currencies, that get whipsawed.
6:44 Speaker 00 Go watch the Ed Secoda Whipsaw Song. It's on YouTube. He explains the mindset, the philosophy. And guess what? If you get a bunch of whipsaws, they add up. A lot of 2% losses added together, hey, those can get you down 30, 40%. So if you adopt my mantra today of no risk, no return, you're putting yourself in a position where you could be flat for a long time, and then an explosion. Explosion up, explosion down. You don't know why that explosion necessarily happened. The price action itself doesn't tell you.
7:27 Speaker 00 But we're trend-following traders, so we're following the price action, right? We can't know everything, right? We can't predict a damn thing, right? We can't follow the trend. And ladies and gentlemen, that is a truth bomb. Back to MicroStrategy, now Strategy. Go look at that chart. Even the chart from, let's say, 2023 into 2024 into 2025. Flat for a long stretch there, 22, 23 to the beginning of 24. Then an explosion up, then explosions down. Yes, you absolutely could have been, hold on for dear life with MicroStrategy. That's not necessarily the best strategy.
8:12 Speaker 00 So even if you end up with a big trend up in something like Strategy, the company, Michael Saylor's company, there's ups and downs. There's volatility, there's ins and outs. There's entries and exits. It's not necessarily a classic trend following move, especially in the last couple of years. But it's still a massive trend. The reason that I bring this up, the challenge to you. How else could you trade this beyond trend following? Rolling dice? Spinning the roulette wheel? Counting cards? Guessing? Lottery tickets? Betting on your aunt's mystery food in the refrigerator?
8:57 Speaker 00 Who the hell knows what? But you need something concrete. Because micro strategy is just an example, just one example. Of a market taking off, a market having volatility? Market coming down, a market going up? You need a set of rules for this. Look, risk is not the enemy. Risk is the entry ticket to the game. Risk is the thing that should be getting you jacked up. Adrenaline rocking. That feeling in your heart of, damn it. I'm either gonna make a million bucks, I'm either gonna find a beautiful woman, whatever. But it's that energy. But it's controlled because you have rules.
9:42 Speaker 00 You're willing to fly with that energy. You're willing to go with it. But if that energy, if that risk goes against you, you're ruthless. You're fucking ruthless. You cut your losses, you get the hell out. Think of it this way. Every market reward is payment for taking risk. Let me also add, without volatility, without uncertainty? Where's the big upside? Does it even exist? I mean, if everyone's doing the same damn thing, if everyone's thinking the same way? How do you stand out? How do you do better than the average? You can't if you are doing what everyone else does.
10:24 Speaker 00 And trend following is a strategy for doing something that not everyone is doing. If micro strategy was guaranteed to always go up? No return would exist. Everyone would buy, no opportunity. Your reward, your return is directly proportional to the discomfort you're willing to endure. Go listen to my podcast episodes with Jerry Parker, Larry Height. These guys say it over and over, like broken records. Brilliant broken records, but broken records. Broken records that I love to listen to because they're freaking wisdom. They are pure wisdom. You want that trend following mindset? It starts like this. You're going to be wrong often.
11:08 Speaker 00 You're going to take small losses, but you stay in the game for the rare big winners. MicroStrategy is a rare big winner. Tesla, a rare big winner. Nvidia, a rare big winner. Doesn't it seem like there is a rare big winner? Or two, or three, or four? Every 10-year generation? Seems like it to me. But you don't get to participate unless you have a plan. Unless you got rules to deal with all the damn issues that take place in the markets. And it's worth remembering, what are the markets? The markets are every knucklehead, every smart guy, every dumb guy, every fool, every greedy SOB,
11:51 Speaker 00 every bloody person on the planet make up the markets. It's the crowd. Red meat to the crowd. Is the crowd necessarily irrational? Sometimes it is. Is your goal to predict rationality and/or irrationality? No. Your goal is to follow the damn trend. And the cleanest, most efficient way to follow the trend is by following price. That's it. You follow the price, you are following any potential trend that might happen. To repeat the principles, they're really clear.
12:32 Speaker 00 Cut losses fast, protect capital, let winners run, give trends time to develop. Stay systematic, no predictions, just process. It sounds simple, but I had someone the other day, someone who has supposedly read my books, has my training, and even the basics of looking at that trend following chart on my X account that shows to the left side, taking a small loss, and to the right side, the trend running towards infinity. The very basics of cut your losses and let your profits run on. I shared that chart.
13:15 Speaker 00 I said, "Do you understand this chart?" The answer, "No." Now, if you don't understand that chart... You're not trying. You're not trying at all. I can help you if you want to learn. If you're willing to get into the damn game with some uncertainty, not having your full set of rules, I can get you there. But you've got to want it. You've got to say, "Damn it, I'm ready. I'm ready to jump in. I'm ready to go for it." If you're sitting there right now, listening to CNBC with your pants off, dialed into Kramer, doing something that should probably have you in jail for the rest of your life, yeah,
13:57 Speaker 00 you don't have a snowball's chance in hell. Because you're right back to entertain me. Let me flip on the channel, and the same AI robots that have been speaking to me for 30 years are going to give me something else. You notice today that I'm not attempting to be an AI robot? I'm not attempting to tell you that I have the answer about any one particular market, about its direction, its duration. I don't fucking know. And every honest person says that. Fucking liars tell you how far a market is going to go. And if you listen, what the hell is wrong with you? The excuse of "I didn't know any better"
14:40 Speaker 00 doesn't work. If you're not very smart, if you're low IQ, I get it. But there's ways around that. There's ways around not knowing. There's ways around low IQ. There are rules that you can adopt, that you can build into your life, that will save you a lot of grief. Yeah, you might not ever know everything there is to know about Nvidia, or Coinbase, or Microsoft, or Tesla, or strategy. You might go to the cocktail party, and you don't know shit from Shinola about any of these damn companies. But if you're a trend-following trader, you just smile to yourself, and you smile to the other folks at the cocktail
15:21 Speaker 00 party, and you say, "I just trade price. I don't know anything. I just trade the price. If the market's up, I'm long. If the market's down, I'm out, or I'm short." I didn't invent this mindset. But to toot my own horn, I've probably been responsible for helping more people to get it than just about anybody else. It's been my passion for over 20 years. There is a satisfaction to sharing with people a mindset, a philosophy, a technique, systems, to where they can stop getting screwed by the system, to where they can stop getting screwed over by the man.
16:06 Speaker 00 Because if you can stop getting screwed over by the man, you got a chance at something even bigger in this no risk, no return mindset that I talk of today. You got a chance at something even bigger: freedom. Freedom to do whatever the hell you want. Because if you're sitting there right now and you don't have that freedom, and you want it, you only got so many choices. You can go buy lottery tickets, you can maybe meet the next Warren Buffett, but if you don't got that, all you got is something like what I'm talking about today: a mindset, no risk, no return, and rules like trend following.
16:48 Speaker 00 And then you're in position, then you are a stud, you are epic, you can get into the game with anybody. And you're really not competing with anybody at that point in time, you're competing with yourself. Who the hell wants to compete with their neighbor about what size TV he has? Or whether your friend has the newest iPhone? Fuck all that. Your goal is to get tight, lean, mean, and make it happen. And in the spirit of this lean, mean, and make it happen, yes, I've had my personal social media that I've used for a long time, and I will continue to, hosting all kinds
17:30 Speaker 00 of stuff, including a lot of trend following stuff, but my assistants got on me and we decided it was time for some trend following specific social media. At all the big names in the social media world, you will see my new trend following specific social media.
17:50 Speaker 00 All to be found at trendcovel, whether that's Instagram or X or whatever. And my goal is for these accounts to be repositories for the reminder, the daily reminder, the kick in the ass to get you inspired, that when you don't have anyone else to share with, you don't have anyone else that gets what you're thinking. You've been exposed to trend following and now you're excited. You tell your family, you tell your friends, and they start droning on about listening to Kramer with no pants on. That's just not a plan. But I can promise you, my new social media creations will give you that inspiration to stick with it, to make it through, to figure it out, to put yourself in a position,
18:36 Speaker 00 but not just to get the FU money, to get the freedom that comes with some FU money. Because that's what you really want. See you again next week.
18:51 Speaker 00 I see a time when those awake will understand how to make money in up, down, and surprise markets. Whether new trader or experienced, college student or financial advisor, protecting against a crash or just trying to make a lot of money. Trend following offers everyone an answer in uncertain times. To get started immediately, send me an email, [email protected] . I will send you the right trend following steps to take, along with my free video.
19:27 Speaker 00 But if you want to buy and hold, trust the government and trust Wall Street, this is absolutely not for you.
Previous Ep. 1352: Laura Ries with Michael Covel on Trend Following Radio Next Ep. 1354: Attitude Adjustment with Michael Covel on Trend Following Radio Page updated November 6, 2026 · transcript and summary are machine-generated
