Pod Insights Michael Covel's Trend Following Ep. 1378: High Agency Trading with Michael Covel on Trend Following Radio About this episode Please enjoy my monologue High Agency Trading with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive.
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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.
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Transcript 0:00 Speaker 00 You know, in the markets, it's pretty easy for people to bring in their emotional and psychological issues, how they see themselves, how they see life. I mean, they bring that shit to the markets. Victimhood. They blame other people, other institutions. They don't take ownership. That's what I want to talk about today. Let me start with a sentence that sounds harmless. "The market did this to me." That's the kind of sentence that ends your making money career. Not because it's emotional, obviously it is, but because it transfers control away from the only place it ever existed. The control is your decisions.
0:44 Speaker 00 High agency, what we're talking about today, is not only about confidence, it's not about bravado, it's not about believing you can control the markets. It's about accepting something far more uncomfortable, that every outcome and your profit and loss is the result of a choice you made. Even the bad ones, especially the bad ones. And remember, a loss is not necessarily a bad outcome, because losses are part of the game. But you know, people get defensive. "The market's manipulated." "High-frequency traders were front-running me." Whatever. "The Fed changed policy." No shit. "But this was impossible to predict." Man, you're fucked if you're thinking that way.
1:28 Speaker 00 I mean, all of these things can be true if you live in Willy Wonka-land. I mean, all of them are irrelevant as well. Look, markets don't force positions, they don't force size, they don't force timing, they don't force leverage. Your loss, my loss, every loss begins with participation. That's what people don't want to accept. Low agency, low IQs, they don't feel comfortable with this, because they want a villain, they want an explanation, they want relief from self-examination. High-agency thinking gives you none of that, it gives you accountability, and accountability is psychologically expensive.
2:13 Speaker 00 Yeah. That's why most people don't want to do it, they avoid it. Let me define agency clearly. Agency is not predicting outcomes. Agency is owning inputs.
2:26 Speaker 00 You do not control the price. You control whether you enter, how much you risk, how long you stay, exiting with a win or a loss, whether you follow the rules. That's it. Everything else is noise. So what attracts people to low agency thinking? Now, before I get into it, we all kind of know, deep down, it's probably going to skew along IQ. But not necessarily. A lot of high IQ people, low agency types. You see, trading is uniquely good at producing ambiguity. Losses feel unfair. Outcomes feel random. Effort and reward are disconnected.
3:11 Speaker 00 And that environment just loves to invite blame. Blaming something external restores the emotional balance. It makes losses feel less personal, but it also makes improvement impossible. Because if the problem is the market, there's nothing to fix, is there? Right. If the problem is the market, you can't possibly be the problem. High-agency traders, the opposite. They assume fault first. Not moral fault, structural fault. They ask, what did I choose that made this outcome possible? That's an uncomfortable question, isn't it? Kind of rare, isn't it? Let's talk about manipulation.
3:56 Speaker 00 Because this word comes up constantly. People say silver's manipulated. Crypto is manipulated. Stocks are rigged. Rates are controlled. Yeah, probably all true. But here's the uncomfortable question no one wants to answer. If a market is manipulated, why are you trading it? No one forces you to trade silver. No one forces you to trade meme stocks. No one forces you to trade around Fed meetings. Participation is voluntary. That's agency. Low-agency traders trade markets they believe are unfair and then complain when they lose. High-agency traders either adapt or leave. They don't argue with structure. They respond to it. Think about this high-frequency stuff.
4:41 Speaker 00 Yeah, most of us are never going to touch it. We don't have the resources, we don't have the access. It's just something that's out there. And there's always been some form of this at a level that we really can't know about or can control. But who cares? Have you seen trend following performance for the last couple hundred years? It doesn't make a difference. So if you are trading at a timeframe where high-frequency traders dominate, that's choice. If you don't like that environment, change timeframes. Basically, that means all the people that write me and tell me they're trading five-minute bars or 15-minute bars or one-hour bars or some other version of light-speed trading, which they're really not doing. So if you don't like any of this, change it. That's agency.
5:26 Speaker 00 Markets don't owe you fairness. That's not what they do. They offer opportunity under specific conditions. You don't like the conditions? Get the hell out. Opt out. Blaming the structure while participating in it is low-agency, otherwise known as asshole behavior. Now, people can get confused. They think high-agency means self-blame. It doesn't. It's self-ownership. Big difference. Self-blame, emotional. Self-ownership, procedural. Self-blame says, "I'm bad," which there's a lot of losers out there that like to talk like Oprah. I get it. I'm not into that. Self-ownership says, "This process didn't work." One paralyzes the other, adapts. High-agency traders don't beat themselves up.
6:11 Speaker 00 They audit themselves. They treat mistakes as data. They assume their model is incomplete, not the world as unfair. Let me connect it to trend following. Trend following is a high-agency framework, not because it's aggressive. I mean, it can be, but because it removes excuses. If you get stopped out, the system did its job. If you miss a trend, the system accepted uncertainty. If you take a loss, it was sized intentionally. There's no villain. There's no manipulation narrative. There's only execution. That's why trend following attracts people who can tolerate responsibility. It repels people who need explanations. It repels losers. It repels excuse makers.
6:56 Speaker 00 Think about the language people use. Low agency sounds like, "I got chopped up. They ran the stops. The Fed screwed me. The market was irrational." High agency? "I entered too early. My size was too large. I traded a timeframe I don't have an edge in. I violated my exit rules." Same outcome, different ownership. One leads to progress. The other leads to repetition. Let me talk about victimhood for a second. It's not necessarily a weakness. I think it is, but it's a survival instinct for many. But in the markets, lethal. Markets don't care if you feel wronged. They don't adjust for fairness. They don't compensate for effort. They don't reward intent.
7:41 Speaker 00 They reward alignment. High agency is aligning yourself with the reality, not arguing with it. Right? You with me? Here's the hard truth in trading. The market does not know you exist. It does not target you. It does not punish you personally. Thinking otherwise is ego. Ego is expensive. Once you accept that the market is indifferent, something changes. Right? Losses, not personal. They become informational. That shift. That subtle little shift. Losses, not personal, but informational. That's everything. How can you learn from experiences if you externalize? You can only learn from experiences you own. Look, high agency doesn't mean you never complain.
8:25 Speaker 00 It means you don't confuse complaining with strategy. High agency is not optimism, it's realism. Here's the paradox, though. Taking responsibility actually reduces the emotional charge, the emotional burden. Low agency feels comforting in the moment. High agency feels heavy at first, but over time, the opposite becomes true. Because once you accept responsibility, you have control. And control reduces anxiety. That's not philosophy, that's basic human psychology. So if everything is your responsibility, then how do you design a process that can survive randomness? How do you take ownership without demanding certainty?
9:10 Speaker 00 How do you stay accountable without becoming rigid? That's where high agency becomes not just a mindset, but a system. Look, this low-agency stuff, this low-IQ stuff, often psychological defense. It's the mind saying, "If this outcome was outside my control, then my self-worth is intact." That's why low-agency, the narratives of it, spread so easily in online communities. They're emotionally efficient. They explain losses without forcing introspection. They bond people together through shared grievance. They are poison. Grievous because grievance creates stagnation.
9:55 Speaker 00 Now again, one of the most common low-agency explanations? The market is manipulated. I mean, they whine all the time. No shit. It always has been. But if it trends, and you're a speculator, you can make money. But you know, when they whine about the market being manipulated? They always continue to participate. So the market is manipulated, they cry about that, but then they keep participating. And then when the market does something they don't like, and they lose more money, the market is manipulated again. I mean, you only got two choices there. Low IQ or low EQ. That's it.
10:36 Speaker 00 Now, one of the ones that is really popular, and hell, I don't like the actions of the Fed. If we look at the actions of the Fed over the last 25 years, some pretty awful results. Truly awful results. But as of right now, the way the game is set up, what can you do? The Fed changed policy. Yeah, they always do. Central banks are not surprises. They are recurring variables. And if your strategy, whatever you're doing right now, can't survive a policy shift, you're fucked. You got a bad strategy. It's incomplete. That means you need to build a process that's robust to policy uncertainty.
11:21 Speaker 00 That's a design problem, not a moral one. Again, I think what the Fed has done for the last 25 years is shit. Absolute shit. They have hurt so many people and rewarded a certain population at the very top. And there's no guarantee, as we all know, that it will continue. But how the hell do you bet off that? What do you do with that information? I can dislike the Fed's actions and then what? What does that get me? I mean, a bunch of people online will go, "Yeah, I agree. I agree." And we all agree, so what? So if we know there's the possibility that the Fed, which is a political animal,
12:02 Speaker 00 if we know the Fed can change its policy on a whim, then what the hell can you do? Well, for one, you can follow price. And if you follow price and you don't follow the Fed, you're in a hell of a lot better place. A hell of a lot better place.
12:22 Speaker 00 You know, earlier I talked about low agency and perhaps low IQ. But you know, high intelligence also likes to create explanations. The so-called smart people are often very good at building stories. They can explain why something didn't work in a way that sounds convincing, right? They can intellectualize failure, they can rationalize process flaws. They can defend decisions long past their expiration date. That's some dangerous shit, man. Because the better you are at explaining, the longer you can avoid doing what? Changing. High-agency traders, and guess what? Trend following is right in the headspace of high-agency. But high-agency traders do not need explanations to act.
13:07 Speaker 00 They need signals. They do not ask, "Was I right?" They ask, "Is my process aligned with what just happened?" That question bypasses ego. Let's talk about ego explicitly. It's not arrogance. It's identity attachment. When your self-image is tied to being smart, losses feel like threats. So you defend against them, you externalize them, you find villains. And of course, these defense mechanisms, these feel protective. But where does your learning go if you act like this? High-agency requires ego reduction, not ego destruction, reduction. You are not your last trade, you are not your drawdown, you are your process.
13:51 Speaker 00 Once you accept responsibility for outcomes, you also accept responsibility for preparation. You can no longer say, "I didn't know." You say, "I didn't design for this." Another shift that changes everything. Because now, the losses are not surprises, they are feedback. And feedback is only useful if you're willing to listen. Think about rule-breaking. Low-agency traders break rules and then blame outcomes. High-agency traders, what do they do? They break rules and blame themselves. Rules are not prisons, they're commitments. Breaking them without accountability turns your strategy into improvisation. Yeah, basically some kind of discretionary nonsense.
14:35 Speaker 00 Consider drawdowns. Low-agency traders experience drawdowns? It's an injustice. High-agency traders experience drawdowns? Stress test. Did my system behave as expected? Was my sizing appropriate? Did I violate my rules? Those questions do not remove the pain, but they create clarity. Look, if we connect this all to trend following, trend following is not passive. It's aggressively accountable. It assumes you will be wrong often. You will be late. You will exit imperfectly. You will miss moves. And it builds survival into those assumptions. That's high-agency in action. Doesn't demand control. It demands discipline. I know, the people start saying, but I want to understand why.
15:20 Speaker 00 Understanding is fine, whatever. I mean, there's a ton of podcasts out there that every day they've got the latest whatever why that has to go on. But needing to understand before action, dangerous shit. Markets do not wait for emotional closure. They move. High-agency traders act with incomplete information by design. I mean, if all you're doing is following price and that's incomplete because you're not looking at all the fundamentals. But if from a trend following perspective, you actually would turn that on its head and you'd say, it's 100% complete. Let me get specific from another angle. If you truly accept responsibility for your profit and losses,
16:02 Speaker 00 then you accept responsibility for decision environments, not outcomes, environments. You design environments that make bad decisions hard and good decisions boring. That's the whole game. Let's talk about where agency actually lives in trading. It's not in prediction. It's not in conviction. It's in constraints. Position sizing is agency. Timeframe selection is agency. Entry rules, agency. Exit rules, agency. Maximum loss, agency. Everything else is commentary, motherfucker. Low-agency traders, they want freedom. High-agency want boundaries. Boundaries reduce error.
16:45 Speaker 00 Consider position sizing again. Agency becomes unmistakable. No one forces you to risk 10%. No one forces you to lever to the moon. No one forces you to concentrate. Oversizing is not a market problem. It's a personal one. It's your problem. If you blow up, it was not because you were wrong. It was because you bet too big. Exits. Low-agency traders, exits are emissions of failure. High-agency traders treat exits as cost control. Another shift that changes everything. At the end of the day, most traders fail not because markets are unfair. I mean, it could be. They might not be. Who the hell cares? But they fail because they refuse to accept how little control they have.
17:28 Speaker 00 They fight reality instead of aligning with it. High-agency. And again, that includes trend following, ends that fight. It replaces it with cooperation, not with markets, with math, with probability, with time. Now, think about what changes once you fully internalize everything I've talked about today. You stop complaining, not because you're enlightened, because complaining is irrelevant. You stop searching for villains, because villains don't change your next trade. You stop waiting for certainty, because certainty never arrives on time. You stop demanding fairness, because fairness is not a variable.
18:08 Speaker 00 And in that silence, without excuses, something unexpected happens. Your decisions become simpler. Your emotions become quieter. Your losses become smaller. Your process becomes repeatable. Markets didn't change. You did. That's high-agency. No slogan, no sign on the wall, just a system. Once you build that high-agency system, market can do whatever the F it wants. Your responsibility remains the same, and so does your edge. See you again next week.
18:54 Speaker 00 I see a time when those awake will understand how to make money in up, down, and surprise markets. Whether a 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. But if you want to buy and hold, trust the government and trust Wall Street, this is absolutely not for you.
Previous Ep. 1377: Men Can't Make Babies and the Zero Sum Game with Michael Covel on Trend Following Radio Next Ep. 1379: Trend Following Plus Fitness with Michael Covel on Trend Following Radio Page updated November 6, 2026 · transcript and summary are machine-generated
