This is Trend Following Radio, where great thinking comes alive.

Nobel Prize winners, legendary traders, bestselling authors, and the pros that know what drive us irrational human beings.

I am your host, Michael Coval.

Not filtered, raw, honest.

That's my passion.

I want to connect the dots today to try and explain something that I don't think many people

that come into the markets still get. This is the notion of technical analysis either as

predictive or reactive. Predictive technical analysis, this would be the chart reading, the patterns say this will

happen, the death cross, just follow this particular wiggle, and then this will happen

in the future.

That's a predictive technical analysis take.

Trend following, on the other hand, and I define this well in my book trend following, is reactive.

It's not about one market and some particular chart pattern.

It's a portfolio perspective where you're using momentum indicators to take a position and you never know what

will happen in any one market. So you have to take positions. You have to take signals in many

markets and play it out over time and you never know where your big winner is going to come from.

That's trend following. The thing that I love about

these two particular takes is that one has a mountain of evidence that it works and the other has

nothing, literally nothing that I've seen. So what do I consider as evidence? First, hold that thought for a second.

I want to read something. A real quick line from Richard Feynman, the physicist, long since past,

but a brilliant man, go watch his YouTube videos. They will teach you how to trade, even if he never talks about trading.

To quote Feynman,

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