TTU25: Why a Mechanical, Long-Term Trend Approach is Best ft. Scot Billington – 1of2
Our next guest takes a mechanical, long-term trend approach to trading to a new level, and you’ll find out why he thinks it is the better option in this episode. He started Covenant Capital with his business partner in 1999 and has grown it into a profitable boutique firm. But in early 2002 after they ended the previous year down 20%, they really had to grind it out and stick to their guns which ultimately paid off in a big way.
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In This Episode, You’ll Learn:
- How Scot started his firm, doing the testing by hand.
- The difference between a discretionary model and a mechanical model and why Scot chose a mechanical one.
- How he met his business partner Brince Wilford and started with 3 accounts in 1999.
- How narrative bias can affect a trader’s decisions.
- How the firm got through a year that ended with them down 20%.
- What made Scot believe in his model and stick to his guns.
- The offerings that the firm currently has, including the differences in the trading models.
- The pitfalls of investing in shorter term models and not allowing managers to see a full cycles with markets.
- Why most allocators and investors are chasing 24-month returns on stocks and why that may not be the right approach.
- About different types of CTA firms, including boutiques, battleships, emerging, and experimental.
- What to look for in a CTA.
- How to get investors to share the long-term horizon with his firm when certain markets do very well in the short term.
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Resources & Links Mentioned in this Episode:
- An article on Covenant and Scot Billington in Futures Magazine.
- Check out Discretionary vs System Trading.
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