Patrick Welton recently joined Niels Kaastrup-Larsen and co-host Alan Dunne on Top Traders Unplugged (Episode 153), “Why Investors Keep Getting Trend Following Wrong.” They talked about four decades of trading and investing: early lessons from Paul Tudor Jones and John Henry, where trend following returns come from, and why investor behavior often matters more than which strategy an investor picks.
We’d like to thank Niels for having Pat on the show. For years, Top Traders Unplugged has given traders and investors a place to hear directly from the people behind systematic strategies. As Pat told Niels on air, it’s one of the best resources in the trading community.
Highlights
- What Paul Tudor Jones Taught Me (4:18): A meeting early in Pat’s career, and the lesson he never forgot: when you trade size, you get out when the market lets you.
- The Moral Shift of Managing Other People’s Money (12:52): Why taking on outside capital means the client’s goals come first.
- How Client Feedback Can Kill Your Edge (20:36): What happens when managers change their approach to match marketing feedback.
- The Four S’s and John Henry’s Billboard (25:24): Setup, signal, sizing and symmetry, and why traders only stick with a system they believe in.
- Where Trend Following Returns Really Come From (35:10): Economic trend, financial carry, information diffusion and feedback loops.
- Can Trend Followers Get Too Big? (49:28): A thought experiment that takes on the capacity question.
- The Biggest Input to Compounding (58:52): Market regimes, research, and why a steady hand matters more than most investors realize.
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