It has been over a decade since the launch of TurtleTrader and over fifty years since Richard Donchian proved beyond a shadow of a doubt that trend following works. Yet we are still asked, “Does trend following work today?”. The answer is an emphatic, Yes.
Yet questions persist from our web visitors:
Q. The markets have changed, right?.
A. No, the markets have not changed. Markets behave the same as they did 300 hundred years ago. The hopes and desires of men and women who trade the markets are manifested in trending behavior. The key is to trade a method that takes advantage of major market moves or trends.
Q. My question may sound a bit paranoid, but it is one that holds me back. How can I place my trust in trend following?
A. Please read all of the following links:
Do the above links calm your paranoia?
Q. Why does Wall Street avoid using trend following on a regular basis?
A. Ignorance and fear. Most of Wall Street only believes in fundamental analysis and only likes to gamble. Turn on CNBC for five minutes and the answer is clear. More? See here.
Q. What if lots of traders were to trend follow? Would it lose its overall profitability?
A. No. Why? See here.
Stock Trend Following
Trend following is just as appropriate for stocks as futures. There are vast numbers of stocks that trend to be traded so it’s not a problem finding them. If you follow the rules of trend following and go both long and short you will always find markets that are trending. A casual observation of the US stock market over the last 5 years validates the concept of stock trends without question.
Read the Adobe PDF document on zero-sum trading. It’s a good overview of how the mistakes of losers provide the winners their gains.
Trend Following Products
Review trend following systems and training: