A good article on Man's trend following fund: read ...

Trading Wisdom from Van K. Tharp on "being right":

How important is it for you to be right? Let’s say I could guarantee that you would make money by the end of the year — lots of money — but you would probably lose money on 90% ...

Traders should be concerned about making money; after all it is the reason to be in the markets. In the beginning, most traders are concerned more about the total return of their investment rather than their exposure. However, stay in the game long enough and you will agree with the ...

In Peter Bernstein's book, Against the Gods: The Remarkable Story of Risk, he briefly explores 'Prospect Theory'. He outlines an experiment in which it is shown that 'our choices between negative outcomes are ...

Why do traders miss the big moves? People often make decisions on their perception of what the market direction will be. Once they make their directional choice, they become blinded to any other option. They will keep searching for any type of validation to support their analysis even if they are soon losing money. In bull or bear markets people become convinced that things will never end. They fail to recognize that their particular opinion on market direction is wrong. They remain in denial and watch their portfolio balances get sucked dry. Suddenly their plans for a life of luxury are gone. Literally trillions of dollars have vanished from investor accounts that were waiting for the never to be seen rebound. Where do you think the losses went? Well it had to go somewhere, right? Losses go into the accounts of investors armed with solid trading plans. Savvy individuals always prepare for up, down or sideways markets. How is it that so many traders lose money, yet a handful always make a fortune? The answer lies in the concepts of zero-sum trading and trend following.

Why is price data so important? A recent view offered at a trading conference:
While a technically based or systematic program may be a novel or foreign concept to many investors, it builds on long-established methods of investing. Why? Two questions seem to predominate: First, ...

No trend can be predicted. Even though prediction is an impossible goal, many chase it every waking minute. Christopher Cruden offers some gentle sarcasm and quick wit to the majority forever fixated on forecasting trends.

The thing about trends is that they are much ...

How have noted Trend Followers pulled millions from the market? They plan their trades and trade their plans. Think about it.

Keep It Simple

We could still imagine that there is a set of laws that determines events completely for some supernatural being who could observe the present state of the universe without disturbing it. However such models of the universe are not of much interest to us mortals. It seems better to employ the principle known as Occam's razor and cut out all the features of the theory which cannot be observed."
Stephen Hawking

What is Hawking driving at? Trading rules must be easily explained. All great trading concepts avoid layers and layers of interconnected rules. Tradestation might invent invent hypothetical profits, but is this wise? Occam's razor dictates that if there are two trading methods that achieve similar results, choose the simpler method. Period.

Change

Another lesson I learned early is that there is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.
Jesse Livermore

Doubt Livermore? You think 2003 is somehow different? Here are the hot tech stocks of 1968:

The names change. The year changes. The market might change. Trend Following using price data never changes. More.

Q: Don't take this the wrong way, because I greatly admire your site, but I find it hilarious when you quote Jim Rogers who uses about 90% fundamentals.

A: Fundamentals are useless. That said, we have read Rogers' ...

Everyone accepts the coin flip before a game, right? Can you accept it in trading though? Can you handle the randomness of everything around you? Or do you have to attempt to control a random world? Answering these questions is crucial to any Trend Following success.

However, randomness is a foreign concept to most:

As humans we do not come equipped to deal with the variety of randomness that is around us every day. Many professions deal with making processes and things work reliably. We are taught to strive for perfection, for high scores in school and in sports. This can be a handicap to traders. There is no perfection in trading. Instead traders must put probability in their favor.
Larry Sanders
LSS Limited

Put Sanders' words into a straightforward example? You will never have certainty about the direction, frequency or magnitude of any trend -- ever. You need to aim to maximize your profit and control your risk in the face of always partial knowledge:

Probability is expectation founded upon partial knowledge. A perfect acquaintance with all the circumstances affecting the occurrence of an event would change expectation into certainty, and leave neither room nor demand for a theory of probabilities.

George Boole
An Investigation of the Law of Thought

Many people still feel uneasy with the partial knowledge concept. They yearn for a black and white world, but miss the point that estimating shades of gray is the game Bill Dunn plays:

An approximate answer to the right question is worth far more than a precise answer to the wrong one.
John Tukey

Mark Douglas frames the issue nicely for all systems traders:

There is a random distribution between wins and losses for any given set of variables that defines an edge. In other words, based on the past performance of your edge, you may know that out of the next 20 trades, 12 will be winners and 8 will be losers. What you don't know is the sequence of wins and losses or how much money the market is going to make available on the winning trades. This truth makes trading a probability or numbers game. When you really believe that trading is simply a probability game, concepts like "right" and "wrong" or "win" and "lose" no longer have the same significance. As a result, your expectations will be in harmony with the possibilities.
Mark Douglas
Trading in the Zone

Gain the edge. That's the Trend Following goal.