“Trend following is an exercise in observing and responding to the ever-present moment of now.”
Daily life is filled with distractions, and since it will continue to be, a trading system in place will help to minimize them. If you don’t have a trading system, or written out rules, you’re going to have a hard time. If you try to jackknife your trading decisions into place without knowing in advance why you are making those decisions, you set yourself up for a fall. If your trading is anything less than precise, you’re even more vulnerable to daily distractions. Trade after working hours? There are other distractions to cope with such as long commutes, family and social obligations and just plain exhaustion. Trading systems, well thought out in advance, can help to mitigate distractions and breed confidence. Effectively cutting through distractions invariably requires a longer-term strategy.
Trend Following enables you to deal with day to day distractions since all of your if/then contingencies for any given day are decided the day before. There is no guessing what to do or second-guessing what you did. You know how to handle all market eventualities before the distractions of each day begin. Handling distractions demands white hot focus. Trend Following gives you a structure to trade within and rules to trade by. It shuts distractions out. Each day, before the market opens, you know what you will buy or sell, how much you will buy or sell, etc. There is a very good chance you will do nothing on most days. Once you have your system though, as Charles Faulkner reminds us, trading demands passion(Charles Faulkner quoted in The Intuitive Trader, by Robert Koppel):
The people that I know who are the most successful at trading are passionate about it. They fulfill what I think is the first requirement: developing intuitions about something they care about deeply, in this case, trading. They are the people who study years of charts, or commodity annuals…They develop a deep knowledge of whatever form of analysis they use. Out of that passion and knowledge, their trading ideas, insights, and intuitions emerge.
Expanding on Faulkner’s wisdom, Daniel Goleman speaks to motivation and passion:
If there is one trait that virtually all effective leaders have, it is motivation. They are driven to achieve beyond expectations – – their own and everyone else’s. The key word here is achieve. Plenty of people are motivated by external factors such as a big salary or the status that comes from having an impressive title or being part of a prestigious company. By contrast, those with leadership potential are motivated by a deeply embedded desire to achieve for the sake of achievement.
Trend Following Products
Review trend following systems and training:
More info here.