Man Investment Products, Ltd., formerly AHL, have been applying a systematic and disciplined approach to trading the world’s markets for more than ten years. Complex trading systems, built around ideas generated by the research team, are designed and tested in Man Investment Products’ proprietary software environment. This has been developed specifically to investigate market behavior and to support their risk management techniques. Risk control is of paramount importance and Man Investment Products’ systems are monitored continuously in an effort to ensure that predefined limits are not exceeded. New markets are never overlooked and progressive ideas are constantly tested to enable Man Investment Products to remain at the cutting edge of the trading arena.
A Short Passage from The Complete Turtle Trader related to Trend Following Funds
While Dennis knew exactly where the sweet spot was for making big money, he often fumbled his own trading with too many discretionary judgments. Looking back, he blamed his pit experience, saying,
“People trading in the pit are very bad systems traders generally. They learn different things. They react to the [price] ‘tick’ in your face.”
Dennis and Eckhardt did not invent trend following. From the 1950s into the 1970s, there was one preeminent trend trader with years of positive performance: Richard Donchian. Donchian was the undisputed father of trend following. He spoke and wrote profusely on the subject. He influenced Dennis and Eckhardt, and just about every other technically minded trader with a pulse.
One of Donchian’s students, Barbara Dixon, described trend followers as making no attempt to forecast the extent of a price move. The trend follower
“disciplines his thoughts into a strict set of conditions for entering and exiting the market and acts on those rules or his system to the exclusion of all other market factors. This removes, hopefully, emotional judgmental influences from individual market decisions.”
Trend traders don’t expect to be right every time. In fact, on individual trades they admit when they are wrong, take their losses, and move on. However, they do expect to make money over the long run. In 1960, Donchian reduced this philosophy to what he called his “weekly trading rule.”
The rule was brutally utilitarian:
“When the price moves above the high of two previous calendar weeks (the optimum number of weeks varies by commodity), cover your short positions and buy. When the price breaks below the low of the two previous calendar weeks, liquidate your long position and sell short.”
Trend Following Products
Review trend following funds systems and training: