Within the DSM 1 Trading Program a framework of money-management and risk-control parameters is applied. Also, technical methodology is followed with rigid discipline to determine the price at which trading positions should be established or liquidated. DSM 1 Program’s time frame is generally long-term in nature, with a majority of profitable trades lasting longer than six weeks and many lasting for several months.
Firm Disclosure
Mangin Capital principals include: Douglas Mangin.
DSM 1 Program: Long-Term Trend Following in Practice
The DSM 1 program description contains the complete anatomy of a systematic trend following approach in four sentences. A framework of money-management and risk-control parameters is applied: this is the position sizing and stop loss structure that defines maximum risk per trade and total portfolio exposure. Technical methodology followed with rigid discipline: this is the rule-based entry and exit system that fires on defined price conditions without subjective override. Positions established or liquidated at defined prices: this is the pre-committed exit that prevents the emotional holding of losers and premature exit of winners. Time frame generally long-term with profitable trades lasting longer than six weeks: this is the distributional signature of trend following, where holding periods are long and profits are concentrated in the trades that run.
The six-week minimum for majority of profitable trades is the practical implementation of the sit-and-wait principle that DiMaria described through the home run analogy and that Livermore expressed as “men who can both be right and sit tight are uncommon.” A system that exits profitable positions before six weeks have elapsed is capturing only the early portion of the trends it correctly identified. The majority of the trend’s price movement occurs in the weeks and months after the initial breakout, not in the first few days of the position. A program designed to hold profitable trades for six weeks to several months is structurally positioned to capture that later movement.
The combination of rigid discipline in methodology with long-term time frame is also the structural response to the psychological challenges that Steenbarger’s three vices identify. Perfectionism produces premature exits of losing positions, which the defined stop loss prevents. Overconfidence produces overtrading and entry outside the defined criteria, which rigid technical methodology prevents. Revenge trading produces entries after losses without valid signals, which the requirement for defined price conditions prevents. The DSM 1 framework encodes the solutions to all three vices in its operating description.
Long-term systematic trend following programs like DSM 1 are evaluated correctly only over multi-year windows. A program with six-week minimum holding periods for profitable trades will produce quarterly and annual results that vary significantly from its long-run expected performance. The 36-month minimum evaluation window that TurtleTrader documents elsewhere in the quarters analysis applies directly here. A program that appears to have a poor year may simply be in the flat waiting period between the major moves that the long holding period structure is designed to capture.
Frequently Asked Questions
What is the DSM 1 Trading Program?
The DSM 1 is the systematic trend following program operated by Mangin Capital under principal Douglas Mangin. It applies defined money-management and risk-control parameters to position sizing and portfolio exposure, uses technical methodology executed with rigid discipline for entry and exit decisions, and operates on a long-term time frame with most profitable trades lasting longer than six weeks and many lasting several months. This profile is consistent with the systematic trend following approach documented across TurtleTrader’s manager profiles.
Why does a long holding period for profitable trades indicate a trend following approach?
Because trend following profits come from holding winning positions through the full extent of a sustained price move rather than exiting at early profit targets. A system that exits profitable positions quickly captures the entry’s initial price movement but misses the majority of the trend’s value. Programs designed to hold profitable trades for six weeks to several months are positioned to capture the full extent of the directional moves that define trend following returns. The holding period is not a preference but a structural consequence of the approach’s entry and exit design.
How should the DSM 1 program’s performance be evaluated?
Over a minimum rolling 36-month window, not on a quarterly or annual basis. A program with six-week minimum holding periods for profitable trades will produce significant variation in short-term performance windows depending on whether major trends developed during the measurement period. The correct evaluation asks whether the program’s long-run performance is consistent with the systematic trend following approach it describes, not whether any specific short period produced the returns the approach will eventually generate.
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