Some people focus on the past results of a trading system to gauge its success. Others only think about what happened last month. Both are wrong.
A great trend following system, adapts to change. Trend following successfully trades the charts below. Moreover, these 3 charts have no dates or times on them. Why? That information couldn’t matter less. Neither is there any mention of what market is being examined.
Why no specific information on the charts? Why doesn’t it matter? Markets trend. They have trended for hundreds of years. If you know markets trend, and the price is the key, why does it matter what market the chart even represents?
Take a close look at 1 and 2 and see if you can guess the market. What’s the relationship? It’s the Japanese Yen and Cisco from the 1990s and the dot com bubble. There is no relationship, that’s the point.
Excerpt from the Trend Commandments related to Market Trend Analysis
Trend following aims to capture the middle, or the meat, of a market trend, up or down, for profit. You will never get in at the absolute bottom or get out at the absolute top. Stocks, ETFs, LEAPS options, bonds, currencies, futures, and commodities are all ripe to trade.
This is the only trading strategy that can be traded on a desert island. As long as price data is available, all else is inconsequential. Media, fundamentals, broker opinions, talking heads, and so on are simply not necessary to profit.
Yes, initial discretionary decisions must be made as a trend follower, such as choosing a trend following system, selecting a portfolio, and determining
We decided that systematic trading was best. Fundamental trading gave me ulcers.
Trend Commandments an appropriate amount to risk. However, after the basics have been set in motion, you can systematize trend-trading rules and automate your daily trading life. This is not day trading, where you are glued to the screen all day in some Red Bull®–induced hyperactivity bender.
However, you have to maintain agnosticism to market direction for trend trading success. Unfortunately, not everyone comprehends or wants to comprehend that.
Consider Erin Burnett of CNBC.
She was interviewing David Harding—a successful trend trader—and asked: “A lot of people obviously want to know what your secret is. What was the magic bullet?”
Harding replied: “The secret strangely enough is not having an idea of what we are going to be doing in advance. We react to the unfolding markets trends rather than make forecasts of what’s going to happen.”
Burnett missed his point in response: “When you look out right now do you think, big picture, I know you are quantitative, but do you believe that we are in a fundamental cycle or are we in a bubble?”
Harding: “It’s not false modesty for me to say I don’t know. I really don’t know. I really do not have the gift of second sight.”
Trend Following Products
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