The market participants change, the hottest stocks change but, the market structure as it is, is still the same. Jesse Livermore, Nicolas Darvas, Richard Dennis all employed trend following and made huge sums of monies spanning decades probably, totalling atleast, 50 years between them. How were they able to amass huge sums of monies during their times if trend following did not work? Hedge funds continue to make monies year after year doing the same. However, their returns are more paltry like 18-20% per year. Not their fault. It is hard to move hundreds of millions of dollars to trade it and then, sell it when the time comes. They cannot sell millions of shares all at once because it will spike the share price or crash it as the case maybe. So, they exit like an elephant walking, slowly.
Yes, the market has changed a lot over the past 2 years. I can't say about medium-term trading, but I can write about intraday trading. Previously, stocks mostly gradually rose until approximately 11-11.30 am, and my strategy was based on this. Then everything changed dramatically and stocks began to rise only until 10 am. I had to redo the trading strategy, and then I lost a lot. In general, I noticed that strategies need to be constantly changed and adjusted to the market.
Some of that proves trend-following worked many decades ago, before everyone had access to free charts, Excel spreadsheets, relatively cheap backtesting/system-building software, etc. It was in the early 90s when those things became more available (at least EOD charting and backtesting) that trend-following fell apart. The vast majority of hedge funds don't beat the S&P 500. That's my point. Look up the funds in Covel's book and see how they've done since it was published. I have nothing against trend-following and use a little of it personally, but only with a few other models as filters.
I've been involved professionally in trading markets since the 1990's. 1. The markets are always changing. In fact, change is the only certainty. 2. The traders who have faced the most dislocation and disruption in the past three decades are the short term traders/scalpers/day traders. Tremendous changes both in the pits and on the screen.
I would say that swing trading / position trading (longer holding timeframes) has the most inherent stability in it.
Agree. But it also depends which paper you are holding, when and where. Otherwise whale gonna crawl it to eternity until he gets his shares back.
There’s a constant trend of increased transparency, liquidity, and access to the markets and financial products. It can be very disruptive for individual traders and trading firms.