Ain't that the truth. In addition, trend following uses tighter risk controls to keep profits and reduce risk to capital. Buy and hold, I call it buy and hope because there is no exit strategy. They just buy it now, check back 20, 30 years after assuming you have that much time and nothing catastrophic hits your life and expect that you made monies as opposed to have lost monies waiting 20, 30 years for it? And the drawdowns could be very huge, enough to keep you wishing and hoping to just breakeven? There is also, a lot of trading opportunities lost in the process.
This thread is a little confusing to me. I thought anyone using TA is automatically a trend follower? In terms of Darvas and his momentum "boxes" you look at something like DPZ back in 2011 when it hit all time highs it never really broke down until Q4 2019 and by that time it went from $40 to $250+. In the aftermath of the lockdowns I just bought whatever stocks hit 52-week highs and they all did very well especially FNGU & ARKK. The stocks in the FANG+ Index and ARKK have tons of liquidity. It doesn't seem exiting would have been much of a problem.
No doubt you can find examples where it works. The issue is using it consistently over the long-term...too many headfakes and false breakouts.
That's what you get with a breakout system. The trick is to make way more on your winners and keep the losses small.
In terms of market behaviour ( fear vs greed), market movement ( trendy vs untrendy market), there is not much change. The biggest biggest change is the value of a contract. look at NQ. 10 years ago, it was around 1000.00 (ie 6 digits). it has increased to 14000.00 (ie 7 digits). That means margin requirement has increased very massively by 14 times or whatever
It is not a problem that markets changed dramatically. The real question is: did you adapt to these dramatical changes? Changes can also have a positive impact. It is not by definition a negative one. If you ccould adapt (or even profit from it), then there is no problem. I trade since the 90's basically the same system without any problems. The last 5 years the performance even increased very much. A good system adapts itself to the changing conditions. The challenge is to find how to create that self adapting part. In the S&P you clearly see differences, one of them is this: in 1995 S&P was around 500; 0.1% rise would be 0.5 points or $25 per contract in 2021 S&P is around 4,200; 0.1% rise would be 4.2 points or $$210 per contract So today percentagewise the same move brings 8.4 times more profit. Margins went of course up too, but the limitation of tradable size is moved much higher. To make the same profit in $ in 1995 as in 2021, you need to trade a size 8.4 times bigger than today.
Some say the title is misleading, but I myself also confused when I heard it from professional trader from TV/internet. They didn't say what exactly are the effect of these changes. they just say volitility is much greater nowaday, more algo trading now than ever these kind fo stuff，but didn't say how they changed conventional TA and partern. The most I heard from is breakout/trend following strategy does't work anymore.