Everyone talks about trend following but no one seems to do it. Like we have seen numerous times on this forum, no one can even define a trend, much less follow it. The thing that has been pointed out before is that in order to have a trend, you have to have one point where you do not identify a trend, and then one point where you do and believe it's going to continue, and that is where you know a trend has started. This can be the close of a period, a candle, the change of an indicator, anything. People get their panties in a knot when you tell them this alsmost as much as they do when you say that all trading is predicting. Which it is, by the way. You are either predicting volatility or price movement. A long position is predicting price will go up. An option is predicting price will move or not move. Arbitrage is predicting price differences will stay so you can use them. Pairs trading is predicting relative price direction. Spread trading is predicting an offer will continue to be there so you can get it. Idiots, scammers, and cranks, there is a difference, say things like you should react to price, not predict price. There is no different with those, you are predicting because you think you have the best chance of something happening. Or maybe it would be better to say those methods of trading are (should be) the outcome of your prediction. The concern with trend following is that you have to take every trade. Since people only win like 10% of the time or something, you need those instances to actually be profitable. Look, don't get me wrong, if you have a winning system keep doing it. THe process of trend trading was explained in this thread, though. TO be aboslutley clear, however, I'm tlaking about intraday trading. THe only people I've talked to on this forum that I think might actually be sustainable are people who sell into resistance. Do you guys honestly think market makers care about your 1 contract order sitting above the previous high? I believe the only not manipulative edge is account size. Or arbitrage. Even that thread about the trading business, every story was about people with big accounts selling into up movement and buying into down movement. Were they identifying trends and riding them? They were going against what the market was doing and making money. They were buying BSC as it fell because that's how you make money. Stops are knowing when to pause. None of them were shoring it although that's what the trend was doing.
John Henry was able to buy the Boston Red Sox thanks to trend following. During the inflationary "glory days" of trend following in the 1970s/80s there were plenty of CTAs putting up insane annualized returns strictly from trend following strategies. What is a trend? Guys like Seykota used to define it as buying xx day high/lows.
It's easy to identify the trend....the hard part is to pick a spot to buy at, where to add and where to exit.
Bullshit. Trend has been defined numerous times. How can it be to understand that a trend is when prices move in one direction with pullbacks and consolidations in between? In fact, the equities market has been in an uptrend since 09. Let's stop pretending to not understand the obvious in an attempt to make a futile argument. Contrary to what many would say, trend following is the essence of trading. When you buy into a market, you're betting that the price will continue to rise and vice versa.
Any trading strategy that ca be reduced to requiring, aside from the calculations, mere patience and nerve, is a winning strategy.
I'll assume you mean trend following...for real-time, not hindsight. (because it's easy to pull up historical charts and draw lines) I like to think I'm kind of good at following/predicting/monitoring the trend for the Dow/spy/spx chart on a daily basis time frame. You have to establish logical and rational initial loose, general, directional or semi-directional biases...and wait for the subtle, breakout signs or reversal signs to peek out and expose themselves. It's kind of a constant hybrid, dynamic dance to trade it successfully. Scalping is for jackal amateurs -- I aim to seize the main, macro moves. You can't trade or wait for or expect something...if you don't know what to look for, or reasonably hunt and position for. It's all about understanding the hunting ground...and the relationship between the prey and predator -- and all its collective dynamic variables between them. Part art, part science...if you have a linear, square brain looking for an automated solution Holy Grail you will fail. Make Trading Great Again, Get rich in 2018...High-Fives` all-around,
in 2013 on a trends don't work thread with marketsurfer I wrote this.. I just pulled up a daily chart of the dow... for the last year or so... its still working.
It is one thing to understand the market and take advantage of their behavior and quite another to follow the "what is fashionable", people usually invest because they see the trend in that investment, without really knowing what is happening