Trend Following--Another Nail In The Coffin

Discussion in 'Trading' started by marketsurfer, Jan 26, 2007.


  1. the wisest post on the thread.

    Proflogic and others trying to promote a certain method often create their own worlds/ word definitions. I prefer to use the generally accepted definitions. Discussing trading with Proflogic is like talking religion with L. Ron hubbard.

    :D
     
    #51     Jan 27, 2007
  2. Actually, yes it does. The difference between coin flipping and the market is there is no sentiment that can change the direction of a coin flip, but there is in the market. End of story.
     
    #52     Jan 27, 2007
  3. In the words of Van K. Tharp, in the book Trade Your Way to Financial Freedom[1]

    “ Let's break down the term Trend Following into its components. The first part is "trend". Every trader needs a trend to make money. If you think about it, no matter what the technique, if there is not a trend after you buy, then you will not be able to sell at higher prices..."Following" is the next part of the term. We use this word because trend followers always wait for the trend to shift first, then "follow" it.

    Semantics really. You define trend as a stock being up sequential days. That is not mine or many others.


     
    #53     Jan 27, 2007

  4. ok, please elaborate how 9 moves in one direction increases the odds that the next move will be in the same direction. if you can do this, you will truly be the HolyGrail.


    sentiment does change the market, but no one knows when sentiment will change. sentiment is a nebulous, nonuseable concept.
     
    #54     Jan 27, 2007
  5. Sentiment is reflected in the trend. Every day does not start as if yesterday did not exist. When you have stocks under valued, stocks will move up to their perceived "value". It takes a trend to move stocks to their value.
     
    #55     Jan 27, 2007
  6. Yes no one knows when the sentiment will change, but that does not mean you can't ride the trend until it does change. You don't have to call the top to be profitable.
     
    #56     Jan 27, 2007
  7. a trend follower will not buy a stock already 9 moves in one direction. he will most likely be selling and looking to get long again at some later point.

     
    #57     Jan 27, 2007

  8. thats all well and good. however, sentiment is not the same what is reflected in the trend. Let's take your example--what is undervalued based on perception? unfortunately, we are not privy to perceived value or sentiment untill after the fact. sure, one can see trend in the past, but it really has no barring on what will happen after you enter the trade. the concept of trend following is fatally flawed.

    surf
     
    #58     Jan 27, 2007

  9. why not? are the odds less of a continued move in the same direction after X number of moves?

    :D
     
    #59     Jan 27, 2007
  10. I agree and it's not worth the effort in this case.
     
    #60     Jan 27, 2007