trend following delusion shattered

So my wife keeps saying.

 

She's a "keeper."

 

Just to be clear, I was not being disrespectful in my post to you.

 

I didn't know you used crossovers Hank. I have never liked them because of the delay... or a delay that I 'seemed' to perceive. I like price crossing one average better. For me the concept is simple.... a necessity in my case.... price tends to deviate from the mean. To the extent that 'price tends to deviate from the mean' makes some instruments better - whatever better is - than others. Many utilities tend not to deviate much; many tech stocks tend to deviate a lot.

It makes sense to me that fading an MA crossover would hold profit opportunities because it seems that price pulling away from an average, especially one popularly followed, tends to pullback to that average before resuming its original direction. An MA crossover might actually signal a short term peak in prices, at least relative to the longer term average.

 

Okay.

 

Yeah, there's a Gilligan's Island rerun about something like that.

 

You didn't prove anything. All you did was continue making assertions. Prove something and we'll talk.

M

 

Sounds good.

First you tell me how to posit a proof without making an assertion.

 

Fred:
Sorry to be late in replying. I am kind of busy today making a living.

I used the example of index arbitrage because it is an example of trend on the micro level. If you look at how index arbitrage works you will see that once the spread between cash and futures hits a specific level, there is a ramping up of buy or sell orders into the market, as arbitrageurs go after the difference and in the process bring the premium back into "balance". As these orders (which are program trades) hit the market they cause momentum or movement of price. A reasonably good analogy is that of a avalanche. At first the orders have little effect (again this is on the order of fractions of a second) then as the orders increase, there is a reaction and movement that is "trend" in a pure form.

I haven't taken time to read the posts in between this and your question. I don't expect many to "get it" because they don't have the background. Perhaps you will remember this quote from the bible and smile when I say (please, this is not aimed at you) "the education of fools is folly".

Lefty.

 

Sequence of FACTS (as opposed to your theories or opinions) that, when assembled in the proper order using valid logical statements, evaluate to the following:

Your claim = true

M