I almost titled this thread "Define Your Terms". With the subtitle "Some Quants are Idiots". Specifically I'm referring to a post in another that references this article: http://www.priceactionlab.com/Blog/2015/09/trend-following-forecasts/ Notice how Harris and the Qusma blogger he references NEVER define exactly what he means by "forecast". That's the magic trick: pretend like everyone is in agreement with the meaning of a term then make all sorts of presumptuous claims based on that imaginary consensus. I don't agree with Harris' interpretation of forecast, which for purposes of this thread shall be assumed to be synonymous with predict (verb) or prediction (noun). Apparently Harris thinks any statement about the future is a forecast. Most people would disagree. If you tell someone you're going to forecast an important event that will happen tomorrow and he goes along, chances are he will not be amused when you reply "the sun will rise tomorrow.". A statement about the future that has no uncertainty attached to it is known as A Sure Thing. The rules of common sense and common decency exclude sure things from the realm of forecasting. At least one party has to doubt the certainty of the event and nobody doubts the certainty of tomorrow's sunrise. The next distinction is between anticipation and prediction. Human beings live by anticipation, our lives depend on it. It is only by anticipation that we can plan for and many times attain our goals. Anticipation is a statement about the future which, while perhaps not a sure thing, still has a greater than 50% chance of occurring. They are largely based on past experiences, perhaps not personal experiences but the experiences of others like the anticipater, that If A Then B is a likely event. I will grant the idea that trend followers anticipate. We anticipate, based on past experiences, that trading with the trend is profitable. I personally believe that trading with the trend is virtually a sure thing, the biggest uncertainty being whether the trend follower is detecting true trend or false trend (chop). Again,most people would disagree that anticipating is the same as predicting. After all, when the most likely of two or more possibilities actually occurs, who is surprised by that? Besides people like Michael Harris. So ... common sense tells us that a sure thing is not a prediction. And common sense tells us that most anticipations don't count as predictions either. A forecast/prediction is a statement about the future that is fraught with uncertainty. All trend followers do is make the best case that they can for an extant trend and then go along for the ride. Go look at the counter-trend guys if you want to find predictors. Those guys truly need psychic powers.
Totally wrong thinking and it's dangerous not to use accepted definitions of words. The above post is a clear example of someone deeply fooled by hindsight bias. Sure, trading with the trend is profitable. However this statement is built on hindsight bias-- Think about it. Buy and holders get lucky too. surf
Can't read OP's post as I have him on ignore. However... Trend following IS predicting. When you trend follow, in general, you're predicting "what has come before and is currently indicated will continue for at least a while". That is a correct way to bet given the perceived trend's directional bias.
Not missing anything. Same garbage he's spouted on multiple other threads. As the t-shirt says, http://bit.ly/1IhvOso ...
Yeah, some noobs like to say.. "I don't predict, or I don't have a bias... I just trade"... whatever the Hell that means.
Unsurprisingly, surf, you, like Harris and the Qusma dude, never say what the "accepted" definition of forecast is. Did you think nobody would notice? By all means, give us YOUR "accepted" definition of forecast. And remember, any definition that includes sure things will make you look like an idiot.
Why better? Should I ignore my topic because you want to change the subject? I never said trend followers can't fail. Traders fail for all sorts of reasons. In answer to your question, trend following doesn't have positive expectation primarily when trend followers fail to detect the trend and only the trend.