Althucher guesses: trend funds to disappear within the next 10 years...

[whitster]

the problem is partly one of paradigm.

if you are a "trend follower", then rotating markets look like noise

they aren't noise. so called rangebound, rotating, or whatever you want to call them "anti-trending" markets are just as tradeable as trending ones.

it's a matter of applying the right methodology to the right market.

people who are trend followers in a non-trend market are trying to be a socket wrench dealing with a screw.

wrong tool

 

[aus_SPIder]

trend following is based on psychology. the psychology of the market has never changed and i doubt it ever will.

contrast Dutch Tulip Bubble to wall street crash 87 or south sea bubble to Nasdaq and ull understand that the basic tenants of human psychology in the markets have not changed for the past 400 years.

I would bet my arse that Richard dennis's famous turtle system would worked as well in the 16 and 1700s (i have no data unfortunately) trading those bubbles as it would have trading the NASDAQ bubble and 85-87 bubble and commodities during the 1980s.

trend following will never die. There will be times again when the market trends like hell and is stuffed full of volatility. after the great depression there was a period of almost 20years when there were no significant trends and trend follow system would have alot of equity.

Fast forward to 1980-1996 would anyone have doubted trend following's ability to profit then? Surely not with soros, seykota, marcus, dunn, dennis and co. rolling it in making 2-300%+ in some years.

Seasoned trend followers understand that a bad year or two do not invalidate a method which has been tried and tested over the past 2-3 decades. The rangebound markets separate the men from the boys, and when the market does trend nicely again ull be sure that the media will beat up trend following as teh biggest thing ever again.

 

[marketsurfer]

interesting points. with these severe drawdowns suffered by the "deans" of trend following--- is there a difference between trend following and buy/sell&hold strategy?

regards,

surf

 

[whitster]

nobody doubts that trend following can work

my point was that in a rotating market - it doesn't

markets can go through long period without significant "trends"

trend following does not suit my trading style, and i don't employ it, but i would never deny that a successful system can employ it

 

[marketsurfer]

Quote from whitster:

nobody doubts that trend following can work

my point was that in a rotating market - it doesn't

markets can go through long period without significant "trends"

trend following does not suit my trading style, and i don't employ it, but i would never deny that a successful system can employ it

yes. it takes a dislocation of some sort on a global scale to create trends in the macro universe that can be identified in hindsight only. my suggestion is trend following is no different than buy/sell and hold/hope.

here we have the traders with the most resources, information and money in the history of financial markets--- yet they can't identify the current trends.

regards,

surf

 

[marketsurfer]

Quote from psytrade:

Seykota has mentioned that you dont find trends, you ride the bucking bronco.

yes. seykota, a member of the trend folowers hall of fame, actually states---" as such, we can determine as many instances of trend as we please, in any direction that we please.....there is no such thing as THE trend....."

furthermore--"there is no way to determine the current trend, or even define what the current trend might mean; we can only determine historical trends."


i am surprised he is not tossed out of the "trend followers hall of fame" for making these heretical, yet accurate statements!

regards,

surf

source: http://www.seykota.com/tribe/TSP/Trends/index.htm

trend followers hall of fame info http://turtletrader.com/tpg.html

 

[Cutten]

Trend following makes sense when a large dislocation in fundamentals makes the market take on a serial bias in one direction, AND the competition from other trend followers is not sufficiently great that the resulting noise becomes large enough to make the risk not worth the reward. The trouble is that the best time for this is early in a trend, and most typical trend-followers use lagging systems.

IMO, the current proliferation of naive trend-followers makes it more profitable to exploit their predictability by fading them at extremes rather than trying to join them for the ride. There are still good trends, but in most cases they are no longer good by the time that simple trend following "technical indicators" have cottoned on.

The solution is to identify trends early or before they happen, with something a bit more sophisticated and accurate than a lagging moving average or breakout system. Then, once all the trend followers have got in, book your profits and start scaling into options in preparation for the inevitable fast reversal as they all get stopped out at the same time.

 

[Cutten]

Quote from NTB:

Both Soros and Kovner are trend followers.

I suspect they are more trend anticipators than followers.

 

[psytrade]

read up on william eckhardt and youll find he doesnt use moving averages or breakout to determine trend.

 

[jem]

I tell you right now why trend following is so hard... derivatives.

Derivatives make markets more noisy. Clean signals are harder to find, and because of he derivatives it seems me that the pullbacks in manyof these markes are deeper than they used to be.