Does Trend Following Work?

K

kiwi_trader

Yes it does Surfer.

I define trend following as:
- perceiving a trend by some means
- entering with a breakout or pullback (your choice)
- exiting with a target based on market structure or with trailing stops.

And it works :)

__________________
The things people believe in are usually just what they instinctively feel is right; the justifications and arguments are the least important part of the belief.
That's why you can win the argument, prove them wrong, and still they believe what they did in the first place. You've attacked the wrong thing.
So what do you do? Agree to disagree. Or fight. - C. Zakalwe.
 
Quote from illiquid:

I'm curious -- for those who don't believe in trend following, what happens if you get into a trade for whatever reason, and it just keeps going in your favor? Do you simply exit the trade because "trend following is faulty"? I mean, if it's stupid for someone else to sell while something is trending lower, doesn't that also imply that you have to cover your short?

Also: does calling a reversal and suffering an initial drawdown before it finally turns and starts "trending" your way, somehow make that trade more valid, vs a trend follower who enters at the exact same price, only instead has waited for the market to start confirming that direction before entering?
More...
 
Quote from kiwi_trader:

Yes it does Surfer.

I define trend following as:
- perceiving a trend by some means
- entering with a breakout or pullback (your choice)
- exiting with a target based on market structure or with trailing stops.

And it works :)

__________________
The things people believe in are usually just what they instinctively feel is right; the justifications and arguments are the least important part of the belief.
That's why you can win the argument, prove them wrong, and still they believe what they did in the first place. You've attacked the wrong thing.
So what do you do? Agree to disagree. Or fight. - C. Zakalwe.
More...


thank you for moving this thread.

how many movements in the same direction define a trend? this will be the first step to a interesting discussion.

i am off to NYC---will check back later.

surf
 
Yeah,
Trend following works great!
Only problem is to find the trend.
kiwi is not of much use on that: "- perceiving a trend by some means" :D
 
Quote from nononsense:

kiwi is not of much use on that: "- perceiving a trend by some means" :D
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I borrowed a Ouija board from Surfer and have found it excellent.

More seriously ... I put two emas on every intraday chart and if price is under them I go short only and vice versa for longs. I also count the number of pushes to build a "perception" of the likelihood that this particular trend will collapse.
 
Richard Dennis method works. he turned 4 grand into 200 million in 18 years.

the turtles he trained made 450m in a few years.

others have claimed 300% annual return if you abide by the rules.
 
Quote from Mr B:

Richard Dennis method works. he turned 4 grand into 200 million in 18 years.

the turtles he trained made 450m in a few years.

others have claimed 300% annual return if you abide by the rules.
More...

Another poster who believes everything he reads.
 
Quote from Socrates:

What do you do when your enemas entwine like snakes around Laacooon?
More...

Trend defining is a "little bit" more complicated than 2 crossing MA's.
If you have a good system you will almost never encounter the problem you talk about.

Discussing about the succes of trendfollowing is useles because 90% of the traders are not able to define the trend in a professional way. And from the 10% who can only a part is succesful.

An example of what is going on here:

You can built a house in several ways.
You can simply pile up the wood and your house will fall apart in no time.

You can also tie the wood together, but after a while this will not hold either.

You can use screws and put everything together. In this case your house will stay upright for quite a while.

So the discussion that is going on about trendfollowing can be compared with the three guys who used three different methods to built a house. According to the method used the outcome on the next question will be different, and all three of them will be convinced that their answer is the correct one, based in their experience.
The question is: can you built a solid wooden house ?

1 will say: definitely not
2 will say: yes but only for a while
3 will say: of course you can

And what is the correct answer? If you have the knowledge you will have a solid house; if you are stupid you will only have a pile of wood. Same thing applies on trend following.
 
One of the nice things about trading is you can define the trend a number of ways. Three people can use three ways and the only issue (for me) is whether they are able to use those ways to trade profitably.

Re the emas and the laacooons ... there is slightly more to my entries than simply being on the right side of the emas so I avoid many but not all laacooons. To avoid all laacoons, should one have the faintest what they are, might imply a 100% win rate and most of us realize that that is not necessary for profitability. But price being above or below the emas is a necessary condition (for me) for the trend to be up or down.
 
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