Does Trend Following Work?

Quote from kiwi_trader:

One of the nice things about trading is you can define the trend a number of ways.
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Indeed, this is the problem with a lot of things being discussed at ET.
 
Trendfollowing will usually work when there is a trend, and will likely fail when there isn't one. To me it's like asking if being long works better than being short.
 
Quote from illiquid:

Trendfollowing will usually work when there is a trend, and will likely fail when there isn't one. To me it's like asking if being long works better than being short.
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There is ALWAYS a trend, but you have to look in the right timeframe.

It is not the same as asking if being long works better than being short. Because to know if long is better than short you need to know the trend. If the trend is short, short is better than long; if the trend is long, long is better than short. It's as simple and logic as that.
 
Most traders think of themselves as either (a) trend followers, or (b) counter punchers.

We all know what it means to be a trend follower, but the questions are always, "when has a move become a trend", and "when has the trend stopped being a trend".

Counter punchers do best in ranging markets... fading support and resistance, jumping on perceived swing changes, expecting sideways chop.

Most traders are much better at one than the other. The mindset for each is different. The best traders will recognize this and be able to "trade trend" and "trade chop" with equal aplomb.
 
If you detrend the market data, they would pass most tests for randomness (from "The Computational Beauty of Nature" by Gary William Flake). Basically if you are not trading the trend bias, you are betting on randomness.

Spike500 has helped me out with some trend trading dilemmas. He is extremely consistent in his philosophy. Unfortunately I am not and until I become consistent in my thoughts and actions, it will mean that on some day when the sunspots are moving, I will be trading against the trend and give back my capitals if not my mentals.

You might say ES (S&P emini) is an efficient mean-reverting market but the money will still be made on the leg of the trend and all the risk and suffering will be on the other side. I just have to learn to adjust my trading according to different strength of the trend... some days you can just feel alot of people got caught because the market feed them hopes.

P.S. yes, you can lose a lot of money trend trading the wrong way.... like me.

Regards,
William
 
Quote from spike500:

There is ALWAYS a trend, but you have to look in the right timeframe.

It is not the same as asking if being long works better than being short. Because to know if long is better than short you need to know the trend. If the trend is short, short is better than long; if the trend is long, long is better than short. It's as simple and logic as that.
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Well that depends if you believe simplicity and logic are beneficial in one's trading. :)

But half-kidding aside, I think gnome's post reflects what I meant by comparing tf to being long or short.

There are times you want to follow the trend (greatly simplified, when you believe there is enough "trending" left to go to make the risk/reward worth it), and there are times when you want to fade the trend (when you think there is more reward in the reversal than the continuation).

Trendfollowers are correct at the start of trends, but then again so are reversal traders who've captured the turn prior. Conversely, trendfollowers who are late to the party will usually be wrong, as well as reversal players who arrive too early. (edit: perhaps "early" and "late" are the wrong words here; instead, it might be more accurate and simple to say trendfollowers are usually correct when the trend lasts long enough for them to make a profit, etc.)

Is it possible to capture the turn in a reversal mode, then shift into trend following mode of thinking afterwards? If the situation calls for it, why not?
 
More i trade less i understand the term "trend following"
Only one thing is oposite then "trend following" and that is
when entering the trade you put right away limit order to
take your profits and close position
Everything else is trend following when the trade moves in right direction.
It just matter of what your time frame is 1min or 1month
 
Sometimes the topic of a thread could be quite confusing.

Trend = Movement = Profit

No Trend = No Movement = No Profit

"Does Trend Trading Work?" Of course Yes. :)
 
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.
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True mrB,;
but that requires discretion to realize its the truth.

Some one said simple,
market is always in a trend ,[counter trend is a '''shorter'' trend] if market is open, it goes;
up
down
or sideways trend:cool: Cant do anything except those 3 trends.


:cool:
 
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