Is classical Trend Following still alive?
- Thread starter Slope Trader
- Start date
Just search on YouTube and you will find many traders scanning for breakouts and using them as entry triggers....so the answer is yes.
But I dont.... I usually consider the breakout entry as coming in too late. I try to hit the reversals and position myself firmly in right before the breakouts happen.
I use one set of indicators for getting in before breakouts out of consolidation, and a different set for getting in on V-shape reversal entries.
Additionally, I call B.S. on traders who say that they don't use technical indicators and that they soley rely on pure fundamentals of the company. They wouldn't be traders. They would be buy and hold investors.
But I dont.... I usually consider the breakout entry as coming in too late. I try to hit the reversals and position myself firmly in right before the breakouts happen.
I use one set of indicators for getting in before breakouts out of consolidation, and a different set for getting in on V-shape reversal entries.
Additionally, I call B.S. on traders who say that they don't use technical indicators and that they soley rely on pure fundamentals of the company. They wouldn't be traders. They would be buy and hold investors.
You must belong to the 1%. Most of us, me included are not.
Ask @murray t turtle, like the Turtles, he uses 50ma and 200ma. 50ma is 10 weeks and 200ma is 40 weeks.
So I pursued this question a little further and discovered that Clenow came out with an updated edition of his trendfollowing book just this year. I've started reading it and it appears to be exactly what I was looking for to try to understand where this approach is at right now.
The foreward was written by Jerry Parker and a portion of it is shown below. The emphasis placed on the words trend-following is mine.
Excerpt:
“….. Books like Following the Trend were hard to find back in those days but I was on a hunt and I would not be denied a place in the trend‐following world. When I got my big opportunity to work for Richard Dennis, I was ready. Well, at least I thought I was ready. I had a lot to learn and they were the best teachers, real geniuses. I learned that the best trend‐following rules are not complex and they are not overly optimized. The best trend‐following systems have only a few rules. I have been tempted over the years to make my system more complex but that has only resulted in fewer profits and me having to revert back to the basic rules of trend following that make sure you never miss a big trade and that you continually and, in all situations, limit the losses to a small percentage of your AUM. “Keep it simple” really does work better than complexity.
..…The best traders that I have known play for the big trends, let profits run, take small losses, and trade many markets, both long and short. Diversification is one of the not‐so‐secret secrets of success. I started out trading 20 markets, I now trade over 200 markets. Successful systematic traders must have dogged consistency and discipline. The best traders do every trade, regardless of the recent losses and drawdowns. It takes practice and a commitment to your system. My only regret in trading has been when I haven't followed my system the way I should have. Enjoy this book as I did and revisit it over the coming years to be reminded of how basic and powerful trend following is. The trend is truly your friend!”
Jerry Parker
CEO, Chesapeake Capital
The book:
Clenow, Andreas F.. Following the Trend: Diversified Managed Futures Trading (Wiley Trading) (p. xii). Wiley. Kindle Edition.
Edit: fixed the link
The foreward was written by Jerry Parker and a portion of it is shown below. The emphasis placed on the words trend-following is mine.
Excerpt:
“….. Books like Following the Trend were hard to find back in those days but I was on a hunt and I would not be denied a place in the trend‐following world. When I got my big opportunity to work for Richard Dennis, I was ready. Well, at least I thought I was ready. I had a lot to learn and they were the best teachers, real geniuses. I learned that the best trend‐following rules are not complex and they are not overly optimized. The best trend‐following systems have only a few rules. I have been tempted over the years to make my system more complex but that has only resulted in fewer profits and me having to revert back to the basic rules of trend following that make sure you never miss a big trade and that you continually and, in all situations, limit the losses to a small percentage of your AUM. “Keep it simple” really does work better than complexity.
..…The best traders that I have known play for the big trends, let profits run, take small losses, and trade many markets, both long and short. Diversification is one of the not‐so‐secret secrets of success. I started out trading 20 markets, I now trade over 200 markets. Successful systematic traders must have dogged consistency and discipline. The best traders do every trade, regardless of the recent losses and drawdowns. It takes practice and a commitment to your system. My only regret in trading has been when I haven't followed my system the way I should have. Enjoy this book as I did and revisit it over the coming years to be reminded of how basic and powerful trend following is. The trend is truly your friend!”
Jerry Parker
CEO, Chesapeake Capital
The book:
Clenow, Andreas F.. Following the Trend: Diversified Managed Futures Trading (Wiley Trading) (p. xii). Wiley. Kindle Edition.
Edit: fixed the link
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No. It seldom works out pefect. More often than not it ends up hovering around support and tying up funds, or keeps moving in the opposite direction and I end up DCAing and not getting redemption until a longtime later.
That's just what you sign up for trying to time that big bounce.
Thank you for sharing. Very helpful. Gives us retails some hope that simple systems could work even for us.
I respect your honest answer. Keep at it and hope you will find your answer. I am cheering you on.
Take care.