Jim Simons Trashes Trend Following

[marketsurfer]

as I have been saying for years, trend following is an ancient tactic that has no relevance in today's markets. No matter what its high priests like Mike Covel say:

08 JS: In the old days -- this is kind of a graph from the old days, commodities or currencies had a tendency to trend. Not necessarily the very light trend you see here, but trending in periods. And if you decided, OK, I'm going to predict today, by the average move in the past 20 days -- maybe that would be a good prediction, and I'd make some money. And in fact, years ago, such a system would work -- not beautifully, but it would work. You'd make money, you'd lose money, you'd make money. But this is a year's worth of days, and you'd make a little money during that period. It's a very vestigial system.

10:55 CA: So you would test a bunch of lengths of trends in time and see whether, for example, a 10-day trend or a 15-day trend was predictive of what happened next.

11:05 JS: Sure, you would try all those things and see what worked best. Trend-following would have been great in the '60s, and it was sort of OK in the '70s. By the '80s, it wasn't.

 

[kut2k2]

as I have been saying for years, trend following is an ancient tactic that has no relevance in today's markets. No matter what its high priests like Mike Covel say:

08 JS: In the old days -- this is kind of a graph from the old days, commodities or currencies had a tendency to trend. Not necessarily the very light trend you see here, but trending in periods. And if you decided, OK, I'm going to predict today, by the average move in the past 20 days -- maybe that would be a good prediction, and I'd make some money. And in fact, years ago, such a system would work -- not beautifully, but it would work. You'd make money, you'd lose money, you'd make money. But this is a year's worth of days, and you'd make a little money during that period. It's a very vestigial system.

10:55 CA: So you would test a bunch of lengths of trends in time and see whether, for example, a 10-day trend or a 15-day trend was predictive of what happened next.

11:05 JS: Sure, you would try all those things and see what worked best. Trend-following would have been great in the '60s, and it was sort of OK in the '70s. By the '80s, it wasn't.

Simmons clearly doesn't understand trend following. It has nothing to do with prediction.

LBR's Principle One: A Trend has a higher probability of continuation than of reversal.

No need to predict when you can just play the odds.

 

[achilles28]

Ya the s&p move from 666 to over 2100 clearly is no trend. Nor is oil from 40 to 100 back to 40 a trend. Nor the yen. No trends!!!

Trends happen all the time. Js probably needs liquidity

 

[loyek590]

what has gone up will keep going up, and what has gone down will keep going down. This is the only known truth in trading. And even then it's only true about 10% of the time.

 

[kut2k2]

what has gone up will keep going up, and what has gone down will keep going down. This is the only known truth in trading. And even then it's only true about 10% of the time.

Nothing is certain in the markets, there are only probabilities. But trading with the trend is a tried-and-true profitable method. However most trend traders don't know how to avoid chop, which is where low winrates and even outright failures come from.

NoDoji posted a thread on what to do in chop.

 

[marketsurfer]

Simmons clearly doesn't understand trend following. It has nothing to do with prediction.

LBR's Principle One: A Trend has a higher probability of continuation than of reversal.

No need to predict when you can just play the odds.

"Simons doesn't understand". LMFAO! Dude, no personal offense meant, but that is among the. Most moronically arrogant statements ever on et. Thanks for the laugh.

 

[Mtrader]

In trading there are many different approaches and many different specialties. Jim Simmons is a master in one of these specialties. Nobody can deny that.
But that does not mean that he is an expert in ALL the existing different approaches.
It is not because sportsmen, businessmen or actors are successful in 1 thing that they can be successful in everything.
The same applies to Jim Simmons. He does what he does because he is good in it. Other successful traders dont trade the way Simmons trade but use another tactic because they are good in that tactic. For them what Simmons does is not working.
But I agree that trendfollowing as it was in the 70's and 80's is completely different from what trendfollowing represents now. The trendfollowing fas it was in the 70's and 80's does not work good anymore.

 

[Occam]

Simmons clearly doesn't understand trend following.

I truly hope you're joking. I truly regret that you probably are not.

It has nothing to do with prediction

If "trend following" has nothing to do with prediction, then "trend following" has no use whatsoever in either trading or investing.

Fortunately for anyone attempting to use these techniques, kut2k2's statement is probably wrong (at least to some degree, although probably not nearly to the degree to which most traders, amateur or professional, would be able to profit by it).

 

[kut2k2]

"Simons doesn't understand". LMFAO! Dude, no personal offense meant, but that is among the. Most moronically arrogant statements ever on et. Thanks for the laugh.

He thinks TF has something to do with prediction, you idiot. His ignorance on the subject is blatant. As is your stupidity.

 

[GloriaBrown]

He clearly said trend following doesn't work now, just accept the truth. His firm is the best trading firm in the world, that is enough to prove trend following just doesn't work anymore.