Trend Following--Another Nail In The Coffin

[marketsurfer]

Quote from HolyGrail:

Yes no one knows when the sentiment will change, but that does not mean you can't ride the trend until it does change. You don't have to call the top to be profitable.

Can one make a random entry, if it starts moving in the right direction, hold for profits? If so, what good is knowing the past moves?

random entry meaning paying no attention to the past moves.

is this trend following?


surf

 

[HolyGrail]

Quote from marketsurfer:

Let's take your example--what is undervalued based on perception? unfortunately, we are not privy to perceived value or sentiment untill after the fact. sure, one can see trend in the past, but it really has no barring on what will happen after you enter the trade. the concept of trend following is fatally flawed.

surf

You have to separate the retail investor from the institutional investor. True the retail investor probably doesn't know the value but I can assure you the institutional investor does know. Now how can we use this? We trade in the direction of the instituional investor(the trend) for as we so choose. We exit on strength and return on weakness.

 

[Lights]

believe it or not, trendfollower will sell stock in an uptrend.

Quote from marketsurfer:

why not? are the odds less of a continued move in the same direction after X number of moves?

 

[marketsurfer]

Quote from HolyGrail:

You have to separate the retail investor from the institutional investor. True the retail investor probably doesn't know the value but I can assure you the institutional investor does know. Now how can we use this? We trade in the direction of the instituional investor(the trend) for as we so choose. We exit on strength and return on weakness.

interesting. I agree with the first line....However not with the rest of your statement. Institutional investors dont always make winning trades. See JWH over the last several years, etc. The retail guy following JWH's trades would have been wiped out multiple times. You are talking about sub trends in the last line??

 

[HolyGrail]

Quote from marketsurfer:

Can one make a random entry, if it starts moving in the right direction, hold for profits? If so, what good is knowing the past moves?

random entry meaning paying no attention to the past moves.

is this trend following?


surf

There is more than one trend and perhaps that is why there is so much confusion.

Every entity has a long , intermediate, and short term trend. If you trade nothing but short term trends you will most likely lose.

You should always trade the trend one step above. If you are a short term trader you need to trade in the direction of the intermediate trend. If you are an intermediate term trader you must trade in the direction of the long term trend etc.

Sorry, but it works. Add sector analysis to it and you increase your odds even more.

 

[marketsurfer]

Quote from Lights:

believe it or not, trendfollower will sell stock in an uptrend.

why? my understanding of trend following is that one waits for the trend to change prior to closing the position. JWH has been waiting a long long time for an example.

Watch the leading evangelist of trend following preach the gospel:

http://www.youtube.com/watch?v=49aRW-d1-hE


If you want to change the method, you should call it something else.

regards

 

[Lights]

Yes it does work. I think some people are just better at it than others. That the majority cannot do it should not negate it. Marketsurfer seems to be making a point that most trendfollowers lose when chasing momentum. That is true too.

Quote from HolyGrail:

There is more than one trend and perhaps that is why there is so much confusion.

Every entity has a long , intermediate, and short term trend. If you trade nothing but short term trends you will most likely lose.

You should always trade the trend one step above. If you are a short term trader you need to trade in the direction of the intermediate trend. If you are an intermediate term trader you must trade in the direction of the long term trend etc.

Sorry, but it works. Add sector analysis to it and you increase your odds even more.

 

[Lights]

nope, that is "buy and hold". i never heard of covel.

Quote from marketsurfer:

why? my understanding of trend following is that one waits for the trend to change prior to closing the position. JWH has been waiting a long long time for an example.

Watch the leading evangelist of trend following preach the gospel:

http://www.youtube.com/watch?v=49aRW-d1-hE


If you want to change the method, you should call it something else.

regards

 

[ProfLogic]

Quote from Lights:

believe it or not, trendfollower will sell stock in an uptrend.

Absolutely because when one can define a current trend, part of that trend is the pullback in that trend. In a Bull Trend, price has to make a support oscillation that is a HL so it can to back up and make a new (HH) resistance top and continue that current trend. This sustains that trend. In a Bear Trend, price has to make a resistance oscillation that is a LH so it can to back down and make a new (LL) support bottom and continue that current trend. This sustains that trend.

We all, even smurf, understand that a Bull Trend is price making HH/HL/HH/HL/HH etc. and a Bear Trend is price making LH/LL/LH/LL/LH etc. but the rub is that most traders, because they can't define specific parameters that make up "A" trend, forget that the pull back in the trend is as important as the trend itself because IT IS what SUSTAINS the TREND.

 

[HolyGrail]

If you believe that momentum EXISTS within the market then you have to believe that trend following can work. Trend following is nothing more than a form of long term momentum.