Trend Following--Another Nail In The Coffin

[marketsurfer]

Quote from Bearbelly:

I think communication is often impossible. If you have different definitions of the terms you are trying to communicate with than the person you are trying to communicate with there is no possible way to reach a resolution unless you stop and try to agree on the meaning of every word. Rots o ruck.

the wisest post on the thread.

Proflogic and others trying to promote a certain method often create their own worlds/ word definitions. I prefer to use the generally accepted definitions. Discussing trading with Proflogic is like talking religion with L. Ron hubbard.

 

[HolyGrail]

Quote from marketsurfer:


does 9 moves in one direction, make the 10th or more moves in the same direction more probable?

Actually, yes it does. The difference between coin flipping and the market is there is no sentiment that can change the direction of a coin flip, but there is in the market. End of story.

 

[Lights]

In the words of Van K. Tharp, in the book Trade Your Way to Financial Freedom[1]

“ Let's break down the term Trend Following into its components. The first part is "trend". Every trader needs a trend to make money. If you think about it, no matter what the technique, if there is not a trend after you buy, then you will not be able to sell at higher prices..."Following" is the next part of the term. We use this word because trend followers always wait for the trend to shift first, then "follow" it.

Semantics really. You define trend as a stock being up sequential days. That is not mine or many others.

Quote from marketsurfer:

the wisest post on the thread.

Proflogic and others trying to promote a certain method often create their own worlds/ word definitions. I prefer to use the generally accepted definitions. Discussing trading with Proflogic is like talking religion with L. Ron hubbard.

 

[marketsurfer]

Quote from HolyGrail:

Actually, yes it does. The difference between coin flipping and the market is there is no sentiment that can change the direction of a coin flip, but there is in the market. End of story.

ok, please elaborate how 9 moves in one direction increases the odds that the next move will be in the same direction. if you can do this, you will truly be the HolyGrail.


sentiment does change the market, but no one knows when sentiment will change. sentiment is a nebulous, nonuseable concept.

 

[HolyGrail]

Sentiment is reflected in the trend. Every day does not start as if yesterday did not exist. When you have stocks under valued, stocks will move up to their perceived "value". It takes a trend to move stocks to their value.

 

[HolyGrail]

Quote from marketsurfer:

ok, please elaborate how 9 moves in one direction increases
sentiment does change the market, but no one knows when sentiment will change. sentiment is a nebulous, nonuseable concept.

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.

 

[Lights]

a trend follower will not buy a stock already 9 moves in one direction. he will most likely be selling and looking to get long again at some later point.

Quote from marketsurfer:

ok, please elaborate how 9 moves in one direction increases the odds that the next move will be in the same direction. if you can do this, you will truly be the HolyGrail.


sentiment does change the market, but no one knows when sentiment will change. sentiment is a nebulous, nonuseable concept.

 

[marketsurfer]

Quote from HolyGrail:

Sentiment is reflected in the trend. Every day does not start as if yesterday did not exist. When you have stocks under valued, stocks will move up to their perceived "value". It takes a trend to move stocks to their value.

thats all well and good. however, sentiment is not the same what is reflected in the trend. 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

 

[marketsurfer]

Quote from Lights:

a trend follower will not buy a stock already 9 moves in one direction.

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

 

[ProfLogic]

Quote from Bearbelly:

I think communication is often impossible. If you have different definitions of the terms you are trying to communicate with than the person you are trying to communicate with there is no possible way to reach a resolution unless you stop and try to agree on the meaning of every word. Rots o ruck.

I agree and it's not worth the effort in this case.