trend following delusion shattered

illiquid · Nov 22, 2006

Quote from ProfLogic:

Any Trend Trader worth their salt doesn't trade based on the anticipation of a trend, they trade with an established trend. If you can't strictly define a trend within a specific chart increment time frame then you will always be anticipating one.

That was what I meant, the fuss on this thread isn't about whether or not traders want to catch trends, it's over how they do it. Some prefer to catch the turns, others prefer to ride the middle.

If one could do both then this thread is moot.

ProfLogic · Nov 22, 2006

Quote from illiquid:

That was what I meant, the fuss on this thread isn't about whether or not traders want to catch trends, it's over how they do it.

I linked another thread which contains a full explanation of how I do it. I can't and won't speak for anyone else.

Buy1Sell2 · Nov 22, 2006

Quote from Keeper:

I agree with Buy1Sell2.

Thank you. So do I.

jack hershey · Nov 22, 2006

Quote from illiquid:

That was what I meant, the fuss on this thread isn't about whether or not traders want to catch trends, it's over how they do it. Some prefer to catch the turns, others prefer to ride the middle.

If one could do both then this thread is moot.

I think that many people do both: catch the turns and ride the middle.

I think of it as a hold /reversal strategy and it's optimization is a matter of staying in the market at all times and on the right side of the market.

I'm sure this means different things to different people simply because of the manner in which they view real time market data.

I use shells of boundaries and monitor within them with consideration only of the forming bar. It is always to the left of the trendline even when two trendlines are overlapping during the period of the turning point.

Price moves from the extinguishing trendline, finally as the over lap of the trendlines comes to an end.

I annotate on two markets and trade the lagging one as deja vu. Having the leading one to watch proves helpful.

All of my pertinent annotations are available in the space of the future and they traverse into the present where I am harvesting profits all the while the market is open.

I do not like guessing nor being at risk at any time.

illiquid · Nov 22, 2006

I would just assume that if conditions are such that large moves occur more frequently (commodities in the 70's, tech stocks in the 90's), then trend following as such will show more success in general.

Conversely, top and bottom pickers/range traders will suffer during such times, and if they should ever return then we can start a thread called "range-bound trading delusion shattered" or "premia selling delusion shattered" etc.

Can one be completely irreproachable for starting a "GOOG-shorting delusion shattered" thread? So far so good . . .

psytrade · Nov 22, 2006

excellent illiquid

its like what karl popper spent his life on.

http://en.wikipedia.org/wiki/Falsifiability

Falsifiable does not mean false. For a proposition to be falsifiable, it must be possible, at least in principle, to make an observation that would show the proposition to fall short of being a tautology, even if that observation is not actually made. The logical precondition of being able to observe something of a given description is that something of that description exists.

In this context, I aim to say, prove that trend following is in fact a delusion. Clearly its not.

marketsurfer · Nov 22, 2006

Quote from psytrade:

excellent illiquid

In this context, I aim to say, prove that trend following is in fact a delusion. Clearly its not.

Speaking directly to mr.popper---trends exist and can be proven in the past--however its the future, after the trade is executed that matters to us and it is my contention that past trend has no effect on future results of a trade entry thus making the concept of trend following delusional and a trader myth.

--the concept does not test in the equity indexes. please note--my comments are directed toward the index markets. all one would have to do is buy when the market is going up and it would keep going--you are following the trend. however, this is not what occurs. in fact, tests indicate that buying new highs in the SP 500 is a vastly inferior strategy to buying new lows-- buying new lows is the opposite of trend following--the trend follower would say sell new lows, buy new highs.

furthermore, my basic question on how many time periods up increase the odds that the next time period or series of same will be up--has remained unanswered.

the public by default are trend followers--this is not the camp you want to be in.

regards,
surf

Bitstream · Nov 22, 2006

try buy new highs in this vix coma induced mkt and tell me how it goes.

Quote from marketsurfer:

Certainly, it is delusional--the concept does not test in the equity indexes. please note--my comments are directed toward the index markets. If not all one would have to do is buy when the market is going up and it would keep going--you are following the trend. however, this is not what occurs. in fact, tests indicate that buying new highs in the SP 500 is a vastly inferior strategy to buying new lows-- buying new lows is the opposite of trend following--the trend follower would say sell new lows, buy new highs.

furthermore, my basic question on how many time periods up increase the odds that the next time period or series of same will be up--has remained unanswered.

the public by default are trend followers--this is not the camp you want to be in.

regards,
surf

psytrade · Nov 22, 2006

Marketsurfer,

Intuitively you may think buying bottoms works because you tried it in 2002, but its a losing method.

I can show this to you with a backtest, but define first what bottom it is you buy. Is it a 50, 100, 200 , 255 day bottom?

ProfLogic · Nov 22, 2006

Quote from marketsurfer:

. . . in fact, tests indicate that buying new highs in the SP 500 is a vastly inferior strategy to buying new lows-- buying new lows is the opposite of trend following--the trend follower would say sell new lows, buy new highs.

furthermore, my basic question on how many time periods up increase the odds that the next time period or series of same will be up--has remained unanswered.

the public by default are trend followers--this is not the camp you want to be in.

regards,
surf

I am a Trend Reader not a Trend Follower! I do not believe in buying new highs, buying new lows, selling new highs or selling new lows. I believe a Trend Reader can simply read when a Trend is migrating from one direction, to it's counter direction and finally into a completely new trend.

Your question was answered in the link I posted. You do not understand the process involved with the answer. Not my problem.

Personally the camp I do not want to be in is the one that continuously tries to short new highs in the Dow when it is clear to us "Trend Readers" that price is still going up. The shear futility in that is blatantly and financially painful & obvious.