Trend Following Research

marketsurfer · Apr 17, 2011

I agree, this argument has lots to do with non issues and semantics. With this said, I'll try to break it down to the core-- why does waiting for a trend to form prior to entry create any more of an edge than predicting when the past trend will change? Trends can change at any time, even the most fervent true believers would admit this-- therefore there really isn't any difference making the "trend following" hype a term used to market funds and other items without any edge or substance. It's really just buy and hope or sell and hope with wide stops across multiple asset classes. I look forward to your perspective as I have never seen the edge in investing in trend following. If you know it, aside from anecdotal legends. Do tell.... Thanks

Surf

Butterball · Apr 17, 2011

Quote from marketsurfer:

With this said, I'll try to break it down to the core-- why does waiting for a trend to form prior to entry create any more of an edge than predicting when the past trend will change?

In this thread I have noticed you mention "trend following offers no edge in entry" about half a dozen times. That statement alone disqualifies you. Not because your statement is wrong, but simply because it is irrelevant.

Trend following has very little to do with waiting for a trend to develop. You could use entirely random entries and still follow developing trends successfully and profitably. The timing of entries is quite immaterial. You could vary entry parameters and timing wildly without big variations in overall profitability.

Trend following is about letting winners run (without profit targets) and cutting losing positions after they go against you.

Quote from marketsurfer:

It's really just buy and hope or sell and hope with wide stops across multiple asset classes.

You'd be correct if financial markets were a casino making daily random coin flips to determine their returns. If that was the case then markets would be entirely efficient and trading them would be an exercise in futility. IMO markets are inefficient (many academics disagree at this point) and trend following is one way (amongst many) to exploit a number of those inefficiencies.

marketsurfer · Apr 17, 2011

Quote from Butterball:

In this thread I have noticed you mention "trend following offers no edge in entry" about half a dozen times. That statement alone disqualifies you. Not because your statement is wrong, but simply because it is irrelevant.

Trend following has very little to do with waiting for a trend to develop. You could use entirely random entries and still follow developing trends successfully and profitably. The timing of entries is quite immaterial. You could vary entry parameters and timing wildly without big variations in overall profitability.

Trend following is about letting winners run (without profit targets) and cutting losing positions after s.

If that's your definition, van Tharp, then I have no argument. I guess trend following is really just a marketing term for buy/sell and hold with stops. Very very wide stops based on the massive drawdowns of trend funds.

If there is no edge in entries and random entries work for trend following--- we agree. Trends are meaningless prior to your personal entry therefore studying charts and TA (to find past trends) really a waste of time. Right?

Butterball · Apr 17, 2011

Quote from marketsurfer:

Very very wide stops based on the massive drawdowns of trend funds.

So let me get this straight: "Massive drawdowns" of a trend fund directly imply the use of wide stops?

Clueless, just as I said.

I don't understand why you're passionately discussing a topic that you clearly know very little about and have very little hands-on experience with. Why not stick to topics that match up better with your personal trading and research background?

Neenisti · Apr 17, 2011

Quote from marketsurfer:

Trends are meaningless prior to your personal entry therefore studying charts and TA (to find past trends) really a waste of time. Right?

What is the purpose of fishing for opinions or answers if when offered your only response to them is that they are incorrect?

Ghost of Cutten · Apr 17, 2011

Quote from marketsurfer:

With this said, I'll try to break it down to the core-- why does waiting for a trend to form prior to entry create any more of an edge than predicting when the past trend will change?

Well, if trends are persistent then seeing a trend in place raises the odds that the near future will be trending also in the same direction.

marketsurfer · Apr 17, 2011

Quote from Neenisti:

What is the purpose of fishing for opinions or answers if when offered your only response to them is that they are incorrect?

I post on elite for entertainment ( I'm really boring) and to find ideas for future book/ article projects. It's been exceedingly good to me for developing ideas, getting gigs and raising money -- not so much for trading tactics. Regards, surf

marketsurfer · Apr 17, 2011

Quote from Butterball:

So let me get this straight: "Massive drawdowns" of a trend fund directly imply the use of wide stops?

Clueless, just as I said.

I don't understand why you're passionately discussing a topic that you clearly know very little about and have very little hands-on experience with. Why not stick to topics that match up better with your personal trading and research background?

What other reason would cause drawdowns of 40 plus percent? Maybe getting chopped to bits by multiple bad entries?

Neenisti · Apr 17, 2011

Quote from marketsurfer:

I post on elite for entertainment ( I'm really boring) and to find ideas for future book/ article projects. It's been exceedingly good to me for developing ideas, getting gigs and raising money -- not for trading tactics. Regards, surf

They say a picture speaks a thousand words, in this case 36 words speaks volumes.
I've met some petty people in my life but never one so open about their greed based existence.
How does one develop ideas being so closed minded?
How sad for you.
I can only imagine you are currently unmarried or at best divorced and childless.

Good day sir. I would normally wish a person luck at departing but in your case it would do no good. Please, I would appreciate it if you would not respond to any more of my posts.

AL

marketsurfer · Apr 17, 2011

Quote from Neenisti:

They say a picture speaks a thousand words, in this case 36 words speaks volumes.
I've met some petty people in my life but never one so open about their greed based existence.
How does one develop ideas being so closed minded?
How sad for you.
I can only imagine you are currently unmarried or at best divorced and childless.

Good day sir. I would normally wish a person luck at departing but in your case it would do no good. Please, I would appreciate it if you would not respond to any more of my posts.

AL

Whoa! :eek:

very harsh, I don't follow your reasoning or conclusions-- but that's likely a positive. Regards, surf