Trend Following-Trend Commandments

My new book 'Trend Commandments' is out, but my 2nd new book comes shortly: 'The Little Book of Trading'. I would not describe 'The Little Book of Trading' as a 'Market Wizards' style interview book, but rather a narrative built around interviews and other research. Very different works.
 
Covel is a good example of what focusing on salesmanship can do for one.

In the manual for new CTA traders, they talk about trend following and how it is one of the most over crowded trades possible.

Look at Bill Dunn, he's been losing money since what 2003.

Trend following is certainly a valid strategy, and I will review Covel's information: I'm sure there is some good stuff there. But, I won't even consider spending thousands for his DVDs.

Covel, how much of your net worth/assets are invested in trend following strategies?
 
bwolinksy

I'm Market Predictor over @ C2. I've some of the best futures systems there. I believe I've tracked your performance and wasn't impressed.

Are you trading these with real money? If true then that implies a considerable confidence in your abilities which is commendable.

Quote from bwolinsky:

I will pm you that.

I'm up 44% since late March trading NQ futures with high leverage factors, nearly 12 to 1 in fact.

That's 136 contracts with 361,000 means 136*2285*20/361,000=17.21

Hmm... Think I should limit that to 12, but I'm pretty comfortable with what I'm doing. Did take a $71k draw on the last trade, though, but jumping the gun without confirmation from both systems naturally will have more risk. I entered a solid 15 points too early.
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For those interested in getting their message out. (3) recommendations:

Linchpin by Seth Godin
Rework by Jason Fried
Fascinate by Sally Hogshead
 
One thing I never understood about trend following is how a method that either wins or losses based on getting direction right doesn't predict direction or most practitioners go further and denounce prediction. Seems silly to me.. but to each his own. It pretty good for me actually because we have a whole group of traders who's performance depends on something they aren't even trying to do.
 
Trend following is an entirely reactive strategy. If any market starts to move in either direction, a TF system will jump on hoping that it will turn into a huge move. If it doesn't, the system will get out on a stop loss.

TF makes money from big directional moves and goes through loss making periods (drawdowns) when markets are choppy/sideways moving.
 
True. Prediction is not trend following.
 
Quote from Ash1972:

Trend following is an entirely reactive strategy. If any market starts to move in either direction, a TF system will jump on hoping that it will turn into a huge move. If it doesn't, the system will get out on a stop loss.

TF makes money from big directional moves and goes through loss making periods (drawdowns) when markets are choppy/sideways moving.
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The question remains how many moves in one direction increase the odds that the next move or series will be in the same direction. Until this is answered why not just do random entries?
 
Quote from Lucias:

One thing I never understood about trend following is how a method that either wins or losses based on getting direction right doesn't predict direction or most practitioners go further and denounce prediction. Seems silly to me.. but to each his own. It pretty good for me actually because we have a whole group of traders who's performance depends on something they aren't even trying to do.
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Although it is a reactive strategy - stop in and stop out when the market moves frequently - it is based on a prediction. The prediction is that in the future, for this set of entry/exit reactors, there will be more dollars returned in the productive trends than are lost in the whipsaws.

You takes your choices.
 
Quote from marketsurfer:

The question remains how many moves in one direction increase the odds that the next move or series will be in the same direction. Until this is answered why not just do random entries?
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Been answered.
Your "move" must be defined first and quantified.
 
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