Trend Funds Destroyed in 2012

Is it at all correct to look at the performance of funds and extrapolate that the method is dead?

Funds of that size cannot scale in and out of positions in very short order, whereas the smaller trader can.

I have no difficulty using the basic approach in directional trading, though I do close positions long before those epic drawdowns.

If there is to be a 20% or 30% correction, I would probably be out at about 8%. I have always favoured this, with a re-entry on the pullback and a 2B reversal as advocated by Trader Vic.
 
Quote from justrading:

Is it at all correct to look at the performance of funds and extrapolate that the method is dead?
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Apparently some thinks so. Vide LTCM, LTCM v2.0, Niederhoffer, Niederhoffer v2.0 and many more.
 
Quote from luckyputanski:

Apparently some thinks so. Vide LTCM, LTCM v2.0, Niederhoffer, Niederhoffer v2.0 and many more.
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Yes, I suppose people just look at flawed application of a strategy or failure of a strategy in a constrained situation and say that it will not work universally. A pity for those traders who blindly accept this.

BTW, when you mention LTCM I am reminded of the 'house prices will never go down because demand just keeps growing' spiel.

Waiting for the next sure thing now. There's usually money to be made if one does not fade it too early.
 
Quote from luckyputanski:

Well, assuming he trades eod, then yes, you're right - he predicts where the market is going for the next day. And he's predictions are maybe 51% right.
The point is, he's not anticipating a change in direction. He looks at current direction, reacts to it, predicts that it won't change for at least a day, and then puts a trade.
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There's no difference between a change and a continuation when it comes to predictive accuracy. surf
 
Quote from marketsurfer:

That's double talk. When one enters a directional trade, they are predicting follow thru and clearly, the trend followers, stick with their prediction thru large drawdowns. surf
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If we take as a given eckhardt really is a trend follower....

your response is the double talk. he may be predicting follow through but it does not have to follow through 50 percent of the time. His method is more about magnitude than quantity. In essence he is saying he would rather have a few big winners than be right 51 percent of the time.

So trying to pin the coin flip problem on trend followers does not follow.
 
Quote from justrading:

Is it at all correct to look at the performance of funds and extrapolate that the method is dead?

Funds of that size cannot scale in and out of positions in very short order, whereas the smaller trader can.

I have no difficulty using the basic approach in directional trading, though I do close positions long before those epic drawdowns.

If there is to be a 20% or 30% correction, I would probably be out at about 8%. I have always favoured this, with a re-entry on the pullback and a 2B reversal as advocated by Trader Vic.
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This approach is exactly what killed the trend followers last year.

Take a look at the SPX. It "trended" upwards for most of H1 before losing over 9% in May, it bottomed out in June and again "trended higher" until it peaked in Sept and again lost over 8% and only bottomed in Nov.

You'd have sold right at the bottom twice in a row if you had got out at the 8% correction mark, and probably bought near the top just as the market looks to be trending higher again.

Trend following is nothing more than just another bet on a continuation of direction, you are predicting that the trend will continue when you buy into a trend.
 
I believe you. the trading community does not seem that big once you start making money.

Back when I was making living trading I wound up meeting or speaking with multiple market wizards. Its seems to me that once you are making money and turning the commissions you get invited to the chicago christmas parties. Soon you meet people. I did not consider myself a big deal nor was I making a fortune... we were just making money almost every day.
 
Quote from trickshot:

This approach is exactly what killed the trend followers last year.

Take a look at the SPX. It "trended" upwards for most of H1 before losing over 9% in May, it bottomed out in June and again "trended higher" until it peaked in Sept and again lost over 8% and only bottomed in Nov.

You'd have sold right at the bottom twice in a row if you had got out at the 8% correction mark, and probably bought near the top just as the market looks to be trending higher again.

Trend following is nothing more than just another bet on a continuation of direction, you are predicting that the trend will continue when you buy into a trend.
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If you read the link to what I considered the great interview... it was a look into the mind of a guy who manages money and has to decide how to optimize winning systems (but not over fit) to adapt or stay ahead of a market that by its nature evolves to destroy winning systems.
So in essence he must adapt his winning system to not be stuffed by the very action you mention. Maybe he enters sooner or later. maybe he evolved his stops to get wider or much tighter... who knows? Maybe he has blended multiple systems.
 
Quote from jem:

I believe you. the trading community does not seem that big once you start making money.

Back when I was making living trading I wound up meeting or speaking with multiple market wizards. Its seems to me that once you are making money and turning the commissions you get invited to the chicago christmas parties. Soon you meet people. I did not consider myself a big deal nor was I making a fortune... we were just making money almost every day.
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No question about it--- I only raised about 40m for several funds-- peanuts for the trend guys, but word gets around.
 
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