Why trend following works

There are various techniques and time-frames to determine the direction of the market and generate a trade signal, for example, moving averages, 20 Day Breakout, momentum indicator technique. Trend following should be systematic. Market exposure, risk management, cutting of losses are also under consideration.

As a trader, you can do research and read books on the trend following and develop your trend following trading system. You can bring the balance in different markets you are trading with the help of trend following. Market changes and surprises. It moves up and down with sentiment and Trends flow accordingly. Instead, you should focus on your risk management, markets universe and trading consistency.

Past performance is not an indication of future performance. Please do your own due diligence before risking your hard-earned money. Thank for sharing this, you dont know how much it meant to someone like me…thank you very much. Very nice article. What timeframe is suitable to this Trend Following strategy? You suggested that you should be across the many different markets to capture trends everywhere. How can we get the 50 day High? Is these an indicator?

Can you pls let me know the name of the particular indicator usually available in MT4? Thanks for the wonderful blog post. Is it based on the back test of that particular market to see what fits this type of market and so may be different for different markets , or are there any other trading rules applicable? Hi Rayner Is averaging is really bad?. When you cant identify a single price point how about trading mini lots in many price points? Thank you very much for your articles and knowledge you provide, they have been very useful.

Hi rayner, great post, thanks for sharing! Anyway, would you please suggest the time horizon to analyze market on each time frame especially for 1H, 4H, and 1D? I mean, if you -for example- trade in 1D, how many days in the chart would you use to analyze the pattern? Iv Improved so much as a trader from last 5 years following ur tips excellent, I guess your always student for life always learning something new.

Does these Trend Following Strategies work on smaller timeframes as well like 5min, 15min, 1hr or should I only trade the daily timeframe? Already am with UST. For example, buying strength in the stock markets which could translate to something similar with options trading. Good day Rayner. Pls what are best parameterS for setting ma and 20ma.

Thanks once more………you are my Facilitator…….. It must to become a psichological constitusion in trading. Hi Rayner…you are a great teacher. You advise us to increase the markets that we trade. Or you just regard it as cost of doing business? For CFDs, yes it can be high. Or you can trade the futures directly which is much cheaper but requires more capital. I do not see you mentioning the video that would be included in Trend Trading.

Hey rayner…I love your youtube videos and your books. I really appreciate your willingness to share these ideas. Infact Rayner you are just incredible, you are so receptive, willing to help and teach traders increase in thier profits, and trading system, which makes u phenomenon, and ever since I have been following you, oh my goodness, I have improved rapidly.

Thanks for your good heart, more money,more knowledge for you. Thanks for the well organized series of videos and lectures. Very informative. He came up with six turtle trading rules to give structure to his method. In the beginning, the group achieved mixed results. By following growth trends or value stocks, traders can, in fact, profit from the next bullish or bearish market.

Bill Dunn of Dunn Capital is a lifelong trend follower who notably exploited the Japanese Yen and earned massive profits in Stick with your guns and believe in the trends, folks.

Ed Seykota is a self-taught trader. His unique method revolves around continual self-examination and commitment to studying the psychological components of trading while helping others achieve their potential.

The guy was a pioneer indeed. John W. Henry thinks the same. Henry followed a purely mechanical approach and relied on market prices to make sound investment decisions. He focused on the long game and stressed that you would only reap the rewards over the course of decades. This means sitting through the volatility, not acting on desires to make moves during adverse market conditions, and sticking with your plan. Circling back: Patience is the key.

Nicolas Darvas was a self-taught investor, author, and dancer. Back then, his ways seemed unorthodox to many, because instead of studying the fundamentals, he judged public enthusiasm instead. This method reportedly works best in volatile markets.

Interestingly enough, he picked up this skill from his experience as a dancer, where he learned to tune into the feelings of his audience. He mainly watched out for price and volume, which was the heart of his trend following strategy. Dinesh Desai was regarded as one of the best trend followers in the 80s before his retirement. As you have seen, there are many reasons why trend following stocks has worked in the past, and plenty of evidence to suggest that this will continue to work in the future.

If you have been dissatisfied with buy and hold or mutual fund investing, maybe it is time for you to learn how to profit using your own stock trend following system. The best way to learn how to do this and build total confidence in your trend trading strategy is to join The Trader Success System.

In the Trader Success System you will get immediate access to over 18 different trading systems Including several phenomenal trend trading systems for different markets AND learn how to backtest and build confidence in those systems for yourself. Click here to learn more about The Trader Success System. Join The Crypto Success System Now Trend Trading also known as Trend Following is one of my favourite trading strategies because it is very low maintenance and has been profitable over many decades.

A good trend following system can make you money for decades! Trend Following Stocks is a great trading strategy Trend Following System Components A backtested trend trading system is the backbone of most systematic trading portfolios. Read these articles to learn more about trend following! Hello, your systems look promising. But there so many out there offering what they call good systyems, Would it be possible to see some of the results of the system, for instance on SPY?

Kind regards Harald. Hi Harald, Thanks for your question — you are right, there are a lot claiming to be good systems that are really just curve-fit garbage. The systems are all robust over a wide range of parameter values, have a stable edge over time and profits are not driven by outlier trades — they are solid and reliable and I trade many of them with my own money. Your email address will not be published. Think of the dotcom bubble in the early s. Many of those dotcom companies were not profitable, but many investors still bought into them simply because everyone else was buying.

Think of the Bitcoin bubble in Even right now in , we are still in a bull market, after the Great Financial Crisis ended in This stock market uptrend is still ongoing, and it has been 10 years already. Many Wall Street pros and gurus have been predicting a stock market crash every year since But what is actually happening? You should know the answer: The market at the point of writing has broken all-time high. Trend following is actually quite dumb as a trading strategy.

Trend following is simple conceptually. For those who need a primer, Alvin wrote an article over here. To put it simply, if prices start moving up, you go long buy. If they start moving down, you go short sell.

And you try to hold on to your position until the trend changes again. Instead of guessing where the market is going, you wait for it to establish the trend first. This means that you will never buy at the bottom and you will never sell at the top.

You try to capture your profits in the middle. If you are doing trend following, you will need to diversify your risks by placing bets in different asset classes or products — futures, forex, commodities, ETFs etc. So you minimise and diversify your risk by trading with a lot of instruments. So, you will be cutting losses often.