The trend is not your friend... | Forex Factory

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The trend is not your friend...

  • Poll

  • THE TREND IS NOT YOUR FRIEND
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  • #1
  • First Post: Aug 7, 2017 11:01pm Aug 7, 2017 11:01pm
Agree or disagree?
Personally it took me several years to understand this. I Agree and will till I stop breathing, nobody believed in trend following like I did, and I can say boldly most of the times it doesn't work and I don't like spending most of my times in draw downs as most moves retrace. Trends are so rare and few these days, before one shows up you have already been so smashed and beaten up emotionally.
Special one
  • #2
  • Aug 7, 2017 11:16pm Aug 7, 2017 11:16pm
if it aint your friend, what is ?
  • #3
  • Aug 8, 2017 3:53am Aug 8, 2017 3:53am
The trend is your best friend in the markets. One of the greatest edge for a retail trader. Yet almost nobody can trade a trend. At least I can't remember an occasion on this forum, when I saw somebody being able to trade with the trend properly.

This is how you should trade a trend. Personally this is pretty much what I'm doing. Green is where you buy, red is your stop.

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Yet what everybody tries to do? Wait for confirmation, and buy the breakout.

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Not a problem, still works fine in a trend like this.

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But the market trends very rarely like that. More often a trend goes something like this.

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By waiting for "confirmation", and trying to follow a rigid, too systematic method for buying breakouts, your RR turns to crap. Almost nobody can trade like on the first picture. If they could, then it would be obvious that the trend is the best thing happening in the markets. Instead they try to pick turns, keep buying as the market is moving down, and keep selling when it is moving up.

Just take a look at the EURUSD, GBPUSD, AUDUSD and similar threads in the interactive trading section. This is what 90% does there. This recent raging rally in the euro massacred them. But this was a really prosperous period, if they could trade with the trend.
Price and volume reveals everything. The market moves on supply and demand.
  • #4
  • Aug 8, 2017 4:04am Aug 8, 2017 4:04am
Trends are TF dependent. If you see the market ranging on a higher TF, there are perfectly tradeable trends on lower TFs.
Invincibility lies in the defence; the possibility of victory in the attack
  • #5
  • Aug 8, 2017 4:49am Aug 8, 2017 4:49am
Quoting TradeGenuis
Agree or disagree? Personally it took me several years to understand this. I Agree and will till I stop breathing, nobody believed in trend following like I did, and I can say boldly most of the times it doesn't work and I don't like spending most of my times in draw downs as most moves retrace. Trends are so rare and few these days, before one shows up you have already been so smashed and beaten up emotionally.
Very ironically, all the sell positions on your TE are winner and all the buy positions are losers. Don't you think there was a serious downtrend during those 3 days of trading?
  • #6
  • Aug 8, 2017 5:00am Aug 8, 2017 5:00am
Interesting thread. I always thought the stock market trends stronger and longer than the FX market, so I think it depends on the instrument that you are trading too.
  • #7
  • Aug 8, 2017 5:09am Aug 8, 2017 5:09am
Imho, the bend is your friend when it continues to trend.

Trade safe and prosper.

KP
Do your homework, follow the footprints of smart money
  • #8
  • Aug 8, 2017 5:58am Aug 8, 2017 5:58am
yeah but next month when we start moving again you will eat your words'''

but now you're stuck fading tops because you have been primed to believe in your rigid way of thinking that this is "your friend"

its hard to commment really on this statement other than to say that the notiuoin of a TREND to begin with whether it be your friend or foe is concerning your mind with a popular fad or belief .. Sounds like a 90% kinda thing doesn't it

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  • #9
  • Aug 8, 2017 6:28am Aug 8, 2017 6:28am
on a side note im talking from a day traders perspective a position trader utilizing the tide against central bank sentiment and news statements could make a good point against my post.


Something i used to do for fun on my strategy tester (forex tester, good program) was stop trying to guess the directioin of the market.. instead put yourself in the shoes of Benny Mc Frankinshpill from Australia who has been trading for 5 years and trying to make money in this vicious market..

What is Benny thinking? when does he click? why does he click?............ Anyway everytime benny Buys ... Sell...... and vice versa

Amazing how suddenlyy you seem to become a wolf rather than a sheep.. This did me no good though in a live market though becasue I could never systemise it into any rules that would make me act in a consistent mannor... In short I kinda became Benny, trying to be clever yet doing the same f thing every other idiot around the globe was trying to do... I'm only human after all

But its a fun excersise on a tester all the same... mainly becasue you can erase the time trap and hypnotic grasp the market makers have on you

just a thought

but in my belief and experience the market is a machine so any effort that relies on guess work or "feel" is a sure sign you just don't get it yet,...

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  • #10
  • Aug 8, 2017 6:59am Aug 8, 2017 6:59am
The Markets are ranging at the moment lots of fake breakouts, the trend is always your friend its just a matter of understanding how to use it.
  • #11
  • Aug 8, 2017 7:38am Aug 8, 2017 7:38am
Quoting TradeGenuis
Agree or disagree? Personally it took me several years to understand this. I Agree and will till I stop breathing, nobody believed in trend following like I did, and I can say boldly most of the times it doesn't work and I don't like spending most of my times in draw downs as most moves retrace. Trends are so rare and few these days, before one shows up you have already been so smashed and beaten up emotionally.
Na.....you just have to be patient and suck the drawdowns in. It is the psychological difficulty of trend following that allows it to keep it's edge over the long term. In a nutshell if it wasn't painful, it wouldn't work as everyone and their dog would be doing it.

Here is the performance results of the top 54 trend following fund managers in the world. It has been tough on trend followers post 2015 but since the GFC we get these tough patches of mean reversion inter-dispersed with some great performance runs when central bank intervention has the wobbles. In fact the overall returns of the TF community since 2000 has been a fairly consistent regression line through the guts of the return distributions. In times like these you just need to tighten the belt buckle, grit the teeth and manage risk like the devil.

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  • #12
  • Aug 8, 2017 7:58am Aug 8, 2017 7:58am
Quoting Copernicus
{quote} Na.....you just have to be patient and suck the drawdowns in. It is the psychological difficulty of trend following that allows it to keep it's edge over the long term. In a nutshell if it wasn't painful, it wouldn't work as everyone and their dog would be doing it. Here is the performance results of the top 54 trend following fund managers in the world. It has been tough on trend followers post 2015 but since the GFC we get these tough patches of mean reversion inter-dispersed with some great performance runs when central bank intervention...
with all du respect sir

you're posting a 17 year old graph in a trading forum...

second to that... please explain to me how the worlds "most succesful" hedge fund run by ray dalio who simply took advantage of Americas inability to face facts about real value intends to liquidate his bond holdings in the presence of zero liquidity??

thirdly how did you personally profit from this hindsight in the age of\\ fuck head Amerika

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  • #13
  • Edited 6:03pm Aug 8, 2017 8:14am | Edited 6:03pm
Quoting CindyXXXX
{quote} with all du respect sir you're posting a 17 year old graph in a trading forum... second to that... please explain to me how the worlds "most succesful" hedge fund run by ray dalio who simply took advantage of Americas inability to face facts about real value intends to liquidate his bond holdings in the presence of zero liquidity?? thirdly how did you personally profit from this hindsight in the age of\\ fuck head Amerika https://www.youtube.com/watch?v=Rr8ljRgcJNM

Hey Cindy. How's things :-)..... Ray Dalio (Bridgewater) is a value investor (aka insider trader)....not a trend follower like these guys.

These trend following funds are the quiet sort that don't get much airing on CNN. They just quietly clean up in the background usually on the other side of the more vocal hedge fund magnates such as Bill Ackman and Steven Cohen and other hedge fund supposed gurus who rely on inside info yet don't know when to say enough is enough and let their investors take the hit for their sublime ego's. BTW 6 of these trend following funds have outperformed Warren Buffet's Berkshire Hathaway over the past 20 years or so. The moral of this story is that you don't have to be an asshole to be successful trading the markets.

Here is one of Bill Ackman's tips. He was long by the way at the peak of the curve and his ego relating to his verdict that he was right cost his investors dearly when his insider info was clearly wrong.

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Two stories about the not so nice hedge fund gurus.:
1. How mastermind trader, Steven Cohen, bent rules and made billions w/ Sheelah Kolhatkar
2. Risk Management Lessons from the Valeant Saga and also here for the full story of Bill Ackman's disastrous call.
  • #14
  • Aug 8, 2017 8:18am Aug 8, 2017 8:18am
Quoting Copernicus
{quote} Hey Cindy. How's things :-)..... Ray Dalio and Bridgewater are value investors (aka insider traders)....not trend followers like these guys. These trend following funds are the quiet sort that don't get much airing on CNN. They just quietly clean up in the background usually on the other side of the more vocal hedge fund magnates such as Bill Ackman and Steven Cohen and other hedge fund supposed gurus who rely on inside info yet don't know when to say enough is enough and let their investors take the hit for their sublime ego's. BTW 6 of...
fair call but I guess you're talking about investing rather than trading... I see the 2 as pretty different animals although inherriently intertwined

sorry to get offensive =P
Time hides Nothing
  • #15
  • Aug 8, 2017 8:25am Aug 8, 2017 8:25am
Quoting CindyXXXX
{quote} fair call but I guess you're talking about investing rather than trading... I see the 2 as pretty different animals although inherriently intertwined sorry to get offensive =P
Na Cindy. I thought your post was fine. I view trend following as trading....but I can see where you are coming from. It has served me well over the years....but I do tend to avoid the short term.

PS Ray Dalio's hedge fund is the largest but in no way shape or form the most successful in terms of longer term performance returns to their investors.
  • #16
  • Aug 8, 2017 8:34am Aug 8, 2017 8:34am
IMO, the trend can be friendly, but understanding market tendencies when the market is trending or ranging is quite a bit more important to successful trading. If you think about the forex as a business (the bank's business, not yours) rather than a market, you might find the tendencies and the reason they exist, a little more clearly.
  • #17
  • Aug 8, 2017 9:10am Aug 8, 2017 9:10am
Quoting TradeGenuis
Agree or disagree? Personally it took me several years to understand this. I Agree and will till I stop breathing, nobody believed in trend following like I did, and I can say boldly most of the times it doesn't work and I don't like spending most of my times in draw downs as most moves retrace. Trends are so rare and few these days, before one shows up you have already been so smashed and beaten up emotionally.
Idk where you learned how to follow and trade a trend but clearly there is a hiccup in your analysis. Mant great traders have made billions by following this method. My favorite is Jesse Livermore, you should read his book called Reminiscence of a stock perator. One of the greatest technical analysis and macro event traders ever. Warren buffet makes his billions by this method as well and I think his billions speak for themselves. The trend is clearly your friend. As well if you're having trouble reading PA then hit me with a PM and I'll send you the course that turned my trading around and put me in the green.
Gentlemen always play by the rules, if they can't, they change them.
  • #18
  • Aug 8, 2017 9:33am Aug 8, 2017 9:33am
I get to be a better trader when I understand that trend does not exist. The trend only exists in a brain evolutively designed to predict.
  • #19
  • Aug 8, 2017 9:48am Aug 8, 2017 9:48am
From my point of view a good trader has to be a contrarian, Trade against the trend but it takes skill to do. Which most do not have. Look at the polls guys, 60% believe the trend is your friend, who like being on the majority. Not me, this is the very reason most traders loose their butt.
Special one
  • #20
  • Aug 8, 2017 10:04am Aug 8, 2017 10:04am
Quoting TradeGenuis
From my point of view a good trader has to be a contrarian, Trade against the trend but it takes skill to do. Which most do not have. Look at the polls guys, 60% believe the trend is your friend, who like being on the majority. Not me, this is the very reason most traders loose their butt.
You can make money trading against or with. It doesn't matter either the market is trending down or up. Unless you limit the pairs you trade to only 1 or 2 there will always a pair in FX that is trending either up or down. Jesse Livermore was the king at catching the switch in the trend being contrarian when needed and trend following when needed. Its beyond stupid to try to fit every or any one market under one set of circumstances. If you can't see the trend, go up in your TF until you do.
Gentlemen always play by the rules, if they can't, they change them.
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