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Are you a trend trader or a counter-trend trader? 29 replies

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Trend- what is it?

  • Post #41
  • Quote
  • Edited 8:40pm Aug 28, 2018 8:19pm | Edited 8:40pm
Quoting tomorton
{quote} This is much theory. Have you actually tried trend-following trading?
A pretty long history with it mate and a devoted advocate.

Sometimes context matters....so this was creating a context to explain why so many different approaches to trend following create similar long term performance metrics. The info here for the inquisitive mind might help in understanding why the specific trend following technique is less important than the overall process of what is trying to be achieved. For example why do the majority of trend following strategies have a Pwin of <50%, a R:R of >1.5 and have positive skew and why do trend followers have relatively volatile equity curves compared to alternative trading methods such as mean reversion?

Is this volatility a sign of poor performance or a natural consequence of the method?

The more you play in this space....the more these type of questions will arise when you are deep in drawdown and the less you will be focused on supposedly important facts such as predicting entries with sniper accuracy.

For a trend follower, experience demonstrates that the repeated application of a well thought out simple process and enduring patience always outclasses the particular technique but you need to understand that 'style drift' between different methods is more attributed to either leverage (eg. position sizing) or simply luck of the draw with assets selected (as opposed to the method itself).....so there are many applicable trend following methods which over the Law of Large numbers converge on a fairly standard and representative performance result. This feature of nearly all trend following methods can be attributed to the broad class of rules that are applicable to this method such as 'cutting losses short and letting profits run'.
Quoting Nut
{quote} My trading plan has always been very simple, don't get involved with trading plans focus on trading. My money management is equally simple, use say 1% of the account and don't change it. When the account has grown sufficiently use 1% of your winnings only and don't change it. Cheers Nut
Could you pls clarify your above bolded statement?

Cheers
[quote=Copernicus;11417170]{quote} Morning N :-) Andreas Clenow's book is a real eye opener and a game changer that is more a practical guide from an experienced professional fund manager to approaches that mimic the methods employed by fund managers in the diversified trend following space.

Hi,
Was that the "Following the Trend" or "Stocks on the Move" title?
Cheers
[quote=wombles;11418494]
Quoting Copernicus
{quote} Morning N :-) Andreas Clenow's book is a real eye opener and a game changer that is more a practical guide from an experienced professional fund manager to approaches that mimic the methods employed by fund managers in the diversified trend following space. Hi, Was that the "Following the Trend" or "Stocks on the Move" title? Cheers
Hi wombles :-)

Following the Trend mate. Stocks on the move was good too but related to rotational momentum strategies in equities.
  • Post #45
  • Quote
  • Edited 5:25am Aug 29, 2018 5:06am | Edited 5:25am
When trading I never think it terms of trend.
I think about it at a more basic level..
Lack of willing buyers or sellers will cause a movement.

Stocks just hit new all time highs... There is a lack of willing sellers.. And the buyers are having to pay top dollar to get in.

Or you could say there is lack of Liquidity on the sell side, in the stock market.. something has scared off the sellers...

Thinking about whats going on at a Level of Liquidity... Forces me to think where the buyers or sellers actually are.. and how to trade it.
Just saying its in an "up trend". draw some diagonal line where you think they might be.. Has never worked for me.

Trend and Momentum are words I never use.. But I do use volatility, liquidty, buyers, sellers, all the time.

I do use support and resistance ( a place where buyers and sellers may be in pain or waiting to jump in (an area where liquidity might return).

Just chasing some Trend Line on your chart, with out any context to how the market really works, or Chasing the mythical Momentum (price dose not have mass so it can't have momentum) gives no context to the real workings of the market.

If your a failing trader, who's tried trends and momentum with out success.. Start thinking in terms of Liquidity and volatility and start to Find where the orders are on the chart. Once you get good at guessing where the orders are, then you have made it.. Remember it takes 10,000+ hours to get good at anything. So have fun with the process and don't rush it.
The only system that will work is one designed by and for yourself.
Basically, I agree but I visualize it in terms of what the big dogs are doing particularly in forex and futures markets. If markets are going up the big boys are taking shorts onboard and vice versa. Therefore they must square their books in the future.

Not sure my idea works with stocks as the big dogs may just be disposing of stocks they bought at lower prices, stocks they took onboard during a market slump for example. The market makers have all the control over price.
Quoting genghistar
{quote} Could you pls clarify your above bolded statement? Cheers
I simply don,t use a plan. It is not possible for me to know what a market will do in the future, indeed where will life itself take me. To have aspiration is terrific and plans can be built around aspiration but is the aspiration itself realistic. Has the plan covered all possible outcomes? Furthermore, does the plan cover all possible actions should things go wrong?
What value is a plan if a person cannot trade in the first place. Therefore focus on your trading, if you are a success the plan will take care of itself.
If I wanted a plan it would probably make sure my account is increasing, if it is not then I need to pay attention to my trading and not a plan.

Cheers
Nut
Quoting Nut
{quote} I simply don,t use a plan. It is not possible for me to know what a market will do in the future, indeed where will life itself take me. To have aspiration is terrific and plans can be built around aspiration but is the aspiration itself realistic. Has the plan covered all possible outcomes? Furthermore, does the plan cover all possible actions should things go wrong? What value is a plan if a person cannot trade in the first place. Therefore focus on your trading, if you are a success the plan will take care of itself. If I wanted a plan...
So your trade is based without a trading plan. Well you must be a real champ then.

Hehe
the problem is in semantics of the word "plan", you are using the same word but referring to two different meanings.
the problem will be solved if you consider "plan" as a set of entry/exit/trade management strategies that you apply to your trading.
As Above, So Below
Quoting Copernicus
{quote} A pretty long history with it mate and a devoted advocate. Sometimes context matters....so this was creating a context to explain why so many different approaches to trend following create similar long term performance metrics. The info here for the inquisitive mind might help in understanding why the specific trend following technique is less important than the overall process of what is trying to be achieved. For example why do the majority of trend following strategies have a Pwin of <50%, a R:R of >1.5 and have positive skew and why...

This sounds very learn-ed.
  • Post #51
  • Quote
  • Edited 12:37pm Aug 29, 2018 12:26pm | Edited 12:37pm
trend - non-horizontal directional movement affected by existing limit orders and triggered by their execution.
As Above, So Below
what is the point of this thread- isn't it obvious what a trend is!!!
Quoting Nut
{quote} I simply don,t use a plan. It is not possible for me to know what a market will do in the future, indeed where will life itself take me. To have aspiration is terrific and plans can be built around aspiration but is the aspiration itself realistic. Has the plan covered all possible outcomes? Furthermore, does the plan cover all possible actions should things go wrong? What value is a plan if a person cannot trade in the first place. Therefore focus on your trading, if you are a success the plan will take care of itself. If I wanted a plan...

Simply hard to credit that you don't have a plan to e.g. get long when price is likely to rise. If you have an idea what a chart looks like on which price is about to rise, and an intention to commit capital, then that's a plan.
From my experience time defines a trend better than quantity. It takes time for a bias to be accepted by the market.
When you see it, BET big.
Hi Nut, I returned to FF after a small break and saw this thread of yours. Its really good. The best thing about your threads is the simplicity with which you explain each concept. Thanks for your contribution in FF. I will keep watching this thread.
Quoting Dilmeshsingh
Hi Nut, I returned to FF after a small break and saw this thread of yours. Its really good. The best thing about your threads is the simplicity with which you explain each concept. Thanks for your contribution in FF. I will keep watching this thread.
Thank you
Quoting tashkent
the problem is in semantics of the word "plan", you are using the same word but referring to two different meanings. the problem will be solved if you consider "plan" as a set of entry/exit/trade management strategies that you apply to your trading.
Then it is already in the thread
Regards
Nut
what time frame to check for trend? weekly or monthly candle?
My friend?
Quoting tomorton
{quote} This sounds very learn-ed.
Great. I hope it helps :-)
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