Trend following system is dead | Forex Factory

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Trend following system is dead

  • #1
  • First Post: Feb 14, 2023 10:05pm Feb 14, 2023 10:05pm
Trend following system is dead.

There is no black and white in this thread....just different shades of grey.

I believe that the era of trend following is over unless there is a particular imbalance in a market that overrides everything else.
Another exception would be if we were to enter a major inflationary or deflationary environment.

In other words, unless there is some very powerful force that can overwhelm everything else.
The markets have changed during the past five to ten years because professional money managers now account for a much greater proportion of speculative trading activity, as opposed to small speculators who tend to make all the mistakes.

The trend following systems approach doesn't work anymore.
I come from the future.
Karen X Mas Bonus 2025 All Time Profit: $15,104
  • #2
  • Feb 14, 2023 10:07pm Feb 14, 2023 10:07pm
Quoting Pat Chiko
The trend following systems approach doesn't work anymore.

The problem is that once you have defined a trend and taken a position, everyone else has taken a position as well.
Since there's no one left to buy, the market swings around in the other direction and gets you out.

One reason we don't have many good trends anymore is that central banks are preventing currency moves from getting out of hand by taking the other side of the trend.

They have always done that on a regular basis.
If you look at a chart of Treasury debt held by foreign central banks, you will see that it has risen astronomically during the last few years.

The foreign banks seem to be taking over from private foreign investors in financing our trade debts.
In terms of trading, we have to adapt our trading style because of it.

That situation illustrates one of the principles we believe in, namely that the big players, including governments, would always tip their hand.
If we saw a surprise price move against us that we didn't understand, we often got out and looked for the reason later.

The European central banks are notified about major changes going to be, and they often act ahead of US policy announcements.
Consequently, the price move shows up in Europe first.
Even if it is something we initiated, if it's an action initiated by the Europeans, the price move is certainly going to occur there first.
I come from the future.
Karen X Mas Bonus 2025 All Time Profit: $15,104
  • #3
  • Feb 14, 2023 10:09pm Feb 14, 2023 10:09pm
Market conditions are constantly changing and what works well in one market environment may not work as well in another.

However, the effectiveness of trend following strategies in forex has decreased in recent years due to changing market dynamics and increased participation by professional money managers.

As with any trading strategy, it is important to continually evaluate its effectiveness and adapt to changing market conditions.
Or....The simple trend following models that were successful in the past may need to adapt to meet this changing trending condition of modern more mature markets.
I come from the future.
Karen X Mas Bonus 2025 All Time Profit: $15,104
  • #4
  • Feb 14, 2023 10:25pm Feb 14, 2023 10:25pm
Gteat title Pat ..., just one question, what would be your definition of a trend, ?, and is their only one definition or will others have their own?, sorry that was two questions...
  • #5
  • Feb 14, 2023 10:31pm Feb 14, 2023 10:31pm
The notion that trend following is dead is based on the assumption that if returns do not significantly improve over a short period, such as six months, a year, or two years, then the strategy is no longer effective.

However, studies conducted over the last two hundred years have concluded that momentum and trend following persist in the markets. In fact, it is necessary for prices to move from lower to higher levels, or vice versa.

To state that trend following is dead is a misnomer.
What is really meant is a frustration with the fact that trend following does not deliver a regular expected return.

This is simply attributed to the fact that the strategy depends on when the market trends.
If the market is not trending, then the strategy may stagnate or enter drawdowns.

However, when the market is trending, the strategy can result in very favorable outcomes.
I come from the future.
Karen X Mas Bonus 2025 All Time Profit: $15,104
  • #6
  • Feb 14, 2023 11:12pm Feb 14, 2023 11:12pm
Quoting Waveskierrob
Gteat title Pat ..., just one question, what would be your definition of a trend, ?, and is their only one definition or will others have their own?, sorry that was two questions...
Nice question.
I will answer it, but need time to write it ( not to some thesis level, but suffice to justify your concern)

Need to smoke first to kick start my creative mind..
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I come from the future.
Karen X Mas Bonus 2025 All Time Profit: $15,104
  • #7
  • Feb 15, 2023 1:58am Feb 15, 2023 1:58am
Simply not true.
If you understand that price always returns to the median one can, put together a pretty effective trend trading strategy.
You can add to your position until it has reached your long-term median.
On my model you start building your position when price is completely out and away from the median lines ranging from the monthly up to you 15-minute median.
See charts:
Monthly median =Red
Weekly = green, daily =Pink, 4H = Magenta, Hourly =White and 15 min = yellow

See weekly and daily chart of the same pair.

See how price always return to the median ( More detailed on the second chart)
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Never Ever Give Up!
  • #8
  • Feb 15, 2023 2:25am Feb 15, 2023 2:25am
If you mean that over decades things changing, also human behaviour change every corner. All the basic stuff around economic is not relevant anymore you must be right. <<< Ironic

Take a chart of choice and you will find a trend, a direction both seller and buyer are okay with the actual move.

If you can not find the graviation line you have yet not search enough. Sorry total out of road here.
Perfection is the enemy of good enough!
  • #9
  • Feb 15, 2023 2:45am Feb 15, 2023 2:45am
Quoting Pat Chiko
Trend following system is dead. There is no black and white in this thread....just different shades of grey. I believe that the era of trend following is over unless there is a particular imbalance in a market that overrides everything else. Another exception would be if we were to enter a major inflationary or deflationary environment. In other words, unless there is some very powerful force that can overwhelm everything else. The markets have changed during the past five to ten years because professional money managers now account for a much greater...
In 2005 was the time HFT algo's started to front front professional money managers and hedge funds causing major losses at times for big players. It was the Algo's and not money managers causing all the problems, they destroyed trends as they were seeing the orders from a big player going to one exchange, then beating them to the other exchanges and buying up that liquidity before the big player could get it - then selling it back to them a point or two higher higher.
Then they evolved to what they are now, creating small exposive breakouts then flipping back hard the other way to dump the orders they just picked up.

Thats where we are now, still lucky due to changes to regulations in many markets - quite a few of HFT firms have gone broke
The intraday trader who was an endanged species for the last few years IS BACK

As an extra bonus, sproofing has dropped by half - YOU LITTLE BEAUTY

The trend may return

Pat have faith
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Trading thin liquidity at the boundary of the charts
  • #10
  • Feb 15, 2023 3:56am Feb 15, 2023 3:56am
Quoting Cobra
Simply not true. If you understand that price always returns to the median one can, put together a pretty effective trend trading strategy. You can add to your position until it has reached your long-term median. On my model you start building your position when price is completely out and away from the median lines ranging from the monthly up to you 15-minute median. See charts: Monthly median =Red Weekly = green, daily =Pink, 4H = Magenta, Hourly =White and 15 min = yellow See weekly and daily chart of the same pair. See how price always return...
Can you explain what all your lines are or label them? i like a mystery, just when it doesn't waste my time.
You have an IQ lower than 90 if you interact with this user.
  • #11
  • Feb 15, 2023 4:06am Feb 15, 2023 4:06am
Quoting Ferna
{quote} Can you explain what all your lines are or label them? i like a mystery, just when it doesn't waste my time.
If you call years of research "wasted time" then i surely don't want to burden you with my "wasted time ".

No spoon-feeding here.

You cannot come here (2022) and expect others to share with you with that attitude.
Never Ever Give Up!
  • #12
  • Feb 15, 2023 4:26am Feb 15, 2023 4:26am
Quoting Cobra
{quote} If you call years of research "wasted time" then i surely don't want to burden you with my "wasted time ". No spoon-feeding here. You cannot come here (2022) and expect others to share with you with that attitude.
You are socially signaling by putting the burden of explaination on somebody else.
It's better if you share such lines in your own group on Discord, where everybody is on the same page.

Here as you say there are alot of people at different stages of development, and they cannot possibly be asked to have read the same books
the same posts, or have the same experience as you have. That would be an infantile and narcissistic expectation.

It would be like if i started talking Latin to patients and call them stupid if they didn't understand what i mean, and i then refer them to "research" and fix their "attitude" "sorry bro if you don't know what appendicitis means, you have no business being in a hospital" let's not spoon feed the little people.
You have an IQ lower than 90 if you interact with this user.
  • #13
  • Edited 4:54am Feb 15, 2023 4:29am | Edited 4:54am
once again: jargon & quarrels (when will the ICT-supergroup join the brawl?)
sometimes it is enough to walk with eyes wide open:
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  • #14
  • Feb 15, 2023 4:44am Feb 15, 2023 4:44am
Quoting Ferna
{quote} You are socially signaling by putting the burden of explaination on somebody else. It's better if you share such lines in your own group on Discord, where everybody is on the same page. Here as you say there are alot of people at different stages of development, and they cannot possibly be asked to have read the same books the same posts, or have the same experience as you have. That would be an infantile and narcissistic expectation. It would be like if i started talking Latin to patients and call them stupid if they didn't understand what...
I commented here because i felt that the thread starter is wrong in assuming that Trend trading cannot be done successfully anymore.
I posted some charts to make my point. Nowhere did i hint that i am here to educate others. Did i?

It remains my choice whether i want to share or not and wouldn't be bullied into sharing by someone as arrogant as you are.

If you want info you can kindly ask for it without the " waste my time attitude"
The last time i spoon fed someone like you i had to use my garden spade to force down the info into his throat as the spoon i used apparently weren't big enough.
Never Ever Give Up!
  • #15
  • Feb 15, 2023 4:54am Feb 15, 2023 4:54am
Quoting Cobra
{quote} I commented here because i felt that the thread starter is wrong in assuming that Trend trading cannot be done successfully anymore. I posted some charts to make my point. Nowhere did i hint that i am here to educate others. Did i? It remains my choice whether i want to share or not and wouldn't be bullied into sharing by someone as arrogant as you are. If you want info you can kindly ask for it without the " waste my time attitude" The last time i spoon fed someone like you i had to use my garden spade to force down the info into his throat...
Alright, i am sorry. Yes i am an bully, you caught me. i am trying not to be.
I apologize.
You have an IQ lower than 90 if you interact with this user.
  • #16
  • Feb 15, 2023 5:03am Feb 15, 2023 5:03am
Hi Josie may I ask what trendindicator you are using looks good
  • #17
  • Feb 15, 2023 5:06am Feb 15, 2023 5:06am
1.20770 short
  • #18
  • Edited 6:13am Feb 15, 2023 5:31am | Edited 6:13am
EUR/GBP short.
Cancel trade volatile as hell.
You have an IQ lower than 90 if you interact with this user.
  • #19
  • Feb 15, 2023 8:08am Feb 15, 2023 8:08am
yes and no.

i found these 4 clear H4 trends with GU last year:

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i highlighted the trends on the daily chart also:

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trading is like dancing, don't think and just listen to the music!
  • #20
  • Feb 15, 2023 9:58am Feb 15, 2023 9:58am
Trend, what Trend?

It's all in the mind, see?

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