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Trend following system is dead

  • #61
  • Feb 19, 2023 11:41am Feb 19, 2023 11:41am
Dear Pat Chiko, I have been studying trend following for a while, Inspired by the Turtle Trader Richard Dennis , also have been listening to Trend Following Biased Podcasts, to see if I can get any more info.

I have been working on a Trend Trading higher Time frame MT4 EA since mid-January 2023, I am getting some Okay results in the 10 yr backtest. However my Best Results are coming from Gold, BTCUSD, NASDAQ/USTech100, USDJPY and GBPJPY. Currencies aren’t that good (for me) for Trend Trading.

How my EA (Scratch004_Complete_compound_All.ex4 - not finished yet) works it can have 2 or 3 Time Frames, It has an Anchor Time Frame and will take Entries based on the Lowest Time Frame.

2 Time Frames; is D1/H1, or D1/H4
3 Time Frames; is D1/H4/M15 (M15 can be replaced by M30).

It looks for momentum (price moving fast) and a trend (significant up move or down). Buy High, Sell Higher, Vice Versa. Trades are only opened and closed on the open of a new candle on the lowest TF selected, That is how I have coded it using NewBar().

I have only optimized for 1 Parameter and that is Take Profit (Profit Threshold). i.e 2R, 3R, +20R. That way I don’t get too many fake results (Over Optimization). It Risks 1% of Account Balance() per trade.

USDJPY Results 10 yr 2013 to 2023 (Dukascopy Data via Tick Data Manager):

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I've got more but I won't Hi Jack the Thread.
All Assets NAS100 GLD BTC AUS JPY GBP All Time Return: 18.2%
  • #62
  • Feb 19, 2023 8:12pm Feb 19, 2023 8:12pm
Quoting hayseed
{quote} //------- vegas system last week..... //---- {image} //---- {image}//---- {image}
Well Bruce,
I took a cursory look at the Vegas system. One of the questions that came to mind was that why if it is such a good system, none of those traders commenting on it are around. I mean they might be but a successful system at least 18 years around, would have produced a few wealthy traders by now.
Then I look at your chart and I see that you have automated it and probably added/subtracted a few things and the old thread definitely doesn't have your nifty subwindow indicator clump. That makes all the difference. I guess what you are saying is that the systems you mentioned, as base systems, they have potential but you need to add the secret mojo sauce to them.
  • #63
  • Feb 20, 2023 6:04am Feb 20, 2023 6:04am
do you think about situation of gold
  • #64
  • Feb 20, 2023 7:21am Feb 20, 2023 7:21am
If trend-following is dead, perhaps I need to give back the money made over the last 6 months from going short on the GBP/USD, and long on AUD/USD, USD/JPY and SGD/JPY.

Right now I'm in cash obviously - if you like, I'm consolidating, because that's what the market is doing.
  • #65
  • Feb 21, 2023 6:26pm Feb 21, 2023 6:26pm
Mind you.....
https://www.forexfactory.com/thread/...7#post12649477
  • #66
  • Feb 22, 2023 7:42am Feb 22, 2023 7:42am
Quoting tomorton
If trend-following is dead, perhaps I need to give back the money made over the last 6 months from going short on the GBP/USD, and long on AUD/USD, USD/JPY and SGD/JPY. Right now I'm in cash obviously - if you like, I'm consolidating, because that's what the market is doing.
Correct my friend. Typically the ones who claim a technique is dead are claiming it is dead because of their inability to execute said technique properly. They cannot properly understand what a trend is and how to trade it so in order to massage their bruised ego, trend trading must be dead and no one else is profiting from trend trading in their deluded coping-mechanism perspective. Why do people do that? lol. Too much pride I guess.

I am not the most skilled at price action trading but I would never say that price action trading is dead lol. I just know im not good at it haha
  • #67
  • Feb 22, 2023 7:07pm Feb 22, 2023 7:07pm
Quoting sharingan9
{quote} Correct my friend. Typically the ones who claim a technique is dead are claiming it is dead because of their inability to execute said technique properly. They cannot properly understand what a trend is and how to trade it so in order to massage their bruised ego, trend trading must be dead and no one else is profiting from trend trading in their deluded coping-mechanism perspective. Why do people do that? lol. Too much pride I guess. I am not the most skilled at price action trading but I would never say that price action trading is dead...
The basic agreement by professional money managers and traders is the HFT Algo’s have destroyed most breakout setups and also many short term trend setups as well.
So there is general agreement that trading trends is harder (but not impossible) since 2005 in many markets these days, but not all.

So it’s not about ego, it’s about historical fact.

Saying that, of course you can trade trends profitability but you have to be good.

Bloody Good
Trading thin liquidity at the boundary of the charts
  • #68
  • Feb 23, 2023 1:12am Feb 23, 2023 1:12am
Quoting sharingan9
{quote} Correct my friend. Typically the ones who claim a technique is dead are claiming it is dead because of their inability to execute said technique properly. They cannot properly understand what a trend is and how to trade it so in order to massage their bruised ego, trend trading must be dead and no one else is profiting from trend trading in their deluded coping-mechanism perspective. Why do people do that? lol. Too much pride I guess. I am not the most skilled at price action trading but I would never say that price action trading is dead...
100% agree.
Are there market order disappear? No
Are there no more limit orders left? No
Stops are not market orders anymore? No

All the market mechanics are the same like they were 100 years ago. Why something should stop working?

I know even what is exactly the same like it was 100 years ago: poeple. They still lazy, greedy, still don't know basi math an how market works. Still drawing lines, believe in magic and call themselves traders. And after another fail claim market and the whole world that something wrong now.
Observer effect
  • #69
  • Feb 23, 2023 7:49am Feb 23, 2023 7:49am
Quoting RickM
{quote} The basic agreement by professional money managers and traders is the HFT Algo’s have destroyed most breakout setups and also many short term trend setups as well. So there is general agreement that trading trends is harder (but not impossible) since 2005 in many markets these days, but not all. So it’s not about ego, it’s about historical fact. Saying that, of course you can trade trends profitability but you have to be good. Bloody Good
There are professional money managers and traders that agree HFT has rendered trend trading much more difficult. There are also many professional money managers and traders who disagree and find that their trend trading strategies were not adversely affected by the 2005 technological shift in the markets. My point is the ones who say it is harder were just ill-equipped to handle the change in the markets while others that were not affected were equipped to handle the change. So there are 2 camps here. Ill-equipped and equipped.

A third camp if you will, are the ill-equipped traders whose trend trading strategies have failed post the 2005 shift and have the nerve to declare trend trading "dead" just because their strategies were adversely affected by this 2005 shift. This third camp is most likely ego driven.

I reckon the trend traders' whose strategies were not affected by the shift trade based on core concrete market principles and market behavioral research that hold true irrespective of technological change whilst those ill-equipped complainers traded based on malleable methods divorced from market principles with efficacy that is at the whim of technological change.
  • #70
  • Feb 23, 2023 6:38pm Feb 23, 2023 6:38pm
Trend following is dead. Trend trading is alive. Do you know the difference?

For trend following to work you need smooth and relatively consistent price curve.
You need significant directional drift. You need bias.
On the classic Monte Carlo simulation a smooth curve suitable for trend following resides outside 1 standard deviation.
In other words, you need bell curve distribution with fatter and longer tails (significant percent outliers) significantly deviating from the random.
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You rarely see such thing on the forex market. It's a bit more common on the stock market but still not as common as it was years ago.

You can play with the numbers as much as you want. The distribution between choppy and trendy is mostly random these days. If you want to succeed in such market you need to employ much smarter strategies than the basic trend following. Because you no longer play against real people! The people are predictable and easy to exploit. They are slow, they make mistakes, they tend to follow other people and the dominant story of day. This is how trends used to form in the past. Because of crowd behaviour. But now, you play against machines! The machines are fast and smart. The don't make the same mistakes as humans. They make other types of mistakes. You have to know how these machines operate if you want to exploit them. Most people probably have no idea how the game is played these days. You look at these charts and they all look the same like the charts from years ago? Right? Nope. They are different! The game is different. They change the rules every few months. Basically with every major update of the bots.

“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
  • #71
  • Feb 23, 2023 8:02pm Feb 23, 2023 8:02pm
Quoting OutThere
One of the questions that came to mind was that why if it is such a good system, none of those traders commenting on it are around.
//----

hey ot...... without putting to fine a point on it, let me just say, things have changed.... maybe they did not like those changes....

vegas is a trend following system , so it's stats should be fairly predictable..... given those stats, we can rule out those guys went broke.....

speakin of predictable trend following 9th graders, peyton is on track for 2k this month...... and i have to match what she makes....

diapers were cheaper.... dang rug rats grew up to quick....h
//------
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to trade and code, keep both simple... no call to impress....h
  • #72
  • Feb 23, 2023 8:51pm Feb 23, 2023 8:51pm
hey cb..... thanks for your message...... and thanks for your offer....

i have always admired those people that planted pecan orchards..... in many cases their patience extends further into the future than they have to live.....
//-------

there is a common sarcastic saying, 'i'll believe it when i see it'......

there is a less common saying, 'i'll see it when i believe it'.......

maybe some believe trends don't exist only because they can't see them.....

maybe some believe trends do exist only because they can see them.....

or maybe just i'm dreaming...... in living color.....h
//-----
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to trade and code, keep both simple... no call to impress....h
  • #73
  • Feb 23, 2023 9:40pm Feb 23, 2023 9:40pm
Quoting hayseed
{quote} //---- hey ot...... without putting to fine a point on it, let me just say, things have changed.... maybe they did not like those changes.... vegas is a trend following system , so it's stats should be fairly predictable..... given those stats, we can rule out those guys went broke..... speakin of predictable trend following 9th graders, peyton is on track for 2k this month...... and i have to match what she makes.... diapers were cheaper.... dang rug rats grew up to quick....h //------ {image}
peyton being the daughter of an astute and keen market observer and coder has something to do with her success I reckon. I sometimes wonder if Miley Cyrus would have been the same without her father or Julian Lennon without his father or Charlie Sheen without his father and so on. Besides, peyton probably is not under such stresses of life such as needing to succeed in order to get away from the slavery of working to survive and perhaps the crushing burden of debt or any other motive that makes us look into escaping by erecting a secret ladder we call trading which in our rush we end up skipping a step or two....but I get your drift...if a youngster such as peyton can do it, so should everyone else.
  • #74
  • Feb 23, 2023 9:48pm Feb 23, 2023 9:48pm
Trend trading may have lost its popularity over recent years but trends definitely do exist. How you trade them is what really matters
  • #75
  • Edited Feb 24, 2023 12:16am Feb 23, 2023 11:43pm | Edited Feb 24, 2023 12:16am
Quoting alphaomega
Trend following is dead. Trend trading is alive. Do you know the difference? For trend following to work you need smooth and relatively consistent price curve. You need significant directional drift. You need bias. On the classic Monte Carlo simulation a smooth curve suitable for trend following resides outside 1 standard deviation. In other words, you need bell curve distribution with fatter and longer tails (significant percent outliers) significantly deviating from the random. {image} You rarely see such thing on the forex market. It's a bit...
Machines, bots, algos are different from humans in terms of automation and execution but the agenda is the same because they are programmed by humans with set criteria based on the trader's perception of value. Regardless of how much technology has advanced, traders are still either short term or long term participants and their behavior is still determined by their perception of value. Despite any technological change, the market's basic imbalance-balance behavior is still the same.

I do fully agree that it is the 3rd standard deviation that shows trend sentiment which is a directional move. This directional move is where traders are typically holding and adding to their positions. This directional move is the most indicative of market sentiment but the move is created by the peak of market sentiment which is the perception of value and this directional move shows confidence in that perception of value(fair price and rotations which is the 1st standard deviation). Value(fair price rotations, 1st standard deviation) is why they are holding and adding to their positions at the directional move(3rd standard deviation).

These are basic market principles that will never change despite any change in tech, incremental or otherwise. They apply to any market.

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  • #76
  • Feb 25, 2023 6:39am Feb 25, 2023 6:39am
The entire 2022 was one big ass trend. What are you guys talking about. Look at USDJPY
  • #77
  • Feb 25, 2023 7:04am Feb 25, 2023 7:04am
DISAgree , lets take a very example of BTC , 68274xx , the whole world is looking at magic number 100k ,
seing at d1 , 21 /10/20 and 21/11/ 10 , there is a big hesitation.
then fold it to w 1 , these will be an extantion down , saw it at 13xxx or 14xxx , told my self i am legit hallucination junkyy not smoking of any mushroom
so trend is alive and well , just take it or leave it
  • #78
  • Edited 8:24pm Feb 25, 2023 8:13pm | Edited 8:24pm
This thread is dead, but trend following and Supply/Demand are SUDDENLY very much alive per the Original poster!

Seems the Original poster was just looking for ideas on trend for a presentation he needed to do. Post 731,772: https://www.forexfactory.com/thread/...5#post14337335

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I feel used:

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Hope you enjoyed my sarcasm.
  • #79
  • Feb 25, 2023 11:04pm Feb 25, 2023 11:04pm
So what have you learned today people ? Or are you still stuck on the "agree" "disagree" toilet seat? Public forums are so funny. SO divisive. The stench of shit wafts over mostly everyone. Hehehehe.
Real Trading is not gambling.
  • #80
  • Feb 26, 2023 2:36am Feb 26, 2023 2:36am
Then , you dont have business here
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