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What If a Stock Market Crash Happens- Trend Following?

What If a Stock Market Crash Happens- Trend Following?

Had this question posed to me…What if a stock market crash happens…

It all boils down to if you have a plan or do you listen to your stock broker!

If you have a plan…you should have a trailing stop. Depending on your rules and time frame this stop can be tight or more long term….There is nothing perfect. Longer time frames avoid the whips..but also you will give back larger share of profits. Shorter time frames you will get taken out and have more trades…however in lieu of a crash you will exit quickly.

Personally the landscape from all sides is disheartening. Bottom line is have a plan and learn to trend follow.

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The Stock Market Experts versus Trend Following

Everywhere I read, this hedge fund guru or this expert are calling the end of the stock market. They point out to the VIX which is truly an outlier. However in the meantime, the stock market is “still” moving up.

As a long time trend follower, I am neither a bull or bear. Emotionally I have to admit slightly bearish…However I follow my system to the tee as should you.

The key take point should be have a trailing stop when trend following….follow a plan…Be open as anything can and will happen..

 

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Where Would you Look to Buy ESNT As a Trend Follower?

Regarding Trend following stocks…you want to buy stocks…when the market is healthy…buy the strongest stocks in the strongest sectors….I will qualify my idea of strongest…Both Technical and Fundamental….

One example is ESNT…However as trend followers we wait for break outs…Where would you buy ESNT?

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Trend Following is All About Patience & Discipline

Trend Following is All About Patience & Discipline

What do I mean by this title? To me it is exemplified in a current trade. I had a signal to buy the French Stock Market CAC. If I would chose, this would not be a trade that I would choose, however trend following is following signals…no opinion…being consistent and having an open mind. I have been in this trade since Feb 2017. So firstly I had the discipline to take a trade that I did not like and more so the patience to stick with it. Currently my trailing stop is very close to being hit. If it hits, I am out…I do not over ride the system. Have a set of rules and follow them. 

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Focusing Your Time when Trend Following

Focus is one of the keys of trend following. Many times when I am teaching clients, I see they are all over the place from a screen filled with countless indicators to trying to follow to many markets. Yesterday I had a lovely session with a gentleman who is a National Sales Manager. Clearly he has a very busy schedule and in our session I showed him how to focus his time allocated to trading to probably less than 15 minutes 5 times a week. It is not a get rich anything. Rather it was simply focusing on stock ETFs and a small basket of sector ETFs with a default screen with only a handful of indicators.

KISS…Keep it simple and stupid…

Being consistent in your trend following will help you to your trading goals.

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Trend Following CRUS Stock – Patience & Discipline

Trend Following CRUS Stock – Patience & Discipline

When trend following one needs to temper their expectations and always be patient. One leading stock exemplifies this CRUS. CRUS breaks out only to pull back. You need to ask yourself ” How do I feel now?” More importantly one needs rules to protect themselves because in reality many times trades simply do not work! Do not fall in love with the company or the stock. Fall in love with your methodology and cherish being consistent.

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Trend Following versus Regression to the Mean

Our current market climate for Trend Followers of commodities is characterized by reversion to the mean instead of trending behavior. This presents us with meager opportunities. In such an environment ones trading system tries to minimize whipsaw losses while still taking its trading signals because you never know which trade may become the next big grand slam. This is trend following.

Trend following takes discipline…persistence…and GRIT!

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Much More Than Moving Averages with Trend Following

Yesterday I received an email regarding one of my books on Moving Averages. Firstly I want to thank the gentleman for his positive comments…as well as sent him a more comprehensive issues to consider with his trend following. When trend following only 1 aspect is the entry and exits. The most important issues are the risks that need to be addressed. I suggested that he should look at risk per trade…risk per sector….total risk on the portfolio….

Trend following is rather encompassing and many issues to consider. Too many consider only the entries. This is a huge issue that only comes with time and sorry to say losses…

 

 

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Taking Profits TOO Quickly When Trend Following

Taking Profits TOO Quickly When Trend Following

It is very common new trend followers over ride their systems when they profits start to evaporate. This aspect of trend following can become an emotional battle. However the only way a trader stands the chance to succeed in trend following is to be consistent in their rules and do not supersede their rules.

In the below example, I have been long Live Cattle for some time. It has had a nice move with nice( rare) profits. It could be disheartening to give up profits but in trend following this is the norm. You will never sell at the top or buy the bottom. Depending on ones account size, situations like pullbacks ( potentially end of trend as well) could be pull back opportunities to add to the original positions. However with the leverage of commodities this is rather hard and risky. However with stocks, this is more of a scaling opportunity. For example you might have your initial position in which you scaled in as the stock moved up….Situations like pull backs to the 50 Day EXMA….or new highs after pull backs also give entries. In situations like this, I add between 10-20 percent of my total position size. This way if the additional entry does not work….I take my hopefully small loss and move on…

 

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING COMMODITY FUTURES, OPTIONS, AND FOREIGN EXCHANGE (“FOREX”) IS SUBSTANTIAL.

 

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Interesting Trend Following Stock TEAM

Interesting Trend Following Stock TEAM

There are always stocks moving up and down…One thing to look for are stocks that move up and then pull back….As well as areas  of consolidation. Team is a nice example of trend following stocks. Team is rather extended…but might want to put on your watch list of trending following stocks.

 

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