Why People Do not Believe in Trend Following as a Trading Strategy

It is very difficult for people to believe in trend following. Trend Following is the anti thesis for most people. Most people want to be right. Most people want to consider themselves smart. These people like to buy at the bottom and sell at the top.

Trend following actually is very humbling and a true marathon. Trend Followers realize that the only certainty in trading is uncertainty. This flies in the face to those who want to be right. More so, Trend Followers buy at the highs with the hope of high going higher or selling lows with the hope they will go lower.

People love trading tips. When one follows an automated trading strategy such as trend following, there are no trading tips. No one knows anything more than you. Even automated trading flies in the face of the norm of investment strategies. Most think that fundamental analysis is the way to go. In my opinion the only way for fundamental analysis to go is through long drawdowns and alot of potential pain. All one has to do is look at Netflix and all the fundamental reports. Contrarily trend followers could have made money going up with Netflix as well as on the downside.

Even if more people believed in trend following, this would not kill trend following. Trend following has worked for decades and is based on human nature. There are good periods, great periods and a lot of bad periods. Nothing is perfect however as far as investment strategies out there, trend following is a life time strategy for me.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts, commodity options or forex can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results. You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

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