1. Vision, Objective and Goal. Why do you want to trade options? A real simple answer will be “to make money”. However, I think if you ask yourself few more questions, you will realize that there is something else. Is it because you love numbers, action of the market, ease of liquidity, or can make “easy money”, have low capital, etc? Have an end in the mind, set your objectives and goals for the year and year after, and of course have progress measures in place.
2. Failure to have a trading plan in place before a trade is executed. Without a specific trading plan, a trader does not know, among other things, what and how to play and why, when or where he will exit the trade or how much money may be made or lost. Traders with no predetermined trading plan are flying by the seat of their pants, and that’s usually a recipe for a “crash and burn.” If you don’t know how to design a trading plan, download a copy here.
3. Money management. Part of trading success boils down to proper money management and not gunning for those high-risk “home-run” type trades that involve too much capital at one time. In the trading environment, we will win and lose. However, we need to be more right than wrong and when right, be big on right. When I was winning I averaged up. But when it started losing, I didn’t cut the losses. As you may know, options swings a lot +/- 30-40% in one day isn’t surprising. Imagine if you are fully invested and if the tide turns opposite to your direction, you can lose 30-40% in one day. My rule of thumb that I learned from various seminars, option trading forums, a maximum of 5% of overall portfolio per trade/underlying. You may choose yours, but have one in place. Learn to use risk/reward measure before starting a trade.
4. Expectations those are too high, too soon. Beginning traders who expect to quit their “day jobs” and make a good living trading in their first few years are usually disappointed. You don’t become a successful doctor or lawyer or business owner in the first couple of years of the practice. It takes hard work and perseverance to achieve success in any field of endeavor — and trading is no different. Trading markets is not the easy, “get-rich-quick” scheme that a few unsavory characters make it out to be.
5. Lack of “patience” and “discipline.” “Greed” and “Fear” will test your emotions again and again and are the ones generally that prompts wrong decision, at times. While patience and discipline are overworked and very often mentioned when determining what unsuccessful traders lack, not many will argue with their merits. Indeed: Don’t trade just for the sake of trading or just because you haven’t traded for a while. Let those very good trading “setups” come to you, and then act upon them in a prudent way. The market will do what the market wants to do — and nobody can force the market’s hand.
6. “Overtrading.” Trading too many markets at one time is a mistake — especially if you are racking up losses. If losses are piling up, it’s time to cut back on trading, even though the temptation is to make more trades to recover the recently lost assets. It takes keen focus and concentration to be a successful futures trader. Having “too many irons in the fire” at one time is a mistake. Separately, just like any other business, there is a life beyond “trading life” as well.
7. Failure to accept complete responsibility for your actions. When you have a losing trade or are in a losing streak, don’t blame your broker or someone else. You are responsible for your own success or failure in trading. You make the decisions. If you feel you are not in firm control of your own trading, then why do you feel that way? You should make immediate changes that put you in firm control of your own trading destiny.
8. Not getting a bigger-picture perspective on a market. One can look at a daily bar chart and get a shorter-term perspective on a market or stock trend. But a look at the longer-term weekly or monthly chart for that same market can reveal a completely different picture. It is prudent to examine longer-term charts for that bigger-picture perspective when contemplating a trade.
9. Don’t try to make back all your losses in one trade: Everyone makes losing trades. Sometimes you get the losers in a row, one after the other, and your account is smaller than when you started. You get frustrated and angry. You decide to take revenge on the market and make all your losses back and then some. So, the next trade you make, you increase the number of contracts or shares because your rage is overpowering your discipline and you’re sure that this trade will be “the one”. And…you’re probably wrong. The trade turns out to be loser as well and your account is even deeper in the hole. Sure, it might be a winner, but it’s not worth the risk. Don’t let your anger control your trading. Just because you’ve had a string of losers doesn’t necessarily mean your due for a winner. If you’re in the situation of having nothing but losing trades, a better idea would be to review your trading plan and see if there might be fundamentally wrong with it. Then you can correct it and see if that improves the results.
10. Don’t stop trying to learn new things about trading, either by doing research reading books and articles. There are lot of free tools available on web (you can check most here) Everyone is getting smarter and more capable. The difference between the educated retail trader and the professional trader is getting smaller and smaller. That’s both good and bad. It’s good that bid/ask spreads are tighter now than they have ever been. But it also means that the industry is more competitive. Knowing what an iron condor is or how to calculate a roll value isn’t enough. There are many who already know that stuff. Making money in trading is very hard work. You have to be willing to devote the time and energy to try to find an approach to trading that might actually make you money.
A successful trading career isn’t built out of luck.
What I Learned From the Best Trader I Have Ever Known
I know many traders and I have worked with many traders around the world. However, one trader who is, by far, the best trader I have ever known. He is an unbelievable trader. He is very consistent and he makes an incredible amount of money trading every day. You may have heard of him, he has been interviewed in trading books, and he often speaks at trading groups and trading seminars. I will simply refer to him as my “Millionaire Trader Friend” and I will tell you what I have learned from him.
I still remember the day that I had come to realize just how successful my Millionaire Trader Friend was at trading. Today I must admit it does not seem as impressive as I have been able to see and meet successful traders from all around the world, but I do know that he is an impressive trader and I still hold him in high regard. I have been luck to know my Millionaire Trader Friend and I have reaped many benefits from incorporating the lessons I have learned from him into my own trading. It is my hope that you too will benefit from what he has taught me.
These are the nine things I have learned from my Millionaire Trader Friend:
1. Do One Thing, and Do It Well
If there is one simple thing that I have learned from my Millionaire Trader Friend, the best trader I have ever known, it is this – to make money trading you only have to become an expert at one type of trade. There is no need to run several different trading systems. You may simply concentrate on one trading system, and if you trade it well you can become a very successful trader.
You may not even need to concentrate on many different markets, you may find that simply concentrating on one currency pair is enough for you to find many profitable trade setups. This is what my friend does, he trades only the GBP/USD and he has success with this.
2. You Can Have An Extremely High Win Rate
There has been a lot written about win rates (what percentage of your trades are profitable trades), but what some traders do not seem to understand is that it is possible to have an exceptional win rate. 70%, 80%, even 90% is possible. This I have learned from my Millionaire Trader Friend – he has an incredibly high win rate, and I do too now because I have learned so much from him.
My Millionaire Trader Friend is continually improving as a trader. He is constantly figuring out ways to get better at what he does. He uses every loss as an educational experience – that is how he sees them. Every loss is a lesson that the market has handed him. I would not say that he embraces losing trades, but he does learn from them.
3. Patience is Rewarded
Another thing that I have learned from my Millionaire Trader Friend is that it pays to be patient. Profitable traders like my Millionaire Trader Friend wait for the perfect trade setup. Many traders who do not consistently make money trade for the sake of trading, I used to do this too. I used to look at the markets and ask myself “which way is the Pound going to go?” Now I look at the markets and say “Is there a trade I must take right now?” I have learned to be patient, and my trading account has grown accordingly.
4. The Best Time for A Trade is When Everyone Else Disagrees
If you think about it, it makes sense – the very best time to buy something is when everyone is convinced that the price is going to fall lower, and the very best time to sell something is when everyone is convinced the price is going to shoot to the moon. My Millionaire Trader Friend has taught me the importance of trading against the crowd. The crowd is reacting to the market, and my trading partner has taught me to react to the crowd, this simple change in mindset can produce incredible profits if you are willing to look like a fool (in the eyes of others).
5. Being Wrong is Not a Bad Thing
My Millionaire Trader Friend has taught me that even the best traders, like him, are sometimes caught on the wrong side of the market. There is no need to panic when this happens, but once it does a very good thing to do is to simply get out. Once you realize that your trade was not a good idea, there is no need to wait for your stoploss to get hit, when you know you have made the wrong move you can simply get out of the market and wait for the next trade.
This is what I have learned from my Millionaire Trader Friend – if you are absolutely certain that you made the wrong move, sometimes the best thing to do is to exit the market and then place a trade in the opposite direction. This can be extremely difficult to do, particularly if you have put a lot of time and effort into analyzing the trade.
6. Let the Trades Come To You
If there is one thing I have noticed about how my Millionaire Trader Friend trades (and this is not a unique characteristic, many of the very best traders I have ever traded with also have this characteristic) it is this he does not go looking for trades, he waits for them to jump out at him. This may seem like a weird way to trade, but it is precisely how he takes so many profitable trades. He waits and watches, and when the market gives him an opportunity to jump in to a good situation he enters the trade. He never trades simply because the market is open, and he sometimes sits in front of his charts for hours and never trades. I have learned from him that successful trading means being ready for the market to offer you “free money” – or ideal trading setups. When these setups come along I know it because I feel like I must take advantage of the opportunity the market is offering.
7. Create Your Own Trading Style
How many times have you heard some expert trader say something like “Fibonacci doesn’t work!” or “never trade during a news release” or “scalping is impossible in forex.” One thing I have learned from my trading partner (and from working with traders all over the world) is that the very best traders create their own trading style. This doesn’t mean that you must re-invent the wheel to become a successful trader, it simply means that many successful traders have found their way to success by adapting trading strategies and making them their own. It is not important that you trade precisely as other successful traders do, but it is important that your style of trading makes sense to you, because this will ensure that you stick with the trading strategy over the long haul.
My Millionaire Trader Friend has a completely unique trading strategy that he has created over time, by exposing himself to many different ideas and many different traders. His system is unique because it is his, and it makes sense to him. This is important because it means that he is better able to maintain confidence through the drawdowns that will inevitably occur.
8. Keep Learning
My Millionaire Trader Friend has such a high win rate, and is so good at picking high probability trade setups that some people may assume that he knows that he has the markets “figured out.” Not so, he is constantly learning, he has many trading books, trading magazines and we are constantly talking about trading strategies. He learns from some of the best institutions and research centers around the world because he has a constant thirst for knowledge. The fact that he is open to new ideas and the fact that he is an exceptional trader is probably not a coincidence. I think that many successful traders are open to new ideas. This doesn’t mean that successful traders switch trading strategies every month (my Millionaire Trader Friend has been trading the same trading strategy for years), it simply means that many successful traders are open to new ideas and new ways of profiting from the markets.
9. Everyone Has a Bad Streak
Even my Millionaire Trader Friend will have the occasional unlucky streak with several losses in a row. This is not that interesting to me, but what is interesting to me is the way that he deals with these unlucky streaks. He does not lose confidence, he continues to take the next trade setups, as they occur, and he does not question his trading strategy. He knows that anyone can flip a coin and get “tails” 4 times in a row, and that is precisely how he views an unlucky streak. He knows that in the long run he will make up the lost money and then some, so there is no need to panic.
I hope that you have learned something from my Millionaire Trader Friend, I know I have.
Before you invest in stock markets
Lot of my friends ask me for how to start investing in markets.
I think one must do following basic things which will help him avoid some common mistakes.
- Do not jump in trading just because of your friend, colleague, girl friend, boy friend, neighbor made greats profits.
- There is nothing called tips which can make you net profits. Selling tips is way to make safe money for tipsters.
- Please visit http://www.investorfirst.in and go thru basic guides. Also go thru CPFA study material.
- You must have basic computer skill and basic MS excel skill. Please find course like http://www.mkcl.org/mscit/.
- Please understand products. Do NCFM Certifications (http://www.nseindia.com/education/co…odule_ncfm.htm) or Also go you http://www.bseindia.com/ and find training courses from BSE training institute, you can also do NISM http://www.nism.ac.in/ for currency certifications.
- Manipal provides class room training http://www.nseindia.com/education/co…al_edu_prg.htm who teach proper courses.
- Do not attend any private courses about markets most of them are about to sell their products.
- The cost involved in training can be zero if you do not take exams and download training material (it’s free). I suggest going for exams, it’s not costly.
- Read business papers & watch business TV channels for three months and track all tips, you will learn that free tips make you NET big losses. So stop reading business new papers, magazines for free / professional tips. You will learn running business daily, business TV channel, being job of anchor on TV channel, being Analyst on TV channel is safer way to make money than trading.
- Prepare your Financial Planning in excel sheet. ( CPFA material provides all details) and find amount which you want to risk from your hard earnings. Please ensure you have insurance for health (family floater), accident insurance and your EMI for next 6 months are in bank & you are already investor in pension schemes or Postal MIS schemes.
- If you lose all money while you are trading in markets, your BP should not go up or you should not lose calmness. Remember you are coming to markets, it’s your greed pushing you to go to markets. You must know how to stop, when to stop. Your family should be aware of your plans on trading game.
- Investment / trading amount should be in separate account than family account & should be divided for different investment vehicles like Mutual funds.
- Please be clear about your risk limits, available quality time to spend on investment/trading activity.
- Open your account with two brokers, I suggest Motilal Oswal and Zerodha. MOSL is full service provider, they offer good fundamental reports and Zerodha is discount broker who offers one of best trading terminal. Remember big banks or brokers are here to take big brokerage and not to make you rich. Please see quality of service. Please do not start trading once you open account.
- By now you must be have done NCFM / certification in Capital markets, FNO, Options.
- Please understand benefits & risks of trading in cash, Futures, Options and markets like equity, commodity, currency.
- Do not select options as your first choice because it can double your money in 3 hours, remember it can make it close to zero in few minutes. Ask people who bought Infycall options at ATM calls before results for almost last 2 years. They all lost 90% money in 2-3 minutes. Options is most complex and different game.
- Now know important resources like trading holidays, market timings, results calender, events calender. Knowing events, results dates just does not help, you need to know actual timings. Like RBI event, it happens around 11 am in morning, markets will not move before that or Reliance results comes post or Infy results always come just before market starts. All channels and print media gives non sense historical info which does not help initiating any trades in first place. If you see news, analyst discussions and then go to trade you will see price already moved in that direction, so you will be mostly last person in row to trade.
- Please buy second hand books of technical analysis explained by Martin Pring, Alexander Elder Second hand books are studied by someone, the person who reads book before you marks important lines, comments, it helps to get this faster and books are also cheap in second hand market.
- Do technical analysis course with either NSE, BSE or Technical analysis explain is enough. Remember Technical analysis is all about Stats and not any mechanical or engineering thing.
- Now get a copy of Metastock, Amibroker (you can download trial copy or get one from roadside shop in Mumbai). Get eod data by using getbhavcopy.com or get datafeed from any vendor.
- Learn patterns, moving avg, RSI at minimum.
- Please understand one thing, you must know if stock is in bull or bear market, if it’s above 200 moving average line, it’s called long bull market. Stock may be in bull or bear market, it may have direct relationship with Nifty or Industrial index or may not. Like Nifty went down but Tata motors & Hero Honda went up, so don’t get carried away.
- Once you learn to read charts (you can read them on * finance, google finance as well), it will help to figure out if you can buy/short stock.
- The most important thing is you need scanner, you can not go thru 4000 stock charts every day to find out any opportunity. Decide your scanners and indicators in your technical analysis software. Apply one of trading systems discussed on forum and walk back to last 10-15 years on eod chart and see what happened. If you would have placed orders in past, would you make money?
- Do complete analysis for at least Nifty and Sensex and it’s relation ship on eod charts like Dow, FTSE from 1997 (for eod) onward as minimum.
- Take a exam given in trading for living or technical analysis explained and some psychology test for traders/ investors. This will help.
- Now understand brokerage calculator, back testing, use of averaging in loss making or profit making positions.
- Understand broker terminal, emergency way to run SL. Ordertypes, taxation on profits, reading contract notes, benefit and risk involved in leverage.
- Start paper trading for at least 3 months on daily basis. Learn from it.
- Now make sure you have best quality, high end infrastructure with N+1 redundancy (fail-over systems in place). Best quality eod and intraday (if day trader) data feed. (commercial data feed makes sense as it saves time in managing data like adjustments for splits, dividends etc).
- Go thru bulk data deals every day.
- Once your systems are up and running, do a dry run.
- Learn money Probability rules.
- Divide your amount to 10 pieces, Have 1:3 risk reward ratio. This will keep you safe. If you have say 100 Rs, you can do 10 trades of 10 rs. each. If you lose 1 Rs, get out. If you lose money in 7 trades out of 10 then you lose Rs. 7 and assuming you will win in at least 3, you make 9 Rs. So 9-7=2. (Rs. 1 will be taken by STT and broker) and you will make 1 which is 1% in worst case. There are lot of ideas like this.
- Identify possible trade by using scanner on eod basis or intraday, have risk reward as 1:3.
- Enter in trade with as per decision. Do not enter SL in systems if you are eod trader, if you are intraday trader enter SL in System.
- Follow your rules strictly. No emotions.
- Have trading diary, remember when you win, someone loses , when you lose, someone win but industry (stock exchange, banks, brokers, Govt, Sebi, NSDL/CDSL) will always make money in all cases. It’s not zero sum game. If you want to go from Pune to Mumbai and you go in opposite direction and trigger SL, next time you have to travel Pune Mumbai distance + loss in last trade + brokerage etc. So it pains. Generally 70% of total trades make losses and only 30% make money and those 30% have to wash out losses made by 70% trades + brokerage etc and give you great returns.
- Identify your targets, like banks give 10% PA, market gives 20%, FNO can give 100% on daily basis or can take 100% on daily basis. Take care and all the best.
Remember Sell- Buy = Profit or loss, Time frame can be 1 min or 1 year or 10 years. It has to beat inflation rate, bank interest rates. If you do Sell – Buy on every second, minute they call you HIGH FREQUENCY TRADER if you hold security for one year + and sell they call you Investor but both liquidate / reverse positions and realize profit or loss.
Trend Following Trading Introduction
What is trend following trading exactly? Author Van Tharp offers:
“Let’s break down the term ‘trend following’ into its components. The first part is ‘trend.’ Every trader needs a trend to make money. If you think about it, no matter what the technique, if there is not a trend after you buy, then you will not be able to sell at higher prices … ‘following’ is the next part of the term. We use this word because trend followers always wait for the trend to shift first, then ‘follow’ it.”
Some other expressions of systematic trend following from pro trend traders:
“Systematic managers trade by following non-emotional sets of trading rules often based on mathematical models of market behavior. Systematic managers use their judgment and intuition in designing their market models and trading systems. Discretionary managers, on the other hand, apply judgment and intuition in making every trading decision.”
“A trend follower attempts to identify developing price patterns with this property and trade in the direction of the trend if and when they occur. They use only the current and historical price of the asset to make trading decisions and the approach can be summarized by the expression follow the herd.”
Still people ask: “What is a trend?” One of the best discussions I have seen on the subject comes from top trend follower and one of my mentors, Ed Seykota:
“A trend is a general drift or tendency in a set of data. All measurements of trend involve taking a current reading and a historical reading and comparing them. If the current reading is higher than the historical reading, we have an up-trend. If lower, we have a down-trend. In the improbable event of an exact match, we have a sideways trend. The direction of the trend depends upon the method we use to perform the comparison. Real instruments fluctuate minute-to-minute, day-to-day and year-to-year. We have, therefore an enormous supply of historical points to use to determine trend. As such, we can determine as many instances of trend as we please, in any direction that we please. There is no such thing as the trend; there are countless trends, depending on the method we use to determine a trend. People typically pick a method for determining trend that fits with their current positions and/or view of the market. All methods of defining trends compare various combinations of historical price points. All trends are historical, none are in the present. There is no way to determine the current trend, or even define what current trend might mean; we can only determine historical trends. The only way to measure a now-trend (one entirely in the moment of now) would be to take two points, both in the now and compute their difference. Motion, velocity and trend do not exist in the now. They do not appear in snapshots. Trend does not exist in the now and the phrase, “the trend” has no inherent meaning. When we speak of trends, we are speaking, necessarily, from some or another view of history. There is no such thing as a current trend. When we speak of trends we are necessarily projecting our own definitions. With that in mind, we can proceed to examine ways to define, compute and use trends.”
There are many ways to describe trend following, but they all come back to the same strategy.
Trend following trading is reactive by nature. It does not forecast or predict markets or price levels. Prediction is impossible. Trend trading demands self-discipline to follow precise rules (no guessing or wild emotions). It involves a risk management system that uses current market price, the equity level in your account and current market volatility. Trend traders use an initial risk rule that determines position size at the time of entry. This means you know exactly how much to buy or sell based on how much money you have. Changes in price may lead to a gradual reduction or increase of your initial trade. On the other hand, adverse price movements may lead to an exit for your entire trade. Historically, A trend trader’s average profit per trade is significantly higher than the average loss per trade.
Trend trading is not a Holy Grail. It is not a passing fad or hyped-up secret black box either. Beyond mere rules, the human element is core. It takes discipline and emotional control to stick with trend trading through inevitable market ups and downs. Trend following seeks to capture the majority of a market trend, up or down, for profit. It aims for huge profits in all major asset classes — stocks, ETFs, LEAPS® options, bonds, currencies, futures and commodities.
Think of it this way: trend following is the only strategy that you could trade on a desert island. As long as you have market data each day, everything else is useless (i.e. CNBC, news, fundamentals, broker opinions, talking heads, etc.) for making the big money.
A Trend Following Story
When the first edition of my book ‘Trend Following’ hit the streets I had hoped to assemble the first comprehensive look at trend following trading. That goal was realized. How did I know? Since the first edition of ‘Trend Following’, I have met literally dozens of trend following traders managing collectively billions. Their feedback is validation. I never could have expected that a then obscure book would lead me to the likes of Nobel Prize winner Harry Markowitz and hedge fund managers Boone Pickens and David Harding, but it did.
Bottom line, forget stock markets only going up. When the Fed rigs rates to boost stocks to unsustainable levels, bubbles, bubbles and more popped bubbles are normal. So can you really stomach your advisor telling you to, ‘just hang in there’? Mutual fund managers and financial advisors charge huge management fees and deliver no return. Let’s face it, mutual funds’ buy and hold (hope) scheme will leave you underwater 20 years from now just like Japan. Guaranteed. Even during bull markets 90% of mutual fund managers fail to beat index averages. A child guessing could have beaten the overpaid suits. It is crazy to stick with a manager, broker, or any other sort of ‘professional’ who just takes your money to churn fees.
Top Reasons for Trend Following Investing
Author Seth Godin said it well:
“Golf is not safe. My grandfather died playing golf. Speaking up is not safe. People might be offended. Innovation is not safe. You’ll fail. Perhaps badly. Now that we’ve got that out of the way, what are you going to do about it? Hide? Crouch in a corner and work as hard as you can to fit in? That’s not safe, either. Might as well do something that matters instead.”
I live and breathe my research firm. Reaching and teaching people the lessons and laws of trend following–is a huge adrenaline rush. Take advantage of the research acquired by myself, and my staff and you will both make and save a great deal of money. For your associates, friends, and family–some bullet point ways to describe and explain systematic trend following trading:
- Profit in up and down markets: Trend following doesn’t swear an allegiance to a bull or bear market. It follows trends to the end. No matter how ridiculous trends might appear early and no matter how insanely extended they might appear at the end, follow trends. Why? They always go farther than anyone expects. Ignore momentum at your peril.
- No more buy and hold, analysts, or news: Trend following decision-making doesn’t involve discretion, guesses, gut feelings, or hunches. It’s not day trading or buy and hope. It doesn’t involve passive indexing, in and out trading, or fundamental analysis. No more 24-hour news cycles, daily turbulence, or sensational hype. No black boxes or magic formulas either. Let go of the Holy Grails.
- No prediction: Trends exist everywhere, always coming and always going. Markets are no different: They trend up and down. That said, no one can predict a market trend, you can only react to one. Trend following never anticipates the beginning or end of a trend. It only acts when the trend changes. There is no need to figure out why a market is trending, just follow it. You don’t need to understand electricity to use it.
- The big money of letting profits run: Trend following at its best aims to compound absolute returns. It doesn’t shoot for average. The goal is to make the knock your socks off returns, not passbook savings interest. Trend following also has the unique ability to lie and wait for targets of opportunity. That means killing it on unpredictable surprises.
- Risk management is top priority: Trend following always has defined exit protocols to control injury to your account. Stop losses and proper leverage usage are standard practice. Trend following also has low to negative correlations with most other investment opportunities.
- Takes advantage of mass psychology: Trend following takes advantage of panicky sheep behavior. Strict discipline minimizes behavioral biases. It solves the eagerness to realize gains and reluctance to crystallize losses. Too many people believe what pleases them. Most behaviors are simply driven by the impulsive moment of now. Trend following wins because of that.
- Scientific approach to trading: Trend following doesn’t require a belief, but rather it relies on unwavering scientific principles. It has a defined edge just like the MIT card-counting team that beat Vegas casinos. Be the casino, not the hapless player. Trend following uses rigid rules rooted in numbers. Think process not outcome. Remember, frequency of correctness is not the issue, the magnitude of correctness matters. Winning percentage means zilch.
- Strong historical performance in crisis periods: Trend following is adaptable to differing climates and environments performing best during periods of rising volatility and uncertainty. The unknown will happen again. Are you ready? You have to be able to ride the bucking bronco. Ride the storm out and stay alive.
- No traditional diversification: Trend following is not restricted to any single market or instrument. A focus on price action allows trend following to be applied to an exceptionally large variety of markets. Price is the one thing that all markets have in common. A trend trading system for treasury bonds should also work on the Euro and stocks. Trend following is robust.
- No government reliance: Forget Social Security, bailouts, stimulus plans, and roads to nowhere. Those won’t help you to make money; they only help you lose. When the Fed puts on or takes off the training wheels (read: rate manipulation), will you be ready to mint cash or will you sit there and just take it again? If your portfolio is grounded in sound principles you can win no matter what happens.