Trend Following
a.k.a. Trend trading
A strategy of identifying a market already moving in one direction and riding it until it turns.
In plain English
A strategy of identifying a market already moving in one direction and riding it until it turns.
Trend following does not try to predict. It waits for a trend to show itself, then hops on and stays on until the trend clearly breaks. The motto: "the trend is your friend, until it ends."
Trend followers typically lose small and often, in choppy markets, and win big and rarely, when a powerful trend runs for months. That requires discipline to keep taking signals through long dry spells. Many managed futures funds are built on it.
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