More on trend following

Trend following is where the money really is! Why? Because you’re not bobbing in and out of the markets trying to catch a few quid.

Instead you’re finding established trends to ride for quite a long way. There are several ways to catch trends. See: Trading with Guppy and  Revisiting the Williams Vix Fix . The technique in the chart below is based mainly on using Aroon and RSI indicators. This seems more efficient and less energy/time consuming.

With trend following the mathematics for profitability is different because:

1. You don’t consider the 80:20 rule (80% of failures / 20% successful trades) as much.
2. In a sound trend following method, your ratio could be 60:40 or even 80:20. But the winnings on 40% or 20% of successful trends followed could be several times what it would be in traditional trading methods.
3. The ratio of aggregate winnings made to aggregate losses is expected to be quite large overall.

See also: Trend continuation and trend following.

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