Trend Trading Strategy
(Redirected from Trend following)
We have all heard the term "Cut your losses and let your profits run."
Whether "long" or "short" the strategy is the same.
1) Identify the trend
2) Identify the best trending sector in that trend.
3) Wait for a pull-back (minor retracement) before entering the trend.
You might ask "Where is the strategy about that?"
The strategy unfolds like this: use as few technical indicators as possible to identify the trend. The best indicator is a five-year old child. Just ask them whether the line is rising, falling, or zig-zagging across the page!
NOW - get this, and get it well! If the trade does not go the way the signal indicated - GET OUT IMMEDIATELY! No "if's or but's". If the trend does not resume, leave the trade. That's called "Cutting your losses for Dummies".
If you stay with the trade HOPING for it to go your way (FEAR of being wrong, Fear of missing out), we here in Australia have adopted a term for this kind of thinking.
It's simply this : "Ya dreamin', mate!" (With thanks to Michael Caton in the great Aussie movie "The Castle".