Sunday, January 22, 2012

It's not rocket science

A lot of successful trend followers are unknown to the public - some of the most prolific earners have never been mentioned on CNBC, Bloomberg or in the mainstream financial press. Others have become well known due to books such as Market Wizards, Trend Following and the story of the Turtle Traders. Fashions come and go in trading, but trend following manages to stay the course.

These individuals are the equivalent of the trading underworld. Ask yourself who profited from the following:
  • The sharp rise and subsequent collapse of Enron;
  • The dot com bubble;
  • The 2007-08 subprime mortgage fiasco and the subsequent financial collapse in 2008;
  • The prolonged uptrend in gold;
  • The collapse of Barings Bank;
  • The 1997 Asian contagion;
  • The 1987 rise and subsequent market crash;
  • The 1973-74 bear market
I could go on, going back further in time - the list is endless. The point, in ALL of the above instances, getting aboard the the trend and riding it to its conclusion, and adhering to the exit signals given, would have made you a lot of money. These rules do not require you to have a PhD or an Oxbridge education, or to understand all the nuances of a company's balance sheet or trading results, or to even understand how to interpret the various buys and sells going through on a level 2 screen. It's not rocket science. There's only one metric to follow. To learn more, click here.

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