Wednesday, March 20, 2013

You interested in trend following?

As concept trend following allows you to:
  • go long on instruments moving in an upward price direction;
  • go short on instruments moving in a downward price direction;
  • have no requirement or need to understand company earnings reports or balance sheets;
  • ignore fundamental or economic analysis;
  • focus on the one metric that determines whether you make a profit or a loss on a trade - namely price;
  • ignore the opinions of others;
  • ignore intra-day price movement or short-term 'noise' and to focus on the price trends;
  • trade any market, be it equities, commodities, foreign exchange etc, in any corner of the globe;
  • fully participate in the markets while requiring minimal time in front of a PC;
  • apply prudent risk control to your trading activities;
  • cut losses and let profits run in an regimented, unemotional fashion.
A complete trend following system tells you:
  • when to enter a position;
  • where to place your initial stop;
  • the number of shares, contracts or bet size to place on each position (when coupled with a prudent risk management plan);
  • when to exit a losing postion;
  • when to exit a winning position;
  • keeps you in a profitable trend until the price movement you profit from finishes;
There are plenty of people out there who will refuse to pay a relatively small sum for ongoing support or guidance, yet are seemingly happy to throw away hundreds if not thousands of pounds losing in the markets, or even blowing up their trading accounts. Some people succeed by finding their niche by pure hard work, others by finding a mentor to guide them along the way. Even some of the famous traders interviewed in Market Wizards benefited early in their career by finding a mentor to help them.

A trend following mentor can assist you by:
  • discussing how to approach trend following;
  • assisting you in setting your system parameters so that you can apply a trend following methodology to your preferred timeframe, holding periods etc, as well as set up prudent position sizing/risk parameters;
  • giving you the benefit of their own trading experiences using a trend following method, through market uptrends and downtrends;
  • reviewing your trading performance and suggesting ways to improve results going forward;
  • providing ongoing support as you gain experience in trading such a system using real money;
  • most importantly, helping you cultivate and develop the mindset needed to profit from the markets in this fashion.
Trend following as a concept has been used by some of the most successful traders and speculators over several decades, and works in both market uptrends and downtrends.By developing a system, good risk controls and the associated mindset, you can approach the markets with confidence using a robust, historically proven method. The power of compounding returns will do the rest...

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