New testimonial

 

Below is a testimonial received from Paul, who I have known for a number of years now and has continued to make progress as a trend follower:

New testimonial from Germany

Julian is trend following trader from Germany who I have worked with over the last couple of years. Here is his testimonial which he kindly forwarded:

New testimonial

The beauty of a robust trend following methodology is that it can be applied to any market, in any part of the world. I have spoken to other traders (both new and experienced) in the UK, the US and the Far East, who are now applying it to their own local stock markets, as well as the other main markets around the globe. Tonight I received the following testimonial from a new trader in the Netherlands:

Training and mentoring for non-UK residents

When I initially started offering training and mentoring services, the intention was to solely provide this for people in the UK. As it turns out, due to the popularity of the blog and the general Twitter feed, I have been able to correspond with people in Australia, the US, Singapore and Hong Kong as well as other parts of Europe.

You guys are fast learners!

One of the things that gives me pleasure is how many of the people I have given training to are very receptive to the methodology and ideas I use and teach. In addition, a lot of them also are quickly able to have a good idea of what constitutes a good looking set up, as well as which ones to avoid.

Webinar tonight

Just a quick reminder that my next webinar is at 8pm BST tonight. For more details and to enrol please click here.

Once enrolled, details of how to access the webinar will be forwarded by email approximately one hour before it is due to start.

Attendees are encouraged to forward any specific questions/topics relevant to trend following by email prior to the webinar, along with a list of any particular stocks they want to be covered.

Supergroup - limiting your open risk

UK stock Supergroup gave back some of its profits today, after a torrid rise over the preceding few sessions (chart shown below). Some would say that you should have closed your profits, and they may be right in this particular case. However, experience has taught me that you shouldn't necessarily close your position simply as a result of a strong rise like this. Why?

The three critical areas of a trading system

There are three aspects to using any trading system, that you must be able to stick to. I have likened  these three areas to the legs of a bar stool - if one of the 'legs' is deficient or missing, then the stool (and your trading system) will fall over. These are:

Coal stocks get burnt

I typed 'coal stocks' into Google today and one of the suggested search phrases was 'Coal stocks grossly oversold'. As I've mentioned many times here, overbought and oversold have no place in a trend follower's vocabulary.

The e-book travels east

I received a nice testimonial this morning from Chris, who is based in Hong Kong:

"I have long been an admirer of those who can trade a trend following system. I like the idea that all you need to know is technical analysis without worrying about any fundamentals. However I don’t have confidence to trade such a system because of the relatively low winning percentage (typical of a trend following system). After reading Steve’s e-book, I believe I can finally apply this to my own trading.

A long and a short

Two nice trends, in opposite directions over the same period. In the case of the long trade, this is why when the general market direction may switch from up to down, you never cut short an existing trade/trend until you get an appropriate exit signal.

Don't say I didn't tell you...

As mentioned in a recent blog post here, there have been political manouverings over the last week, culminating in the Spanish government obtaining a bailout for its banks last night. Next weekend we have the re-run of the Greek elections, whoch potentially has major consequences for the Eurozone, and the markets themselves. This has all resulted in increased volatility and a bounce in the general markets - again, this is one reason why I tend to shy away from trading the indices themselves, but rather concentrate on trends in stocks.

I also stated that the psychological aspect of trend following will be tested, and from speaking to other traders this has indeed been the case. The 'giving back' of a portion of profits is all part of the game from a trend following point of view. From here, will the markets carry on upwards, or will will downtrend re-assert itself? All you need do is control the controllable (refer this post) - your own positions, your risk and your emotions and let market do what it wants.

The US indices are close to reverting to a neutral position, however the FTSE has acted the strongest over the last week - the drop in Chinese interest rates boosted mining stocks, of which the FTSE has a number. The DAX is still weaker, and remains on a short signal:

Regardless of this, if you were short individual stocks over the preceding few weeks you should have made some nice profits. I have posted several recent examples of nice trends - there are plenty more from where those came from. If you haven't made money, then get yourself a copy of my e-book or book some 1-2-1 training and find out what trend followers would have been looking for, and see what profits you could have made.

From here, the markets will do one of three things - go up, go down, or go nowhere. Volatility will remain high so remember to either embrace it or stand to one side. Trend followers will have no emotion, and will put to one side their own political beliefs about what they (personally) want to happen, or even what they THINK will happen - we will simply follow price action, wait for any signals and act accordingly.

Hargreaves Services

Another winner today on the short side is UK stock Hargreaves Services. The chart shows a nice consolidation with a failed breakout to the upside in April, before starting a new downtrend early in May, as a prelude to a sharp fall on a trading update released this morning. Again, the system scans I use identified this when the intial downtrend was signalled, and you would be sitting in a nice profit.

Diamond Jubilee discount offer on The Trading Triangle e-book/training

To celebrate the Queen's Diamond Jubilee, I am running a 50% discount offer on my e-book, The Trading Triangle, which will run for this week and the UK bank holidays next week.

To order and download your copy, please go here.

Alternatively if you want to get some 1-2-1 training, there is also a one-off discount available for this too. If this interests you please email me at trader.steve@btinternet.com and quote 'JUBILEE OFFER'.

To see testominials on both the e-book and the training available, please go here.

Trend following vs trading psychology

Those who believe in 'buy and hold', holding on for the long-term, trying to pick tops and bottoms, or who buy on pullbacks or go short on rallies should look at the chart below and think back to periods when they lost money. Now compare the various psychological states shown to the mentality of a trend follower who, when given the signals would act accordingly by either going long, short (or stand aside) in a totally unemotional manner, making money on both sides of the market, and protecting gains made with appropriate use of stops. All in accordance with a simple to understand, easy to implement strategy.

I've seen and read of people who have held on to losses for several YEARS in a particular stock, as they do not like to take losses, and would rather be proven right, whereas a trend follower would observe their stops, get out of a losing position (limited to say 1% or 2% of their equity) and move on to the next entry signal, in whichever direction that may be.

To those who hold onto losing positions - what's your 'uncle point'? 5%? 10% 50% or even worse, what if the company goes 'pop' and lose it all? (Think Enron). Surely it's better to limit your losses, admit you were wrong and move on???

What's more important to a trader or investor - to be proven right on an opinion, or to make money?

An effective trend following strategy can make you money in uptrends AND downtrends, and can be tailored to your preferred timeframe. Providing you have the relevant psychological make-up to accept that you will never get out at the absolute top, or enter at the absolute bottom (and who can predict that?), and you can accept that you won't make money in a non-trending market, then it is relatively simple to implement such a strategy. And then you can relax in downtrend periods such as 1987, 2000 and 2008, when trend followers pocketed huge profits by following their signals, controlling risk, and letting profits run. Or alternatively, in the case of those who simply invest in stocks in the traditional manner, such a system would let you know when to step away from the market and enjoy your profits.

Remember that even tech stock darling Apple fell the best part of $200 in 2008. And given the current market price action, and the economic news out there at the moment, who's to say that 2012 won't be as bad (or worse) than 2008? If you are interested in making money in such a climate, now is a great time to give trend serious consideration.

Obtaining my e-book, or gaining some 1-2-1 training or even enrolling in my mentoring programme would be a great starting point - I am here to help you make profits, and restrict any losses. Don't just take my word for it - please see these genuine testimonials, with the training available at a cost equivalent to the loss from one or two small trades, so what you got to lose?  If you are interested, please contact me at trader.steve@btinternet.com for further details.

Trend followers to the fore

The whole purpose of an effective trend following system is to protect you from making big losses during non-trending phases (by utilising strict money management parameters) which will enable you to make profits during those more favourable phases when markets are trending. It would seem that so far this year, the period up to mid-February was a nice trend to the upside, followed by a couple of months where volatility increased and there was no apparent trend.

We are now in a situation where this could be the big trend of the year - price action is matching up to the perceived economic situation and major news (principally relating to the Eurozone).

I sincerely hope that traders whose methods do not work in a strongly trending market are using good risk control or are on the sidelines. Knife catchers and bottom-pickers (I hate that name!) potentially run the risk of being repeatedly stopped out of trades - stocks which are considered to be a bargains now, could be even cheaper in the coming days and weeks....

Trend followers (including myself) profited hugely from big moves to the downside in 2008, and the current economic scenario playing out has the potential to be even bigger. All we can do as trend followers is simply follow the trend that is now becoming apparent, use approporiate risk management, and act when exit signals are given.

In general nearly all traders and CTA's who are trend followers I know who were down for the year-to-date up to the end of last month. This period now is where those losses will be recouped, and profits made.

Remember, I am here to help (via 1-2-1 training or my e-book) those traders and/or investors curious to learn more about trend following - these traders have. Spending the time learning the nuts and bolts of such a system can save you a bunch of money in periods such as these, but will also enable you to generate profits from the short side. It will also help investors who solely hold stocks to go up in moving to the sidelines, protecting their capital, until such point in time when it is safe to re-enter the market. If you wish to learn more, please contact me.

Some nice trends a friend has traded

I had a long conversation the other night with another trend follower who I met and gave some 1-2-1 training to earlier this year, discussing both the current market situation as well as individual stocks that are trending well (in both directions). I greatly enjoy these conversations, as not only he appreciates any pointers I can give, but it also gives me pleasure to hear how well he is doing. He was already aware of trend following as a concept before we met, and because he has read up on the topic, has the psychological and risk management sides sorted out pretty well.

We met in February this year, so he started following the system just as the market stopped trending and volatility started increasing - such is life! However, as he knew the strong historical performance of trend following, and has been able to 'stomach' a drawdown, he has able to remain confident in the system and avoid chopping and changing parameters, second guess trades, and stick to the rules. As he said, even those trades which didn't work out were 'good bets' (refer to this post for what he is taking about).

As a result, he is now starting to profit nicely from identifying potential opportunities using the scans and system rules, of the general market conditions. This will give him further confidence going forward, so that when a REAL trend in the markets takes off...

Although there is a lot of indecision in the general markets at the moment, he has proved it is possible to still to be generating returns in individual stocks by using a trend following strategy. Below I've shown some charts of trades that he identified using the scans as described in my e-book, and from which he is currently profiting nicely.

Here is Kofax on the short side, which was discussed in the members' chatroom at the time of the initial breakout.

On the long side, here is Enterprise Inns, which is also doing very nicely:

As I've mentioned here a while back, investment trusts tend to trend very well, and here is one such profitable position that my friend is currently short on:

We also discussed trading other instruments such as forex, indices, commodities etc using a trend following strategy. Again, as I have discussed on here before, I have personally found that, once you get into a trend, stocks tend to generate better returns than those other instruments. I would stress that this is the result of my own personal experience.

Most CTA's utilising a trend following strategy trade a small basket of 20 or so commodities, index futures, forex etc whereas the individual trader is not restricted in the same way. We have a potential universe of thousands of stocks to trade from all corners of the world. As a result, if you are able to find a chart setup that meets your crtieria (and using stock scans can help you do this) then you will find those occasional big trends which generate profits for you.

Jack Schwager speaks

A trend following trader friend of mine sent me the link for this talk given by Jack Schwager, author of Market Wizards. My dog-eared copy of Market Wizards is a treasure trove that I keep returning to on a regular basis. Even though a lot of the traders interviewed are not trend followers, their insights and thoughts can easily be adapted, or are just as relevant, to trend following.

This talk highlights some of the aspects you should consider when thinking about your own trading and the plan that you follow, regardless of whether you are a trend follower or not. And you will find that a lot of these points are mentioned in my e-book, as well as in earlier posts on here, as they are critical to my own trend following system and my own trading mindset. The video is about 50 minutes long, but is well worth watching. Enjoy.

Sounds like a good deal to me...

Late on Thursday night, I posted in the chatroom in the members area a new long position in a US stock that I had taken. Yesterday that stock moved up almost 24%. So, in one trading day, that single position, based on the position size in the model portfolio, would have paid for almost 2 years worth of monthly subscriptions to the members area, covered the cost of buying my e-book 18 times, or comfortably covered the cost of a days' 1-2-1 training. Who knows how far that particular stock will go, but it sure sounds good like a good deal, whichever route you take, to learn how to trend follow, and the great thing is that plenty of stocks act in this manner when the appropriate signal is given.

The Trading Triangle - discount offer

For a short period, I am offering a discount on my e-book, The Trading Triangle. Originally released in late 2010, the system has continued to perform well and generate profits despite the inevitable periods of drawdowns in between, and has helped a number of traders. Readers reaction has been positive - testimonials are here.

I am currently in the process of updating the e-book for release in the next month or two, which will cover both the shorter term and longer term trend following systems, which may appeal to swing-type traders as well as investors, as well as covering other areas of the system in more detail following feedback from readers. The price for the updated version will be increased to reflect the added value.

Anyone who has purchased the original version will automatically receive an emailed copy of the updated version as soon as it is available.

The price has been reduced to £20 for one week only, representing a saving of 33% on the original price.

Alternatively, remember that you can subscribe to the members area, where in addition to being able to download a free pdf copy of The Trading Triangle, you also gain access to the model portfolios, the message boards and the members' chatroom. To subscribe on a month by month basis costs £25, via Paypal, or, if you subscribe for 12 months, it works out at £16.66 per month. To find out more, click here.