DOES TREND FOLLOWING WORK? (22 Year Study)
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- เผยแพร่เมื่อ 17 ก.ย. 2022
- Trend Following as an Investing or Trading Strategy has been around for decades in the stock market, from the era of Jesse Livermore through to the likes of Mark Minervini. It has become the foundation of most of the modern day trading strategies.
In this video we use a 22 year research study to determine the merits of a simple trend following system, rather than relying on the say so of many.
In theory, trend following is simply following the price of an asset in a certain direction for as long as you can. I hope you enjoy the findings.
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This is a great video, I learnt a lot watching your videos and it has been helpful to me. Building a steady income from investing and trading is quite difficult for newbies. That is why a broker is a required service to utilize. That is how I go about improving my portfolio, keep up with good videos.
Apparently that's true, I agree that it can be disastrous for newbies or anyone who doesn't adhere to a well thought-out strategy and over all, a professional broker.
It is a real privilege to find someone who is generous enough to share her success strategy and carry people along in such a way as to help others find success
I have to agree with this, trading with a professional is always the best move in investing
Can you recommend a broker for me, I'm in the market for better brokers
I am not surprised, brokers generally perform well in trading for investors
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Grateful for your videos. On your strategy at paid member site, would you have only long trades or have short trades as well ?
Amazing summary mate. Wondering if you had a link to where that study can be accessed?
Fantastic video as always, thank you I look forward to the next!
Thanks for watching
I use a 1 or 3 day ATR, 10 would seem to me to be way too wide. I would love to see data on using similar rules but a shorter ATR period.
I‘m a big fan not only of TREND investing but of MOMENTUM investing. May be you could once elaborate on this factor based investment process and come up with results. I think it‘s the approach that really shoots the light out.
Yes I combined moving averages, MACD and breakouts for those reasons too
Listening to "a random walk on wall street" I wonder what your annual profit is and whether you beat the Market (when including fees).
It's not easy especially for a long period.
love your work mate. cheers
Much appreciated
A really good study on trend , just wondering where you can find the most trending markets is it the stock market, forex market or the futures market? That will be good to know.
Thank you for this video.
Good content. Thanks for your efforts!
Thanks for watching
Yes .i found value in your videos.
Thank you.
Glad to hear that!
This channel is OP, i can't believe i glossed over it in the past
Thanks for such a nice explanation. 😊
Thanks amit👍
Another great informative vid! Awesome!
Glad you liked it!
Love your videos. Thanks
You are so welcome!
This is a very nice report.
Thanks 👍
Outstanding. Liked and subscribed.
Welcome aboard!
WORLD CLASS CONTENT! Thanks and best wishes form Switzerland.
Much appreciated!
Fascinating as always Gareth /
You are wonderful as usual, but how do we determine the direction from the beginning??!!!
Hi aldar. In this video the start is when a stock makes an all time high
@@FinancialWisdom Thank you very much
Yes, it is true that when hitting a new peak, attention should be paid to work
so Interested, I like to see from you the book "Hit and Run Trading by Jeff Cooper". and I am asking you, How can I make a scan and filter for the stocks by ADX Indicator,
Can you help us with a nice summery on book/books about day-trading?
Hi, could you please link the study? Would be awesome.
This is gold dust. Thank you above all for the clarity.
You're very welcome
Sir, MY QUESTION IS--If trader was trading forex pair to hold for average duration of 3 days what time frame should be used for TREND DIRECTION?--IS IT 4 H CHART? Traders biggest enemy is trend flipping on A dime(e.g. 1H/lower times frame trend).Trend on 4H chart may be the best trend guide for majority of forex traders.. By the time trader confirms that trend on daily chart is up, market has already gone up about 5-7 days & if you ask supercomputer for the mathematical odds, computer tells you that odds are negative right from the start.Trend based on the last 10--15,four H candles has enough big players/juice/force behind it so that it would not flip on A dime, so trader has decent chance to make something without buying overpriced asset to lose again. Your wisdom/experience please?
Great study
Thank you
Continue making these reasearch based videos. Thankyou
A confirmation of a sort. This channel also presented clips that used the 200 day sma, using similar line crossing/buying or selling of stock. All you need, then, are decades?
Nice video ... Please can you make a video about the trader Larry Williams and his strategies please ?
Thanks so much for making this great content 😀I always enjoy watching your videos
Glad you enjoy it!
thanks
Welcome
I was wondering if it would be better to use % trailing stop rather than dollar. If a stock traded at 10 and it's atr was 1 then if the stock takes off and gets to say 40 or 50, 1 is a small percentage of this and could easily be triggered in one day but the original 10% trailing stop would be 10% of 50 which would be 5 and less likely to be stopped quickly as the price rises
if my trailing stop is 10% of value. the value of the trailing stop will not change. if it is 10 pips. that is what it is. if it triggers and it still moves. i don't care. i got my profit out of it. whatever. You are trying to chase every pip. I know where you are coming from. I get it. i have been here. It's your profits going down the toilet. you want to set it to a % of won $. That's your call.
Great video. Thanks very much. You said the ATR length was 10 days. What was the ATR multiplier applied here? 2.5?
Multiplier is 10.
Very useful ...
Glad you think so!
Nice!
Thanks!
Thank you for the post. Very interesting an useful. I wonder how the system would perform if a few of the CANSLIM parameteres, like earnings are added to the filter. 🙂
Absolutely. It serves as a base to build on..
@@FinancialWisdom this video says the trend following is the 10 ATR?
Is there any way you can provide a link to the study you're referencing here
Hi - Try this - www.cis.upenn.edu/~mkearns/finread/trend.pdf
Very good video
Thanks for the visit
4:21 Those vertical bar lengths are definitely not to relative scale of each other. Strange.
Just curious, the stock that lost 90%, this obviously either had huge volatility (atr), or dropped 90%. On the open. Is this correct or am I missing something
Yeah seems like that, idk what stocks was tho
Awesome
Thanks 👍
Art and Science of Technical Analysis by Adam Grimes please
Wonder what type of strategy is the best for forex market breakout, trend , somthing els?
Combined - Trend and Breakout
To clarify, if I'm searching for the 10 day ATR can I just bring up the indicator on a daily chart and change the input from 14 (default) to 10? Or is there another step I'm missing here?
No, it's only this. However, most of the trend following systems usually have higher multiplirr like 10 day atr × 3 as trailing sl.
Simply 10 day atr is slightly tight
You wouldn't change the settings in the indicator, what you do is change the time frame on the chart to 10 days, in Trading View that's a custom setting
SEEKING YOUR WISDOM--I am swing trader watching 15 minute forex chart and after entry hold position for 3-5 days(but not day trader).For chosing which trend direction to trade with,what time frame chart I should pay attention to-- 4 hour chart or daily chart? I want the draw downs not to be too large-markets flip direction every 3-4 days and ruin any profits & you are back to zero line even in the negative. And does daily trend have to agree with?May be one day candle on entry day be in the same direction to reduce draw down?.One hour trend does not have much juice/force/players behind it & can flip on A dime.
Great video, thanks. do you have a link to the study?
Typically no, I'm sure you could do a google search and find it though....
How the heck can I add the ATR like that to my charts? Im using TWS
Interesting...
Another great video, thanks alot 🙏
My pleasure!
Superbly explained..... Sir.... This 9 minutes video is and can change mindset of a trader.... Thank you sir.
Thanks for watching
You post all the links to make you money but you don't post the study? wtf man, trying to hold back knowledge from us, I'll go find it myself thank you very much
How do you decide when is a safe time to use this kind of strategy? E.g. how do we know when this current bear market is over?
You can never know, but you can put the probabilities in our favour.
19.3% annual compounded with only a -20.8% max drawdown is a glorious statistic. Nice video!
Answer: YES!
Would an entry of crossing 10 ATR be more efficient, especially after a bear. Waiting for all time high would keep you out during the recovery.
There are simple screeners out there showing stocks with new all time high prices today. You buy everyone of them applying the 10atr to them and just leave them alone
@@johngrace3200 52 week high or all time high?
You buy and then sell at the 10 ATR? Any backtests to review?
@@obcane3072 all time high only and the backtest is the paper that this video was analyzing
@@johngrace3200 thanks.
@@obcane3072 no problem
👏🏻
Fascinating as always Gareth. Thanks. Nice and simple. I guess the must fundamental questions about trends is how to define a trend. When does it start? When does it end? I note they use an all time high in this study to start and a breach of an ATR stop loss to end. Which clearly works for stocks, but may be less applicable to indexes, FX, crypto and commodities.
Very true!
Its work with crypto as well. I use a similar approach which caught the bull market after the 2020 dump and the down trend after November 2021 on the weekly timeframe.
Wonderful insight😁
I am a value stock investor.
Do you have other researches showing when we buy the stocks at their 52 week low or all time low, what will be the results?😜
Thank you for your answer. Hopefully this can be ANOTHER video idea as well.😉
Blessings from Taiwan
What's the point to buy (Long) stock in down trend?
Its so stupid you cant know how long it can go
Don't remember where, but I have read one study where buying at 52week low for 1 yr without sl gives negative return or definitely underperforming mkt
In short star with trend like 52 wk high or 100 day high etc
It's still works on stocks and commodities but on forex nah
My luck the first stock I would pick would be the one that lost 95%. Haha
They didn’t use the 10 day atr. It was just the normal atr at a factor of 10
You make it sound SO so easy. I suppose it is when you get down to it. It's us which makes it complicated.
Yep, it generally reverts back to the basics and psychology
Thanks for the video. In the future I'd like to see more like the Jeremy "Financial Ed Gone Wrong" video. Maybe you could do similar videos for other popular youtubers, Jim Cramer, other popular people. There's a video here "7 penny stocks for 2022"... which is a train wreck, but the author has over 500K subscribers that he's screwing over!
Thanks Mark, I'll take a look
Amazing content!! 👍👍
Keep up the good work. 🇮🇳♥️
Thank you so much 😀
Another great video for mathematical approach of superiority of trend following. Thanks FW!
Always welcome Cagri👍
❤️
That was quick!
Big fan of all your video cant thank you enough. Recently i have been wondering if trading lets's say a pullback on the 20 ema after à breakout was more profitable then trading breakout. I started trading breakout and i was about right 32% of time with an average holding of 15% and was profitable. However i got screw and november and made all the rookie mistake.. Mark minervini won the 2021 contest by sécuring his profit very quickly. Holding winner is a wrong approach on choppy market. So im questionning myself is there some longterm study on pullback vs breakout? Im wondering which style i should implent in the next bullmarket and i Wonder what's your take on this? For a Guy like me with à job i feel like trading the weekly with wider stoplost and larger gain is idéal but i can adapt
My approach is the weekly chart breakout, up to 2.5 leverage if I have enough qualifiers. It has worked well for me for many years..
Trend following will work as long as there are trends
Can't argue with that ..
how about doing this study on the DARVIS box ,made famous by the man himself nicholis darvis ????
That is my approach
❤❤❤ Ramkrishna
This study was did on weakly chart ?
No, it doesn't say weekly. So must becdaily
Can we get a link to the study? I would live to read
www.cis.upenn.edu/~mkearns/finread/trend.pdf
Can somebody clarify "New all time high".?
When a stock reaches a price that is has never reached before
👍
This material fosters an intellectual awakening. A book I read with related ideas opened new horizons for me. "Mastering Money Mindfulness" by Benjamin Hawk
How do I cancel my subscription?
Which one, the website or youtube?
Hi Gareth, I just wanted to thank you for looking out for me. I've taken your advice and switched over from a buy and hold strategy to your risk management strategy with stops. I had a position in KNC which dropped 25% in a single day yesterday. Thankfully, I had been paying attention and noticed the total crypto market had shifted back into a negative trend, and raised my stop on KNC accordingly beforehand. I was stopped out at breakeven instead of getting absolutely wrecked by a sharp selloff that came almost out of nowhere. I didn't have a lot of money in it but holy cow, I need to be more careful about these low market cap coins 0_0. Volume went from 46k to 1.66 million overnight.
Thanks, glad I helped in some way...
hey brother i always love your personal MACD strategy can you bring videos related to that😁. Thank you for educating us and keep up your work we love u
Thanks. I'll take a look👍
"does long only stock trend following work?"
Yes, it has positive expectancy, as can be seen
@@akashbhayani2092 Thank you, I am aware of that. This was just a better title for this video.
No but a stock can go from a 100$ to 0$ but in a long position it can go from 100$ to 200 and beyond. So while profit can be made shorting... the real money lies in a bullish trend
@@CV-vk3cy I merely suggested a better title for this video, because that's what it was all about.
@@suxxa Although the title suggestion posed does make me ask for more shorting strategies.
Not surprising.
1) Have a trading plan that includes proper analysis, good risk management, lets winners run and cuts losses quickly
2) Determine the (M)arket direction
3) Execute the plan w/o deviation
If you're doing things right, once you get past the newbie emotions trading should eventually become relatively boring.
Spot on 👍
Is this your real voice or a hired narrator's voice?
My voice
@@FinancialWisdom nice voice, sounds very professional.
Been backtesting a level to level strategy and trying to figure out a way to stay in a trend if it ends up materialising. I'll look into this. Timely video for me.
The other option people talk about is leaving a small portion to run, but can't help but feeling that won't yield much profit if such a small amount exposed to potentially larger moves
Excellent video ! I was an options trader. Started with the bull market after covid….. it was great…. Not too good right now…. Trend following makes more sense to me now…. I will keep trading options … but only with strategies that use trend following ….. thanks
Thanks for sharing!
It would have been nice to do in futures. Trend following doesn’t work that well for normal equities
Enjoyable as always. I’d like to suggest a book to review: Better Stock Trading by Daryl Guppy. All about risk and portfolio management
Show a 5 year old any stock market index for a 22 year period and they will tell you a long strategy will work 😂
ஒன்னியம் புரியல
They hit all time highs that often? Oh right, the stock market is entirely manipulated by central banks, so it has gone up almost all of the time over the last 22 years. Now do it with forex, which does not always go up. Take both sides of a pair as the opportunities come up and see what happens. In fact, if this system is profitable for any reason other than stocks being ridiculously predictable, it should work if you short instead of long, let's see the results of that and we'll know exactly how manipulated and predictable the US stock market is. I guess you would have trouble finding all time lows though, huh? You wouldn't get many trades in, in fact zero.
it works until it doesn't
everything is
@@m.agussantoso my comment was not in response to the research described in this video. It was a just an empty joke (my comment). I'm surprised my comment is still at the very top.
this isn't trend following - it's going only long with stops. trend following is trading markets in the direction of the trend - regardless of what the trend is. this is a disappointing study and video (for failing to point that out)
edit: study should've done something similar for shorting stocks at lows
Fair enough
U must be new to stocks trading, shorting doest work in stocks. At least for tend following
Read book trend following in stocks. Shorting doesn't work in stocks
@@akashbhayani2092 def not new. you have any studies that prove shorting doesn't work for stocks? i'd love to read it.
@@Boxedwaffle sorry my book name was incorrect, it's stocks on the move by andreas clenow. It shows shorting stocks is bad idea. Havntt read anything in recent years. And ya both books by him r really good. Pls read them
Can I read this study?
Not even a please or thank you...
@@FinancialWisdom please and thank you
Great info
Can i review the study?
@@FinancialWisdom I thanked you...can I have a look at the study please?