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#Trend Following

Instead of trying to predict #market direction, trend following reacts to movements whenever they occur. This enables a focus on actual price #risk, while avoiding becoming #emotionally connected with direction, duration, and fundamental expectations.
Trend following works because you don’t try to outthink it. You are a trend #follower, not a trend #predictor.
But why should trends continue?

If #prices initially under react to to either good or bad news, trends tend to continue as prices slowly move to fully reflect changes in #fundamental value.
These trends have the potential to continue even further as #investors herd (or chase trends). #Herding can cause prices to overreact and move beyond fundamental value after the initial under reaction.
Trend following is inherently #simple. The reason trend followers do well is because they stay #focused and very #disciplined.
When you #mechanize a trend following #trading system, you take all #discretionary judgments and build them into #rules.
The logic is to #hardwire all scenarios you could possible see in advance across your #portfolio.
The best approach is to focus on #building a single, well-researched #trend following model that integrates key features of many different trend following approaches.
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