Tuesday, July 14, 2009

Is the "Trend" is a Lie?

This blog has become freakin' boring hasn't it? Its all my fault I know. But i'm working diligently to get things done and i'm back trading everyday. I'm starting my Project400 experiment next Monday. Until then, i'm on sim with MB Trading trying to get used to their order platform again and all the quirks of their different orders. In new website news i've put the roll-out on hold for the time being. The website is done, 110% functional, and the content is ready to go for the most part, though its not fully rendered yet (i've got 60+ hours of video rendering to get through). But i'm not going to rush a course out into the real world with people spending real money on it if I can't be sure I can offer them something of value.

I think I can of course but I want to make sure so i've been in contact with various traders getting feedback and we all basically come up with the same conclusion. Results are needed and I couldn't agree more. Project400 should help somewhat but I am not pushing the roll out forward until I have personally been getting consistent results for at least a month. In the mean time, i'll post up my day-to-day outcomes on this blog for you guys to read about.

Onto the provocative question of the day. Think about it today, and i'll give you my opinion tomorrow. Is the "Trend" a lie? We all have heard "the trend is your friend until the end" but is it really true? How many successful "trend" traders do you know? What are the potential problems with trend signals? How would you define you're risk? How would you get out?

I have a sneaking suspicion the idea of trend is a false catch 22 that wipes out thousands of traders accounts each year. What do you think?


GulzaarFX said...

Haha! An interesting way of looking at it - but I don't think it's altogether a lie. Maybe most novice traders just misinterpret it. For example, the statement would hold true if say price was strongly rising - and someone tried to short in those conditions. Their chances of success would be very low. Even if say a four hour or daily chart shows a strong trend seemingly going in one direction(which is hard to get into), a smaller chart like an hourly or 15 minute chart would be moving in waves offering plenty of entries and exits. This is just my opinion. Please feel free to counter me - and do put up more posts, I look forward to them. Good luck!

Silver Eagle said...

If you're going with MB Trading you need to be aware that during their maintenance time (which I believe is 12AM) your stops are not in effect. They claim that it only takes a short time for maintenance but I experienced times when it lasted for about 15 minutes.

I no longer trade with MB because of an experience I had where a trade ran 26 pips below my stop during maintenance time. After trading resumed the stop still did not kick in so I had to cancel the stop and manually sell. If I hadn't been up and watching the screen at the time I don't know how much worse it would have gotten. 26 pips below your stop can do you some major damage. Beware.

Matt said...

Thanks for the Tip SE - i'm well aware of that little foible as i've had a similar experience at their maintenance time. However, for the timeframes i'm trading and when i'm trading it shouldn't be a problem for me.

Anonymous said...

"How many successful "trend" traders do you know?"

Quite a few. Read up on Richard Dennis and William Eckhardt's "Turtle" experiment. It's featured in the book "Market Wizards." They successfully trained a bunch of average Joes who responded to a newspaper ad how to trade commodities using trend following stratagies. Many subjects in the experiment ended up starting Hedge funds of their own, quite successfully, such as Jerry Parker, Paul Rabar, Liz Cheval, and Tom Shanks, among others.

"Market Wizards" also features interviews with Ed Seykota, Richard Dennis, and Michael Marcus, all of whom are successful "trend traders". It's a great book and worth a read if you haven't read it.