The Joy of Trend Following (Forex)

Jan. 30, 2023

If we want to make money trading, the answer is clear.

Follow trends.

Trends are timeless. There will always be trends.

Further, it’s even more profitable to follow trends with a system.

The reason people buy-and-hold is because they’ve been misled into believing we can’t time the market. We can time the market.

Buying things that have gone up using a system has outperformed buy-and-hold by a wide margin over a hundred years. There really isn’t any discussion to be had.

And, if we want to a guarantee to make money long-term (long-term meaning decades, not days), then simple systems are the best. If there aren’t any optimizing tricks, the system won’t become obsolete.

What are some examples of simple trend following? You know them by now. Breakouts and moving averages. Those are as simple as it gets.

What’s a simple example? It’s the robot I had built years ago that simply gets in when the fast moving average (MA) crosses over or under the medium MA. It’s been in the “Old School” portfolio for over a year now. You can find updates on the Performance Page.

How has it done so far in 2023? Quite well. It’s been nicely profitable trading 1 lot each time on the GBPJPY: https://app.screencast.com/xxR7VwAExxmRW.

Furthermore, it’s been cranking out profits every year since 2018:

The GBPJPY is a hard-trending instrument and a simple trend following system has hypothetically produced what we thought it might produce.

And then some.

So, what’s the problem? That seems perfect.

Unfortunately, we do have a problem.

And we’ll talk about that in the next Newsletter.

Talk to you soon.

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Get Robot information HERE.
Visit my Performance Page HERE.
Buy my new book HERE.
The Inevitability of Becoming Rich is HERE.
My latest YouTube video is HERE.

Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.