Trend Following is a very common trading strategy. Discussed in hundreds of books and websites with sayings such as “trend is your friend”. Typically trend following strategies work in two steps. First identify the trend, and then enter on a slight pull back. Easy enough right? This may sound easy, but in practice its very difficult. Identifying a trend is typically done in hindsight after the stock has already made a large move. After the stock has already made a large move, how do we know that its only a pullback and not the start of a new trend?
My trend following strategy utilizes 33 patterns all trained specifically to look for pullbacks within trends. These setups generally have a very high winning percentage, but the percentage gain per trade is usually lower than my Oversold Pattern
Example Signals
Related Posts:
One Response to “Trend Following Strategy”
Twitter
RSS
What happens if there is no pullback? Especially in recent years sometimes there are trend breakouts and then no real pullbacks until very late in the trend. This would be a problem for your methodology. My suggestion is you backtest a 1/2 on signal and 1/2 position on pullback and see how that works.