When you trade as a trend follower, losses are often paid for with gains. Meaning there will be periods of up and down volatility with no clear trend directions. When the trends “hit” (something you can’t predict), then the gains far out pace losses. Sunrise Capital offered the following commentary for March 2005:
“The Global Monetary Program declined 4.8% in March, as investor sentiment suddenly turned bullish regarding the U.S. dollar, resulting in sharp reversals in most currency markets and, to a lesser extent, metals. The ensuing losses from long positions in the euro, Swiss franc, Australian dollar and Japanese yen easily outpaced gains from long positions in Japanese government bonds and short positions in Eurodollars. The stock index and energy sectors posted modest losses as well…Long positions in crude oil had benefited early on from a perceived increase in global demand and a tightening of supply. On the 23rd, however, U.S. government data showed that crude inventories were, in fact, growing, and the market reversed sharply. Gains from long positions in metals also saw a turnabout led by gold, which reversed to the downside as the dollar gained strength after midmonth.”
Of course their fundamental analysis is after the fact and plays no role in their real-time decision making process within their trend following model.