Conducting interviews over the last 5 months has revealed “niches” among trend traders. What do I mean? My book Trend Following covers a distinct grouping of price-based trend following traders. There are, however, traders who trade trends using different entry and exit methods. Instead of relying on price, some rely on specific mathematically based patterns for their entries and exits.
Today I had a conference call with one such trader. Based he Europe, he manages over $1 billion USD in client money and has a track record exceeding 10 years (this is a different trader than the one I met with last Friday in New York City). The big picture lesson? Even if most trend traders are highly correlated, if you work hard and do the research, there exist uncharted territories in trend trading yet to be conquered.
But does this mean this trader’s philosophy is entirely different than trend followers? No, not at all. It means he has found a space where he thinks his method of entry and exit are superior. He still, like trend followers, must use great risk management to control his downside. And at the end of the day, he too needs trending markets to make money.