Political Circles; Trading?

Feedback in:

I’m xxx in the comment section. I’ll provide feedback, but I would prefer to remain anonymous. I have read your first book (excellent, it is my bible), but I have not read your second one. I am a trend trader. Whenever I get frustrated, I consult your book and I feel immediately better. Regarding your blog; it is your blog, so you can obviously treat it as how you wish. When I initially started reading your blog, it was to learn more about trend-following. However, there seem to be mostly postings about politics. Some of it is against Bush and some of it is against Obama. Some people will get mad or irritated depending on who the posting is about. It might be better to do more trend following and less politics for that reason. For example, your entry title “speaking of technicals” was excellent. Very value-added. I have not yet taken any courses so I can’t provide feedback on that. I hope that helps. Take care, xxx

Thanks. I agree with your comments about my political bent of recent.

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5 thoughts on “Political Circles; Trading?

  1. Wouldn’t you say that trend followers performance is adversely impacted by all the political intervention? I know I have been whipsawed out of positions that probably would have gone even more strongly in the direction that I was trading simply due to bailouts, rule changes, etc. I think it is important to note that trend following probably works better when markets are allowed to function freely since we are so dependent on fat tail events. You’ve addressed this in your books as well. I guess all I’m try to say is politics and trading are interconnected in a way so as an advocate of trend trading, the political effects should be addressed. But I am also a biased Austrian econ follower.

  2. I was about to make the same point as James. Political interventions increase the noise to signal ratio in the markets. The only way to avoid being whipsawed out of positions is to widen your stops but this increases risk.
    I have also noticed that when the initial effects of the elephant crashing into the room die down, the existing trends tend to reassert themselves (and if they don’t then a disciplined exit strategy will save you losing too much).

  3. I would suggest at this point that if you are indeed trend trading all this political noise is of little concern.
    During these times of higher volatility you have to adjust your trade size and SLs to account for the excess market noise and patiently wait for your signals.

    JMHO

  4. Michael you are forgetting the cardinal rule….. everything matters in trading, from politics to a typhoon in Indonesia to a bad crop of arabica coffee beans in Brasil. I am glad you comment on politics!!

  5. But in trend trading the only thing that matters is price. All of our political and economic knowledge may help to “save” the United States, but it does little to trade trends.

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