Changes? No.

A new Facebook friend from Singapore asked:

Can I ask if the present market condition driven by political decisions still makes [trend following] system[s] profitable? Because the markets do not trend healthily like last time. Is there any recommended modifications? for your kind advice please.

Trend following is trend following. What exactly is so special about human and governmental decisions today? Is there really some research to show that human nature has changed?

No, human nature has not changed, but liquidity from government decisions will affect the trends–interventions.

There is some new research in the last few years that absolutely quantifies that beyond a shadow of the doubt? I have not seen that research.

Most of the time markets do not trend, but move in consolidation…so the trend is not much. Am I right?

Most of the time means when? What exact time is most of the time? Last month? Year? When?

If we look at the charts in history–daily. Also these are written in books. Markets move sideways then push up or down then again consolidation. You can see many range [bound] markets. My humble question what do you think?

You are telling me things have changed. I am asking specifically when did things change? Or are you telling me trend following has never worked?

Nope. Before trends could last long, but now not as long. And we get more noise and spikes.

That supposedly started when in your opinion? An exact date please?

After 2008 crash when QE starts.

So there is research that says the markets have fundamentally changed since 08? Human nature has changed since then?

Humans no. But central banks yes, policies. Does [trend following] ignore fundamentals? Fully technical?

It seems to me central banks have been around for a long time and so have trends. There seems to be trends no matter what. Is there evidence that a fundamental change is underway? We won’t know for some long time into the future. All you have is now–the moment of now. Typically, and this repeats itself, right when people start thinking some new paradigm has started–massive trends reassert themselves and we find that nothing has changed. Trend following is not fundamentals.

9 thoughts on “Changes? No.

  1. I repeatedly notice how hostile you are when people pose you justified questions. As the most prominent representative for the trend following industry you are supposed to give more elaborate and accommodating advice than this. Instead I keep reading things from you like “any research that proves it?”, “nothing has changed”, prove me this, prove me that. Aren’t you in debt to prove instead? Consider reassessing your answers in future.

  2. Central banks and the boom bust cycle they create are great for trend followers! If you can’t handle the intra-day spike, the problem isn’t the trend, its the trade size. Its funny how many people talk about having 40% winners but size trades like they are going for the all in at a world series of poker showdown.

  3. If you have read all of my books, reviewed all of my podcast episodes, watched my film and followed me on Facebook…and think of me as hostile–that is ok by me. I have an obligation to do my best work for my desires, not to try and pacify the masses. You are welcome to learn and participate or find some other location that makes you feel better.

  4. It’s amazing that most  people don’t want to measure things.  You have done the measuring
    You have the data..  Keep at it and keep asking for verification on other general statements.

  5. The new friend from FB was not being antagonistic, but he was not thinking through the questions, i.e. not measuring as you say. I believe he understood my point after our IM chat. He was appreciative.

    The other guy complaining appears to be a troll.

  6. Second FCM in 8 months absconds with customer funds.  Game, set, match.  Managed futures is over.  Going to have to find something else to write about, Covel.

  7. Peter, trend following is not just amanged futures. Trend Following can be applied to any asset class, equities, ETFS, FX, rates, any market that is liquid. Peter if you think the markets for commodities, i.e. crude oil, metals, ag, etc are going away you are a fool.  

  8. the writer from Singapore should take a look at charts of nat gas, coffee, cotton, and equities like RIMM and MNST before he says markets do not trend. there are trends to be found everywhere if one has their eyes open. Not all markets will trend at all times, but there are trending markets at all times.

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