The Science of Trend Following Trading

Good News Bad News
Good News Bad News

Good trend followers approach trading as a science. Consider an excerpt from Trend Following:

Trend followers, like physicists, approach their world with an open mind. They examine and experiment. Like physicists, they think critically and ask smart questions. The skill of asking objective and focused questions (and then finding the answers) is a key reason why trend followers excel. To be successful as a trader, to be successful in life, you need to develop an ability to ask those right questions, those smart questions. Examples of those include:

Questions that come from digging deep to face the real problem, instead of mindlessly going for an easy superficial query.

Questions that make clear why they are being asked. We need to be completely honest with ourselves regarding the real reason we want an answer.

Questions that are not hypocritical, but instead help us discover how we interpret the information before we ask the question—in other words, questions that offer us the opportunity to make a midcourse correction.

Questions that enable us to face the cold facts about who we are.

Questions that enable us to face the reality of where the answer leads us.

Questions that enable us to face our subjective take on the world and factor in new objective data.

Questions that enable us to see what is relevant in asking them in the first place.

Questions that engender important details we might have missed had we not asked them.

Now consider feedback from a listener of my podcast:


Love the podcast and your newsletter on Agora. We both agree that correlation is not causation, right? We both agree that the narrative follows the trend, right? The narrative is just retrospective sense-making for the trend, the cause of which is pretty much impossible to prove. And this is how Science goes off the rails, when it creates a narrative and then claims the narrative to be truth. When it leaps from correlation to causation. Science is an approximation of truth, science is always adjusting and correcting, science is always wrong, if its not wrong yet, just wait a decade and some new evidence will change the models. The narrative of human embryos proceeding through prior evolutionary stages is not science, its simply a narrative. One that anyone one may freely believe, but it is not science it is a story.


I miss your point. Start here.

You might like my 2017 epic release: Trend Following: How to Make a Fortune in Bull, Bear and Black Swan Markets (Fifth Edition). Revised and extended with twice as much content. Out April 24th 2017.