Firstly, I just wanted to say thanks for the work you have done for the trend following industry. I picked up your original Trend Following book well over a decade ago and it really opened my mind. I have been a professional trader for a number of years and although the strategies of the firms I’ve been at haven’t really employed what I would call trend following, I believe at the core of it, it isn’t so much about the directional aspect of trend following its about the approach to risk, no matter your methodology for selecting your entry the unavoidable truth is losses are guaranteed, but keeping them as small as possible with an asymmetric pay-out is your best chance at trading and life as you are letting randomness and chaos in life work in your favour. I have seen highly successful traders from mean reversion, to trend following, to stat arb all be successful by using that core tenant.
I have become more interested in learning how to apply trend following to other parts of my life, as it’s such an elegant way to view the world its almost a philosophy, I applied it to dating and am now married, applied it to looking for a house and so on. I have recently read The Rule and although wasn’t too much in the book I didn’t already know it was fantastic at cementing the philosophy.
My question to you is, as someone that has studied this philosophy of trend following and I think has looked at it from a more “spiritual perspective” (I don’t mean that in any woo woo way but I mean the wider implications of living your life in this way) have you come across any complimentary books, theories or philosophies outside the world of trading that support this mentality?
I know elements of Buddhism are arguably about going with the flow, but I don’t feel Buddhists are particularly concerned about maximising payouts, it’s more about having no objective want or need which doesn’t really sit right with me. I’m very goal orientated and feel that’s important, I don’t think Buddhists are particularly bothered by how much they lose or asymmetric rewards. I feel there are so many things out of my control in life which I have learned to harness for my own good in the markets but troubled with how to deal with the “trend” of many other cultural things that concern me. My instinct is to “hold my losses” and stick to my way of thinking in life and often wonder if I am acting as a trend follower should. I know you have also stepped into some political discourse and other non market related talking points. Have you found effective tools for using TF for navigating areas outside the markets?
Hope that makes sense and is somewhat of an interesting point to ponder.
I agree. Trend following fits nicely with Buddhism. Alan Watts, for example.
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