Feedback in:
I saw your post about headlines and I tend to agree; however, I wanted to get your thoughts on this if you have time [link].
What is the exact question?
I’m asking if you think there is validity to the episodic pivot as defined here by [name], or would you classify that as gambling on headlines?
You understand what trend following is?
Yes. To be clear, I’m not asking if the episodic pivot meets the definition of trend following. I’m simply asking if you think it has validity.
If you understand trend following you know the answer.
Trend following is proven to work, no argument there. But there are lots of profitable traders who use other methods. Do we chalk it up to luck?
If trend following has been proven to work, then use that method of proof to apply to all these other traders with other strategies.
Most episodic pivots are earnings gaps. Post earnings announcement drift (PEAD) has been proven to exist. So, what [name] describes is essentially an entry/exit method to capitalize on a proven tendency. Another example would be [name], who cites quite a few backtest results showing a specific type of mean reversion on ETFs being profitable.
Why ask me anything? You already BELIEVE.
Because I respect your work as a trend follower, and I think TF is great. I enjoy hearing traders of one system commenting on other systems. Helps me learn.
I’ve already expressed my views backed by data on your type of questions all over my books and podcast. Your newest example isn’t new. So what am I really saying to you?
I didn’t mean to suggest anything was new. EPs and [name] mean reversion go back decades; I realize that. I just found your post that “Trading headlines is not a strategy. Pure gambling” to be a bit too black-and-white. I agree with the spirit of it, but I also think it’s possible for someone to study earnings beats over a period of years, learn sound trade management, and be very successful doing it.
You had this view before you ever asked me a question. I knew that from the start. I don’t see the evidence for your view.
I had a view, but I wouldn’t exactly call it a strongly held conviction or anything. I’m old enough to look back and realize how often I’m wrong, so any view I have is held lightly.When you say evidence, are you referring to backtest results only?
What is the foundation of my trend following books? Back tests? My opinions? No. Go read my 5th edition TF.
Performance proof. Got it … So my takeaway is the evidence is proven performance of successful TF traders. Make sense. The question that leaves me with is what to make of proven performance of non-TF traders. Do we chalk it up to luck? Or maybe that their strategies borrowed enough concepts from TF to be workable? I’ve listened to your interviews with [name] for example and he is very similar to [name]. Their conviction in cutting losses short and letting winners run overlaps with TF, but their discretionary selection/entry process is different. Which begs the question: Is their discretionary element superfluous, or is that what made them so successful?
Good luck.
I don’t understand why those questions are so out of bounds. As I said before I’m a TF fan, but how the heck are you supposed to learn without asking questions?
You find one person doing XYZ and are excited. If you’ve read about my work, and my background, how could you possibly think that would be interesting to me? Especially contrasted against trend following? But it’s interesting to you. So, good luck.
I’m just trying to approach this logically. If the thesis is that TF is the only way, then I have to examine the cases like [name] – who you found interesting enough to interview multiple times, and rightly so – and approach them with an open mind. Some of his method overlaps w/ TF, some is discretionary. You don’t think it’s worth asking if the discretionary part is a net positive or net negative?
Did you read what I just wrote? Clearly not. And oh BTW a word of wisdom — don’t try to put words in my mouth or use logical fallacies. Bore me to tears. Now again, best of luck.
To me, it seems the work you’ve done on TF would have naturally led to ask certain logical questions which you don’t feel are worth asking. Which is fine. But the idea that I should have known that without asking is bizarre to me. Best of luck to you as well.
Note: After following that thread everyone else should start here.
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