Main Menu

Trend Following system return

I have been doing trendfollowing in stocks for sometime & following are the result.

Key point

1) We trade in diversified Sectoral basket of 6 stocks future( all bluechip & market leader). Presently, trading in Bajfin, RIL, hul , Britania, Maruti & Bata. Stocks gets replaced when it breaks longer term trend ( like , planning to replace Maruti with other)

2) Taken around 2-2.25 times leverage of capital & drawdown is around 25-30%

3) System generated 40% plus return in this running financial year

4) Basic principal followed 1) Cut in case of loss ( sl are between 3%-4%) 2) ride the winner 3) risk management in place

5) here capital requirement of rs 25 lacs ( 70% could be in forms of collateral). 

6) system generated sl & will be shared 1 day in advance (totally transparency). No discretion of any individual

If you wish to read about trend following may read this article

http://www.einfomet.com/trend-following-india/ or read www.trendfollowing.com

Trend Following – Focus on Absolute Yield

What is trendfollowing?

“Trend Following” or “Be on The Right Side” is a trading system based on the principal of price analysis. Trend Following tries to take advantage of long, medium or short-term moves of the market. Smart trader takes advantage of these market trends by observing the current direction & using this to decide whether to buy or sell.

The objective of Trend Following is to produce absolute returns irrespective of bullish or bearish market condition. The success of trading system works on following principles –

  • Strict Money & Risk Management
  • Riding the Trend & “No Prediction”
  • Emotionless Mechanical Execution
  • Discipline & Consistency to follow the System

Some of the characteristics of the Trend following system are –

  1. Go with directional trend.
  2. Proven scientific approach to trading backed by Backtesting
  3. One may suffer temporary drawdown in case Sideways market (means no directional trend).

Trend following can be done in Indices ( Nifty & bank Nifty) or in stocks future.

What are the asset classes?

Asset Classes are Equity index and Equity, Commodity, Currency future or any other derivative asset class.But, presently, we have done backtesting in Nifty & Bank Nifty.

Pic11

Who should follow “trend following”?

  • Client is having money but no time.
  • Those who want to make money in bull & bear market.
  • Portfolio investor who is willing to hedge his risk & also wants to participate in market rally.

And it is not for

  • Those who wants to earn money instantly
  • Person who believe in prediction
  • Day-trader

How trend following scores over fundamental & technical?

Trend follower has pre-defined rules which are time-tested & objective in nature.

ParameterTechnical (Discretionary)FundamentalTrend Following
Based onPrice, vol. & IndicatorsBalance sheet& many morePrice
Prediction of priceYesYesNo
Back testingNoNoYes
TargetYesYesNo
Emotionpartly yesYesNo
Proven Consistence & track recordNoNoYes
RulesComplexComplexSimple

When trend following works the best?

It works the best in tending market condition. The investment objective is to make return from up & down market condition. But, it does not work well in sideways market (means no clear directional trend).

Like in 2008 (bear market), trend follower made fortune.
Will too many trend followers make strategies less profitable?

The profitability of Trend following will decline only when human emotions: greed, fear and hope get disappeared.

How risky is trend following?

Life is risky. One can have car accident while cross the street. But if you have concrete plan, risk can be managed.

What is money Management?

Money management, or position sizing, is critical component of trend following system.

It accesses

Risk per trade

  • How much quantity to trade on how-much amount by accessing the risk per trade.

Is Leverage used in trend following?

All great traders made fortune using leverage. But trend following is not about using reckless leverage. It follows strict money & risk management technique.

If trend following works so well, why it is used by few participants and not popular?

We feel that –

  • Investors want to hear prediction backed by great fundamental analysis. These stories are more appealing to them rather than a simple statement saying : “just follow the trend”
  • Trend following is the “core strategy” used by FIIs, Commodity Trading Advisors ( CTA) , & Futures Fund Manager to make money.

Can Trend following be applied to day trading?

No.

Wish to know more about it, may contact us at bonpriya@gmail.com. we can share 20 years backtesting and actual trade summary.

Reference – http://www.trendfollowing.com/

Advise -Useful – Nifty trend following , Bank nifty trend following , Indices trend following & stock future trend following. One wish to share knowledge & get an idea about our system, may contact us at bonpriya@gmail.com.


Click here for reuse options!
Copyright 2019 einfoMet
Tweet about this on Twitter


« (Previous News)



Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Follow

Get every new post delivered to your Inbox

Join other followers: