Trend Trading

The style of trading I use is commonly known as trend trading but is also referred to as trend following, swing trading and momentum trading.  A trend trading system is based on buying an underlying security (e.g. stock, ETF, commodity, currency) once a new upward price trend starts.  The security is later sold after a downward price trend is established.  This sounds straight forward but it is challenging to design a system that doesn’t suffer from too much whipsaw action and many investors find it difficult psychologically to stick to the rules of a systematic trading system.

If you want to read about great trend traders, I highly recommend Trend Following by Michael Covel and both of Jack Schwager’s books: Market Wizards: Interviews With Top Traders and The New Market Wizards: Conversations With America’s Top Traders. I so highly recommend these books that I send a complimentary copy of one of the books to new subscribers to my Trend Trading system once the first monthly subscription fee is paid.

Unlike many of the so-called financial experts that appear daily in the media, I believe in putting my money where my mouth is.  I have designed a trend trading system that uses as many as 50 ETF’s covering various asset classes such as North American equities, US real estate, various international equity markets, agriculture, metals, currencies and a number of commodities.  My system uses leverage (borrowed money) on a 1:1 ratio.  That is, the system can employ 100% margin. For example, my system on Collective2.com started with $100,000 and could therefore borrow another $100,000 if required.  As the value of the portfolio grows, the dollar value of the margin that can be employed will grow as well.

My system is Trend Trading and up-to-date performance statistics can be viewed here.  I use end-of-day price data and in the evening I determine which trades to take the next day.  My trades are entered at Collective2.com.  The performance statistics that you see when you click on the link are provided by Collective2 – they are actual results, not back-tested results.

Below is the equity curve for my trend trading system as provided by Collective2.