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A first step for trend following success is to absorb prior trend following success. That breeds confidence. The data assembled on this book demonstrates what has been possible historically with trend following. The research that outline trend trading success going back over 200 years.
Trend following trading is different. It does not predict market direction. Trend trading demands self-discipline to follow precise rules (no guessing or wild emotions). It involves a certain risk management that uses the current market price, equity level in your account, and current market volatility.
Trend traders use an initial risk rule to determine their trading size at entry. That means you know exactly how much to buy or sell based on how much money you have. Changes in price may lead to a gradual reduction or increase of your initial trade. On the other hand, adverse price movements will lead to an exit. A trend traders average profit per trade is significantly higher than the average loss per trade.
Trend following aims to capture the middle, or the meat, of a market trend, up or down, for profit. You will never get in at the absolute bottom or get out at the absolute top. Stocks, ETFs, LEAPS options, bonds, currencies, futures, and commodities are all ripe to trade.
This is the only trading strategy that can be traded on a desert island. As long as price data is available, all else is inconsequential. Media, fundamentals, broker opinions, talking heads, and so on are simply not necessary to profit.
