What’s going on with Trend Following?  This is no get rich quick…Trend following is not make money in up or down markets…..it’s been one tough environment for systematic programs which rely on market momentum and volatility breakouts. It’s been well documented that we are in a historically low volatility.

Trend following currently has been “Death of a thousand cuts story”, with the computer models designed to typically look for every possible opportunity more so than they’re designed to avoid a lack of opportunity. Stitch it altogether and you get a lot of “strikeouts” and not a lot of hits, causing consistent losses. No big trends…no lasting directions…This is the only way trend followers make money.

As in baseball…only way to win is to have the right pitch. We as trend followers are not getting these pitches…Rather striking out…small losses…and simply more small losses. We are swinging at every pitch as you never know which pitch can win the game. I remember the CEO of the CME telling a story about a silver trade in which he exited (against his system) as he thought it had gone to an extreme…however silver during the Hunt brothers went to the moon….anything can and will happen with trend following…we have to go through the tough times to hopefully reach the good times…

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