Buy Signals Sell Signals: Strategic Stock Market Entries and Exits pdfdrive com

Trend Following Signals
- Enter on a 20-day breakout in price and exit on a 10-day breakout in the
opposite direction.
- Enter on a 30-day breakout in price and exit on a 15-day breakout in the
opposite direction.
- Enter on a 50-day breakout in price and exit on a 25-day breakout in the
opposite direction.
- Enter on a 55-day breakout in price and exit on a 20-day breakout in the
opposite direction.
- Enter on a 100-day breakout in price and exit on a 50-day breakout in the
opposite direction.
How do trend followers trade over many markets and consistently grow
capital?
- They use proven trading systems that identify and follow trends.
- They create systems that give them entry and exit signals along with risk
management parameters.
- They are not experts on the fundamentals of any market, but their systems are
masters of measuring the price action in all markets.
- Their price systems work across multiple futures markets because historically,
big trends happen consistently over time.
- They cut their losses short when they are incorrect but when they are right they
let the winning trade run as far as possible.
- They unemotionally sell when their exit signal says the trend is coming to an
end. They are content to get the meat of a trend, not buying at the low or selling
at the high, but waiting for the market to tell them to get in and then when to get
out.
Many traders have proven that trend following works over the long-term. The
legendary Jesse Livermore and Nicolas Darvas were both trend followers who
made millions by buying strong trends based on price action. Modern day
professional money managers like Richard Dennis, Ed Seykota, and William
O’Neal make millions trading with the trend. John W. Henry bought the Boston
Red Sox with his profits from managing his trend following fund.
Trend followers don’t try to predict the future; they only follow the price trend of

---

the financial markets, and they get in or out when their system tells them to do
so.
They go both long and short based on their systems, with no bias to bullishness
or bearishness. They may have volatility filters or a filter using a 200-day
moving average for their system, but their trades are quantified rather than
opinionated or predictive. While they may have steeper drawdowns in the short-
term, they consistently have returns on capital in the long-term.
They almost always find themselves positioned correctly on the right side of a
market during fat tail events outside the normal bell curve, crashes, and panics
because the market has already warned them. Most trend followers made huge
returns during October of 2008 because they were already short due to the trend
already in place. Trend followers made major returns in the financial panic of
2008-2009 while the majority of investors suffered heavy losses. Trend
following is for long-term growth in capital by trading multiple futures markets.
Authors Micahel Covel and Andrea Clenow do a great job of documenting the
long-term success of trend following funds.