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.
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