On today’s show, we discuss when having lots of experience can sometimes work against you, why hard and fast rules can be better than making discretionary decisions, the importance of trading in appropriate position sizes, the amount of drawdown that will likely cause you to deviate from your system, the unpopularity of Trend Following strategies, creating an adaptive portfolio that can respond to market conditions, and why Trend Following should play a considerable part in your portfolio. Questions we answer this week include: Should you use Trend Filters to confirm your entry signals? Is the 60/40 portfolio usually less volatile than a typical ‘perfect’ Trend Following portfolio? Do you recommend adding mean-reversion strategies to your Trend Following systems? How do you define short, medium and long-term?
If any listeners would like to leave us a voicemail message to play on the show, you can do so here.
Learn more about the free-to-use Top Traders Unplugged Trend Barometer here.
You can download your free guide to Systematic Investing, and subscribe to our mailing list by visiting TopTradersUnplugged.com
Get a free copy of my latest book "The Many Flavors of Trend Following" here.
Find your free copy of Top Traders Unplugged 100 Best Investment Books of all Time here.
Send your questions to firstname.lastname@example.org
Follow Niels, Jerry & Moritz on Twitter:
And please share this episode with a like-minded friend and leave an honest rating & review on iTunes so more people can discover the podcast.
0:00 - Intro
1:11 - Macro recap from Niels
2:41 - Weekly review of returns
14:14 - Top Tweets
55:44 - Mike; Questions 1: Is Trend Following a Dynamic Call Replication strategy?
1:00:39 - Seth; Question 2: Do you use Trend Filters to confirm the entry signal?
1:04:10 - Michael; Question 3: Is the daily volatility of a 60/40 portfolio less than that of the 'perfect' Trend Following portfolio?
1:08:12 - Brian; Listener comment regarding the best way to explain why Trend Following should play a considerable part in all portfolios.
1:14:33 - Dave; Question 4: When using multiple lookback periods, should risk per trade always stay the same?
1:16:02 - Yohan; Question 5: Do you scale into a trade throughout the day, depending on market liquidity, or just enter the full trade upon getting the signal?
1:18:27 - Drew; Question 6: What does your day-to-day look like?
1:20:43 - Yohan; Question 7: Why not combine mean-reversion strategies with your Trend Following strategies?
1:25:49 - Paul; Question 8: Would testing markets that you don’t plan to trade, give added clarity to your backtests?
1:29:22 - Singh; Question 9: How do you define short, medium and long-term timeframes?
1:34:01 - Performance recap