“Trend followers use reactive technical analysis. Instead of trying to predict a market direction, their strategy is to react to the market’s movements whenever they occur. This enables them to focus on the market’s actual moves and not get emotionally involved with trying to predict direction or duration.” -Michael Covel/ Trend Following
You Might be a Trend Following Trader if…..
- …you love buying break outs above resistance and new all time highs.
- …big trends make you happy not angry.
- …you do not trade the concept of something being overbought you just use a trailing stop.
- …your trading decisions are based on what is happening now, not your opinions, your fears of what will happen, or your hopes of what will happen later.
- …you risk a little capital over and over again to make a lot of capital eventually.
- …you are great at letting your winners run.
- …trend followers don’t need a story they follow actual price action.
- …you look for longs in a bull market and shorts in a bear market you are likely a trend follower.
- …higher highs and higher lows are one of your best indicators to go long.
- …you have been long $SPY for the majority of the past 5 years instead of trying to fight the trend to go higher.