In trading and investing post earnings announcement drift (or PEAD) is the theory that a stock’s price action tends to trend in the same direction as an earnings surprise causes it to go. This effect usually starts with a gap in the direction that it will go for the next few weeks or even months […]
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Trend Following by Michael Covel is the bible for traders interested in learning how trend trading works as a method. This book explains the principles and concepts that you will need to understand for how the best trend following traders made their outsized returns on capital. It will teach you the key principles that the
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A market trend is the direction that prices are moving in for a specific timeframe. A market can move in an uptrend, a downtrend, and other times just go sideways inside a price range. Here are simple trend indicators to identify a trend in your trading timeframe. Uptrend indicators: Higher highs and higher lows in
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David Winton Harding is a billionaire trend following quant trader, and the founder and CEO of Winton Group. His fund was launched in 1997 with $1.6 million in assets and now has approximately $20 billion under management. His funds trading programs have returned a compounded +12.5% return over the last 19 years even with its size. David
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Moving averages are technical trading indicators for capturing trends. This post shows the backtesting data and system equity curve versus buy and hold using TrendSpider.com. This is the backtest based on buying $QQQ when the 5 day EMA crosses and closes over the 20 day EMA and then selling when the 5 day EMA closes
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Buy and hold investing on the S&P 500 index with a low cost mutual fund is a top performing system first made popular by Jack Bogle. Warren Buffett also recommends this strategy as a way to beat the majority of mutual fund managers and hedge fund managers. Most financial advisers recommend this buy and hold
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Trend following is the process of trading in the direction of the markets price action and staying with the trend until it ends. A trend follower must have a quantified winning process for entering when there is a signal and then either exiting for a small loss when a trend fails to be established or
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The goal of a trend following system is to capture trends for big profits and cut losses short. A trend follower needs a diversified list of assets to trade in different markets to always have the opportunity to capture a trend where ever it happens. A good trend following system will have backtested signals on
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Moving averages are the best indicators for the direction of a trend because of their power and simplicity to smooth out price direction in trend trading. They create lines on your charts to filter out the daily trading ranges and show the true direction a market is going in for a specific time frame. When
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“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 Trading a trend in price
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