Trend Lines and MA, from Jim Sogi

September 16, 2015 |

 When I first started trading actively in the late 90s there were some pretty massive swings in many issues and markets. Some popular simple systems being touted involved following trend lines or MA's or MA crossovers. With big moves and high gross values in those days such ideas worked ok for a while, but then they stopped working. They haven't seemed to work much the last 15 years except on a long term scale. I think it was called trend following or momentum. It was pretty basic chart based stuff. It was often combined with a predefined stop loss and a trailing stop after a fixed amount of gain. All the charting programs had presets for drawing the lines. Anyone could do it.

The recent 30 point moves in a direction reminds me of those times. You also have to remember that back then we'd been in a twenty year bull market in which the mantra the trend is your friend was true and had been a very successful investment strategy. Everyone one was lucky.

With the drift the way it's been for the past 120 years, one could make a cogent case that the only unlucky ones were the counter-parties to the longs. 


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