24 Feb Trend Commandments

The religion of fundamental analysis is about telling stories.

For a trend trading system to be successful, it needs to be robust. Assume you are trading Treasury Bonds and you switch to gold. Your system needs to still work. And if you switch to corn, something totally different from Treasury Bonds, it must still work.

To have a loose fitting suit requires your trading system to be simple and intuitive.

Trend following is about non-normality of market returns. Trend following’s alpha comes from letting winners run on the right side of a fat tail and cutting losses short on the left hand side.

Putting your ego aside and admitting that you don’t know it all isn’t easy, but it is the mindset of true winners.

Cosmetic and financial services are strikingly similar. They both sell hope.