Trend Following Strategies for Futures Market

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Trend Following seems to be enigmatic or “too good to be true” to some. It seems to go against accepted conventional way of trading: Fundamental analysis, value investing, Elliot Wave Trading, EMH, Candlesticks Patterns, Day Trading, Swing Trading or Crystal Ball methods of Point and Figure.

Let us not waste time comparing Trend Following with these strategies/analysis.

Trend Following is something different and practical in its own way.

What is Trend

 

uptrend

 

downtrend

 

Why Follow the Trend in Futures market?

Let’s be honest and humble that

  1. You are not a fortune teller thus it is impossible to correctly predict the market every time. Take a recent Crude Palm Oil Futures Chart for an example, it is difficult and risky to predict the market reached the bottom and ready for strong reversal.  sample 1
  2.  You are not a robot and you will tired yourself sticking in front of the computer trading the market every second, every minute. Worst still you will be compounding your losses as you overtrades your account.sample2
  3. You are not a computer hence it is pointless to have 3 or more indicators and trendlines cluttering your chart only to confuse yourself in the end.sample3

As traders, our ONLY goal is to make money. Trend Following is neither the holy-grail nor it will help you buy the very low or sell the very top.

sample4

Instead, this simple strategy is THE FOUNDATION of the most profitable trades in futures trading. In essence Trend Following identifies the “MEAT” of a price trend by focusing on price & a few practical indicators. Check out the Crude Palm Oil Futures chart below.

sample5

Every successful futures trader need a trend to stay profitable in the long run and thus Trend Following helps ensure that by focusing on THE PROFITABLE TREND.  

 

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