Has Mechanical Trading & Trend Following Ended
There was a recent article in the wall street journal asking the question, “Has The Black Box Broken? This is not something new to long time commodity trading advisors and trend followers. I have seen these articles over and over again. If anything it encourages me to even allocate to more commodity trading advisors. When I see articles of this nature a turn around is right around the corner. In reality the last 18 months nothing has happened and the goal of any trend following commodity trading advisor was not to lose too much money until some trends appear. No promised us trend followers that there will be trends when we want.
I have seen repeatedly commodity trading advisors add assets under management when they made money…and at any draw down investors flee. Going through a draw down is not fun. Especially if you are AHL which has been the favorite child of Man group. The assets of the commodity trading advisor of AHL has fallen drastically. Investors in commodity traders need to do the exact opposite. This would be a great point to invest with commodity trading advisors.
Trend following has been around since the great famine of Egypt with Joseph and will surely continue. This is what needs to be expected with trend following. If you can not stand the draw downs do not start trading or investing with commodity trading advisors.
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Futures trading involves risk. People can and do lose money