What Does Contagion Mean for Trend followers
The bad news just keeps on coming. Seems like a perfect storm is brewing. Asian stocks have been falling, the Euro is knocking on the door of 130 to the USD, bond risk is climbing amid the fear and speculation Ireland’s banking crisis will spread to Spain and Portugal and to add the icing on the cake China may raise interest rates. Pretty negative stuff. So what does it mean for trend followers?
Actually it is very interesting we have very few positions as well as in my managed accounts they also have very few positions on. Maybe it is just noise or maybe the beginning of some bigger moves. Trend followers never catch tops or bottoms. We seem to enter some what later. Trend followers do not predict moves and mostly importantly we do not have any fears. I can not speak for other trend followers but I have absolute 100% confidence in my methodology that puts me in the path of potential trends if I can put on a low risk trade. If I can not take a low risk trade, I am confident there will be another trade that offers me a low risk entry. Not any one trade means anything. I will have tens of thousands of trades over my career. I will remember the good ones as well as the ones in which gaps caused some greater losses than planned but trend following is a life time strategy that enables me to compound money.
The real goods news for trend followers is that in times of crisis, trend followers seem to make the most amount of money. I can vividly remember numerous crisises such as the bond crisis in 1994..Asian meltdown in 1998…and most recently in 2007 and 2008.
While some traders freeze or jump to cash…trend followers put themselves in a position to profit in times of crisis. Time will tell what will transpire.
Very interesting times!!!!!!!!!
Futures trading involves risk. People can and do lose money