The Importance of Trailing Stops When Trend Following
This week I was very busy at two conferences. I was at the managed futures association conference as well as the Global Grain in which I sat on a panel regarding commodity trading advisors affecting markets & flash crashes. Both were fascinating. The highlight of the MFA was lunch at the Four Seasons and hearing words of wisdom from the founder of Campbell & Co, Keith Campbell. 40 years as a CTA trend follower he spoke about the attributes of success and team. It was fantastic. As well at the conference I met with a representative of Mark Walsh & company. Mark was an original turtle trader whose career spans 28 years. What I found most interesting and encouraging was the hard work he put in. He is currently managing approximately 100 million dollars with 23 million of that is his own money. What stands out the most is the mindset. He has the mental fortitude to never give up. He has a CAR of 19.42% with 40% draw downs and the last 3 years he has not made money. Ironically he is most encouraged by that…
My point of all of this is none of these managers would have had decades of success if they did not have trailing stops.
In my stock trading due to my trailing stops…I avoided most of the carnage in the stock market. I have only had two positions for several weeks and yesterday that was reduced to one.
Along with that I use a simple rule of exiting all longs when the 10 EXMA and 30 EXMA cross…we are almost there. I follow distinct exact rules. I am not a bull nor a bear. I just listen to what the market is telling me. I have received countless emails telling me how wrong I am and that the stock market is going to 20,000.
Regardless…Trade with trailing and hard stops…have a trading plan….that matches your personality that you can follow.
Past performance is not indicative of future performance