Trend following is buying markets that are rising in price and selling markets that are falling in price and either;
- Remaining in cash until those markets are rising again, or
- Selling short markets that are falling in price.
Trend following can be discretionary or systematic. A discretionary trend following looks at charts to see the signal or monitors price for new breakouts. A systematic trend follower follows a predefined set of rules systematically. A systematic trend follower could also be discretionary if they ultimately make the decision to execute a buy or sell trade from the signal. Systematic trend following can also be automated and mechanical if the systematic trend follower is operating a computerized trading system that generates the signals, manages the risk, and executes the trades.
For more information, read: My Introduction to Trend Following
Trend following or trend trading is a trading strategy according to which one should buy an asset when its price trend goes up, and sell when its trend goes down, expecting price movements to continue
Trend trading is a trading strategy that attempts to capture gains through the analysis of an asset’s momentum in a particular direction. The trend trader enters into a long position when a stock is trending upward (successively higher highs). Conversely, a short position is taken when the stock is in a down trend (successively lower highs).
Pure trend following is a trend following system, fund, or investment program that doesn’t add any other signal or system to the trend following strategy.
Consider the definition of “pure”:
- not mixed or adulterated with any other substance or material.
- without any extraneous and unnecessary elements.
- free of any contamination.