EP 002: Why I am obsessed with trend following strategy
In the podcast, we take AMD (Advanced Micro Devices Inc) and TSLA (Tesla Inc) as an example. Refer to the charts below.
AMD went up by 300% in 2016 even though it wasn’t a profit making company. It started to make profit in 2017 but the stock price didn’t actually move during 2017.
One of the hottest stocks lately, TSLA. Note that this is not yet a profit making company.
To assist you in understanding the core belief of trend following strategy, you can gather 10 stocks that are at their all-time high, 10 stocks that are at their 52-week high and 10 stocks that are at all-time low or 52-week low. Stocks from the market(s) you trade, or any market will do. Re-look into the lists after a month, two months, three months or even six months. See how many of the uptrending stocks have gone up higher and how many downtrending stocks continue to trend lower, as well as how many downtrending stocks actually recover.
What you’ll discover in this episode:
- What most people think about trading and why that may not always be the case
- Why the trend following strategy is for most people if not everyone
- The core belief of the strategy
- It’s simple, but not easy and the reasons behind it.
- How you can help yourself to understand this strategy better