From 2013 to early 2015 trend traders profit from a few large trends – crude oil falls 70%, stocks rise 40% and the U.S. Dollar rallies 20%. Since then, performance stagnates. Over the past two years, many markets move sideways and exhibit nasty V-shaped reversals. As a result, many trend following strategies take many small losses as they buy near tops and sell (or short) near bottoms.
I want to show you how and why trend traders have been losing money over the past two years. In the podcast, I discuss a couple of charts from the major sectors: Bonds, Currencies, Commodities and Stocks.
In these directionless environments, trend traders rely on risk management to keep losses small and simply wait it out until trends come back. When they do, they have the capital to take advantage.
I believe discussing the individual markets can help answer the question many have been asking since 2015: “Why are trend traders losing money?”.
Blog post: http://www.michaelmelissinos.com/blog/why-are-we-losing-money/
Disclosure
Past Performance is Not Necessarily Indicative of Future Results There is always a risk of loss in futures trading.
This communication is for information purposes only and should not be regarded as an offer to sell or as a solicitation of an offer to buy any financial product, an official confirmation of any transaction, or as an official statement of Melissinos Trading LLC. All information is subject to change without notice.
These charts show examples of trends. Inclusion of a chart as a trend example does not imply any kind of recommendation to buy, sell, hold or stay out.
4: Why Have Trend Followers Been Losing Money Lately?