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Strategies & Market Trends : The Art of Investing
PICK 56.57+0.6%4:00 PM EST
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To: Sun Tzu who wrote (8989)11/8/2024 3:26:48 PM
From: Sun Tzu  Read Replies (1) of 10750
 
Trading 101 - Trend following

I purged a lot positions today (and yesterday) but I am still behind on my goal of tiedying up my portfolio. Too many things got in it during the quarter.

However, as I was examining my positions, I took a look at my MNMD purchase history. It presents a good example of how I invest/trade.

I've been in and out of MNMD all year long and the average long duration has been ~6 weeks. My patterns is to make a counter trend move near the green and red lines (buy on strength near the green, sell on weakness near the red). If I've sold too early or bought too soon, my loss is minimal and I can get back in quickly.

Between the red and green lines, I follow the trend.

The chart shows you where those entry and exit positions were.

Below is my latest purchase records. What you should be noting is that there are no purchases at lower prices. I don't average down. I average up. And my purchase history show that.

It is not always this way. There are rare occasions that I average down. But the duration of averaging down is typically only a few days. I may look at the chart and decide that a bounce is in order and I should add more to a losing position. But that only happens if the chart is still constructive and the loss is minimal and I believe in the stock. But if I do that a couple of times (no more) and it is still showing losses, then I accept that I've been wrong and I take the loss.

Which is why if you look at each holding's purchase history, they all pretty much show a sorted set of gains like you see below. This is what following the trend means.



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MNMD chart with the guardrails.


Here's EBS as another example of trend following

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