In this post, I share an easy and profitable trend following system. The basis of this trading strategy is an 18-day MA. No doubt, the precise timing of entry is the greatest problem/opportunity. I do not know of ANY purely technical timing system that maximizes profits. Moreover, after all these years, thousands of research hours, and who knows how much money in research, I have still not found a highly profitable timing system that can be used on just one market.

Trend following systems

Trend following systems work only on a big basket of commodities on the assumption something in the basket will have a big move and payoff the little losses. And, the essence of this method is to find a market set up by commercials, public, seasonal, open interest, ADX, accumulation or distribution, premiums, and the like.  Then and only then establish a position once there has been a change in trend. In fact, there are two components:

  • Set up (which is not a reason for entry).
  • And the entry which is a timing mechanism (not the reason for a trade).

18-day MA trend following system

KISS AND COLLAPSE

It is the primary trading pattern that sucks traders into losses, but not for us! The length of the moving average does not matter. So, it simply identifies or isolates your time frame. When a market has been in a steep down trend and takes a run up to the moving average it will usually trade there, for a bit then— just when most traders go long— collapse, pulling back to the dominant trend.

best trend following system

BUMP AND RUN

This is the pattern I like to use to buy after an upside trend reversal. In this case, price gives our entry then declines back into the moving average (perhaps just running into it horizontally). As most traders give up hope at the 18-day crossing, we are looking for a new or re-entry as the trend is most apt to get moving again… especially if there has been a set up condition at the lows.

top trend following strategy

In conclusion

To summarize, trend following systems are ideal for traders who wish to enter into regular trades but have conservative risk tolerance. Moreover, following trends can reduce risks significantly.

Profitable trend following system [Full Guide] by Inna Rosputnia

Wishing you a great week!

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