The Trend Following Bible: How Professional Traders Compound Wealth and Manage Risk

CHAPTER 4

How Successful Trend Followers Trade

It is imperative to remember that the returns of professional trend followers are not representative of those of all trend followers. More so, do not expect your results to be on par with theirs as you begin your journey.

I am not recommending these managers, rather using their history to show what trend following can generate when one trades with a well-thought-out plan and risk management in place. I am giving a short historical background of each of the managers as well. I present here a hypothetical compounding if you had invested with these various managers.

The Trend Followers

Before we start, remember: Past performance is not indicative of future performance. The risk of loss in trading commodity futures, options, and foreign exchange (forex) is substantial.

Salem Abraham

Abraham Trading Company

Began January 1988

CAROR 19.18 percent

Salem Abraham does not trade from Wall Street, rather from Canadian, Texas.

The population of Canadian is is approximately 2,000. However, Abraham Trading has been called “The Best Little Hedge Fund in Texas” by Absolute Return and Alpha magazine. In 2003 the New York Times wrote about Salem. The article was called “A Homespun Hedge Fund, Tucked Away in Texas.” I was surprised that Salem made it mainstream and was featured in the business section of the New York Times. Salem had been in the trading ...