Trend Following, 5th Edition

1 Trend Following

An object at rest stays at rest and an object in motion stays in motion with the same speed and in the same direction unless acted 
upon by an unbalanced force.

—Newton’s First Law of Motion

Speculation is dealing with the uncertain conditions of the unknown future. Every human action is a speculation in that it is embedded 
in the flux of time.

—Ludwig von Mises¹

Speculation

It might sound pedantic or perhaps that I am focusing on the extraneous, I am not: A speculator’s ability to receive a price they can count on as fact—is the foundation of markets. Said another way, with no price, humanity is back to cavemen beating each other with clubs. Austrian economist Ludwig von Mises puts price discovery’s value in perspective:

The aim is to make money, not to be right.

Ned Davis

The people that I know who are the most successful at trading are passionate about it. They fulfill what is the first requirement: developing intuitions about something they care about deeply, in this case, trading.

Charles Faulkner²

It is the very essence of prices that they are the offshoot of the actions of individuals and groups of individuals acting on their own behalf. The catallactic concept of exchange ratios and prices precludes anything that is the effect of actions of a central authority, of people resorting to violence and threats in the name of society or the state or of an armed pressure group. In declaring that it is not the business of the government to determine prices, ...