Chapter 10. Trading Systems
“If you don’t risk anything, you risk even more.” | ||
| --Erica Jong | ||
“No matter what kind of math you use, you wind up measuring volatility with your gut.” | ||
| --Ed Seykota[1] | ||
Trend followers have taken their philosophy and reduced it to formulas to guide them in their daily decision-making. These formulas comprise what are commonly called trading systems. There is no limit to the number of different types of trading systems. That being said, most Trend Following systems are similar as they seek to capture the same trends.
Unlike Holy Grails, such as buy-and-hold or subjective fundamentals, trading systems must be quantified with rules that govern your decision-making. Bill Dunn, for example, tells his clients that his trading ...
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