Get a flying headstart on trend trading with this comprehensive how-to guide
The Universal Tactics of Successful Trend Trading: Finding Opportunity in Uncertainty delivers powerful and practical advice for the serious trend trader. Using the principles identified in The Universal Principles of Successful Trading, author Brent Penfold shows curious investors how to become a long-term winner with tried-and-true trend trading methodologies.
The book includes in-depth and comprehensive treatments of topics like:
· Why trend trading is so appealing
· Popular and effective trend trading strategies
· How to measure risk
· Common trend trading mistakes and how to avoid them
Investors and readers will also discover the importance of risk, and how to judge outcomes and strategies on a risk-adjusted basis.
Perfect for anyone interested in trading successfully, The Universal Tactics of Successful Trend Trading is a key strategy guide that belongs on the shelf of anyone involved in the buying and selling of financial securities.
Table of Contents
Acknowledgements xiiiPreface xv
Introduction xix
Chapter 1 The Paradox 1
Nirvana and Despair 1
It’s Also a Confusing Time 2
How I Can Help You 3
How to Trade Successfully 4
Summary 4
Chapter 2 Key Messages 5
Knowledge 6
Risk 24
Application 36
Execution 54
Summary 63
Chapter 3 The Appeal of Trend Trading 64
It’s a Punch and Judy Show 64
What is Trend Trading? 65
Why are Trends so Important? 67
The Appeal of Trend Trading 67
Summary 119
Chapter 4 Why Do Trends Exist? 120
Confusion Reigns 120
Behavioural Finance 120
Path Dependency 125
And the Winner is? 126
Summary 126
Chapter 5 Why Do So Many Fail? 127
Science Says We Can’t Lose 127
Overview of Trend Trading 127
Why do so Many Fail at it? 130
Variability Kills Indicators 137
Popular Indicators 137
RSI 139
Strategy Robust Review 139
RTT 140
Traders Always Change Variable Values 156
Universe of Alternative Equity Curves, Expectancies and ROR 156
Best Set of Variable Values Always Change 158
Know Your Strategy’s Universe of Alternative Equity Curve’s Upper and Lower Bands 160
Stratgey Robustness Review 161
The More Variables, the More Alternatives, the More Risk 161
Variable and Subjective Tools 163
Independent Objective Tools 164
So, What to Do? 165
Summary 165
Chapter 6 Strategies 167
Markets 168
Trading Naked without Technical Analysis 169
Trend-Trading Strategies 177
Momentum Trend Trading 177
Relative Strength Trend Trading 178
Hypothetical Results 180
Relative Momentum Trend Trading 180
Absolute Momentum Trend Trading 195
Retracement Trend Trading 223
Return of Random Trend Trader (2020) 230
Summary 232
Chapter 7 Measuring Risk 234
How to Measure Strategy Performance 234
Risk-Adjusted Return Measurements 235
Standard Deviation - Proxy for Risk 238
The Ulcer Index - a Superior Risk Proxy 245
The Ulcer Performance Index - a Superior Risk-Adjusted Return Measurement 246
Not all Strategies are Created Equal 257
Summary 259
Chapter 8 Moving Forward 260
The Toolkit 260
Portfolio Construction 261
Data 263
Software 263
Attributes of Winning Strategies 264
Strategy Review 267
Strategy Benchmark 279
Strategy Development 300
Summary 302
Chapter 9 Back to the Future 303
Strategy Development 303
Find a Methodology 304
Code the Methodology 311
Review the Methodology 312
Compare the Methodology 312
Adjust the Methodology 314
Equity Curve Stability Review 359
Sensible Trading Destination 360
Drawdown 361
Charles Dow (1851-1902) 364
Back to the Future to Move Forward 364
Embrace Diversification 365
Thank You 365
Appendix A Literature on Trend Trading 368
Index 377
