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Do You Want to Be a Winner in Investing

Do You Want to Be a Winner in Investing

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Published by andy abraham
This is an excerpt from a lecture on the attributes of successful commodity trading and trend following.
This is an excerpt from a lecture on the attributes of successful commodity trading and trend following.

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Published by: andy abraham on Jul 14, 2009
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07/14/2009

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Do you want to be a Winner or a Loser in investing?
The Real Story of Trend Following& What It Takes to Succeed
 
History supports Trend Following
Trend following has been around from the times of Richard Donchian with 15-20% returns over long periods of time.Donchian used these methods in the 1940s and his students continued on tilltoday.Trend following is the hardest yet easier trading approachOnly simple ideas can stand the test of timeThe only holy grail is Discipline and PatienceIf you don’t have these don’t tradeDiscuss simple methods of Trend FollowingA. Moving averagesB. Breakouts – Donchian channel break outs, ATR, Turtle, Bollinger BandsReally does not matter… if corn goes from 300 to 375 all of these will catch the move. The keydifference is managing the inherent risks.
So why aren’t more people successful trading commodities?
Lack of a Plan…Patience…Discipline
 
Most Important Issues When investing in a TrendFollowing Strategy
RISK MANAGEMENT & Diversification
Take small risk bets that your system or manager can afford to take as well riskenough in order when a trade works you benefit. We take 1% risks per trade max.Trade a diverse basket. We look at 80+ markets. We try not to risk more than 5% riskper sector. Realize just trading the stock market is not being diverse. There arealways trends. You can as easily go long or short. Do not have open trade equityexceeding your comfortable level as this is where some of your draw downs will comefrom.One must be able to trade his personality.
 

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