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 till
today.
• Trend following is the hardest yet easier trading approach
• Only simple ideas can stand the test of time
• The only holy grail is Discipline and Patience
• If you don’t have these don’t trade

• Discuss simple methods of Trend Following

• A. Moving averages
• B. Breakouts – Donchian channel break outs, ATR, Turtle, Bollinger Bands

• Really does not matter… if corn goes from 300 to 375 all of these will catch the move. The key
difference 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 Trend
Following Strategy

• RISK MANAGEMENT & Diversification

• Take small risk bets that your system or manager can afford to take as well risk
enough 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% risk
per sector. Realize just trading the stock market is not being diverse. There are
always trends. You can as easily go long or short. Do not have open trade equity
exceeding your comfortable level as this is where some of your draw downs will come
from.

• One must be able to trade his personality.

 Realize This is a Get Rich Slow
• This is a marathon. We look to compound our way to wealth. Take low risk bets,
diversify as well as allocate no more than 2-5% of our net wealth in any idea. We long
ago realized we do not know the future. We do not predict. We react. Thinking in this
manner encourages discipline. You don’t know when the next big rare winner will
come from, so you just keep on putting the trades on in a preplanned thought…time
tested simple system which has risk and money management attributes.

• Imagine you start with $100,000 and “ On Average” return 15% after 20 years what is
our $100,000 worth.
• Yearly compounding:15.000%
• $1,636,653.74
 Some Good Trend Followers you probably never heard of

Abraham Trading Since Inception:1,740.12% Annual RoR:14.81%(VAMI)Inception:Jan 1988

Millburn Commodity Since Inception:6,544.00% Annual RoR:13.90%(VAMI)Inception:Feb 1977
Tactical Investment Since Inception:1,522.22% Annual RoR:18.92%(VAMI)Inception:Apr 1993
Clarke Capital Since Inception: 744.14% Annual RoR:20.26%(VAMI)Inception:Aug 1997

How many of their investors have stayed with them throughout their careers?

Not many…when ever there is a draw down investors RUN

Investors need to change their thinking…Draw downs are oppurtunities for investment
The only way to avoid draw downs or whip saws is not to trade ( Ed Seykota). Would you like to have
invested with Ed Seykota..60% per year from 1990 to 2000. Not if you can’t stomach draw
downs.
Nothing worse than a draw down is the duration of a draw down.
 Characteristics of a Good Trend follower

• One must park his/her ego.

There is no such thing as being right, the commodities trend is right.
• Your opinions mean absolutely nothing.
• You can work hard do all the right things and lose money. Yes, this is a very strange business.
• Winners in the commodity trading field simply want to win. There is no being right, there is no need for recognition
and funny enough winners in the commodity trading field aren’t chasing money… They are chasing winning.
• Successful trend followers just want to follow their rules of their commodity trading systems, be patient and
disciplined.
• Successful trend followers know over time they will win.
• Successful commodity trading advisors have an edge.
• Successful commodity trading advisors know they do not need make money every month.
• Commodity trading advisors know that they will not have a steady earnings stream month in and out.
• Successful commodity trading advisors know and expect to have down years that can be drawn out for long
periods of times ( yes, even two years) and then have a year they are up 75% or even 115%. Numerous
examples such as Mulvaney, John Henry…Dunn Capital

• Too many investors give up drawing the draw downs.

 So How Do I Make Money
• Either you trade for your self with a thought out plan with all contingencies based on
Trend Following with strong risk & money management
• Or

• Allocate your money to a diverse group of Commodity Trading Advisors

• ABOVE ALL YOU NEED A LONG TERM

HORIZON
• PATIENCE AND DISCIPLINE
• No Holy Grail
 Thank you
• YES YOU CAN, Compound your way to wealth. I have been investing since 1994 and have
increased my net worth by both trading myself as well as allocating to other CTAs and Hedge
Fund managers. These are the exact strategies I actually use and have used to compound
money over long periods of time. If I can do this… you can also. It all boils down to Discipline and
Patience. This a get rich ( stay rich) slow process. Any one trade means nothing. Any month
means nothing. Any year means nothing. Having a long term horizon is the only key. There are
times when a trading system or a CTA can be flat for 1 year… or even longer. In all too many
cases the investors give up and leave just before the eventual big move.

• Commodity trading involves substantial risk. People can and do lose money trading commodities.
Past performance is not indicative of future preformance.

• Andrew Abraham
• Angus Jackson –Retail
• Angus Jackson Partners- Institutional
• 954 772 1166
• www.angusjackson.com
• www.angusjacksonpartners.com

• A.Abraham@Angusjackson.com