Price Trends For Profit-Home

Welcome to the Trends for Profit website.

The aim of this website is to highlight selected stock, bond and commodity price trends and to discuss the evolution of these price trends. A Watch List of securities of potential interest is maintained.  Long term investors and/or traders may wish to click on the “Watch List” tab above.  Access to the Full Watch List is available by free subscription.

Articles posted about current and past trends can be found by clicking on the “Blog” tab above.  The primary goal of this site and our Newsletter is to identify and discuss stocks, funds and ETFs that are involved in significant price trends.

An investable trend is the price path for a security whose return (either positive or negative) over time is large in relation to its price volatility over the same period.

Securities which maintain relatively larger returns to volatility ratios (Sharpe ratios) may be more likely to result in profits for investors or traders.  This is because their price paths generally rise or fall somewhat steadily over the life of the trend.  A steadily rising or falling price may enable an investor to earn a profit from the continuation of the trend before the trend ends.  Appropriate tactics to profit from price trends are necessary.

Some trends last for quite a while, and investments in these situations can be quite profitable.  More often the case is that “trends”, once identified, do not last for a long time (or may not be trends at all).  Investments in such short-lived trends end up creating a large number of relatively smaller, but manageable losses.  In addition, in some market situations (trendless and/or high volatility markets), the transactions costs can be significant.  This can lead to larger than expected portfolio losses during these periods of difficult markets.  The basic ideas to remember when seeking to profit from trend following are:

  • allow profitable positions to stay open for as long as you believe the trend endures, and
  • limit losses from investments for which there is not a profitable trend in place (systematically limit losses to relatively small amounts).

Inevitably, investable trends always come to an end.  So, when seeking to profit from investing in trends, one has to have a plan for exiting from positions whose investable trends are judged to have ended.  Usually, trend followers have rules that they follow in regards to determining when they believe a security’s trend is no longer investable and related positions should be closed out.

 

You may contact the owner of this site by signing up to receive notices of new posts on the Blog page or to have access to the Full Watch List.  Thank you for subscribing.

Disclosures:  This website includes articles, posts and discussions of securities that may be of interest to you for investment or trading purposes.  Nothing in this website can be or should be construed as a recommendation to buy or sell any security or that any security discussed is a suitable investment for your personal situation.  All readers of the information in this website assume full responsibility for doing their own due diligence before making investment or trading decisions.  The owner of this site may buy or sell the securities mentioned on this website (and other securities that are not mentioned) for its own accounts at any time and for any reason, whether or not discussed on this website.

 

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