Chapter 4. Why Trend Following Can’t Be Beat

The easiest way to explain trend following is to explain what it’s not. It’s not buying at the bottom, and it’s not selling at the top. If you’re following trends, you won’t be able to do that.

Trend following is a nonemotional, mathematical discipline that’s simple for any investor to follow. If you follow it as you should, you’ll get the lion’s share of any long-term uptrend—and you’ll also avoid the lion’s share of a long-term downtrend.

Keep in mind that, over time, the stock market and individual securities follow general identifiable trends. The idea is that you want to be more fully invested in stocks when the market is above its long-term trend line (200-day moving average). Similarly, ...

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