Similar to the mean reversion strategy we explored, we can build a trend-following strategy that uses the APO trading signal. The only difference here is that we enter long positions when the APO is above a certain value, expecting price moves to continue in that direction, and we enter short positions when the APO is below a certain value, expecting price moves to continue going down.
In effect, this is the exact opposite trading strategy with some differences in position management. One might expect this trading strategy to be exactly opposite in performance but, as we will see, that is not the case, that is, both trend-following and mean reversion strategies can be ...
