Ep. 380: Lessons from Ken Tropin with Michael Covel on Trend Following Radio
Michael Covel's Trend Following
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The Cost of Capturing Ex Post Long Term Trends
The similarity in payout structure results from how trend followers typically set their trade entry and exit points. Trend followers generally place stop orders to limit losses when trends reverse. Most trend followers will either not utilize take profit orders or will have take profit orders much farther away from the entry price than the stop loss orders. This asymmetry helps trend following strategies capture the upside when price moves in line with the trend while capping downside losses when the identified trend reverses or proves to be false.
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