Trend Following investors lean heavily on money management practices that let winners run and cut losses short. While simple to say, it is difficult to execute; requiring the investor to distinguish between turning points and pullback opportunities. Irresponsible enthusiasts in bull markets will shout to “BTFD!” or post diamond hands that defy sensible risk management practices.
This fourth video helps users understand the interplay between price trends and momentum signals. Alex and Tyler Wood, CMT show practical examples of using momentum concepts within trending markets to lean into moments when momentum surges in the direction of the price trend. In practice, using the GoNoGo Oscillator® with an objective neutral level at the zero line can provide investors with a rules-based approach to entering trends after they have already been confirmed, sticking with trending securities for the full length of the move, and potentially increasing position size at logical points to lean into durable trends. Momentum indicators are often misused in trending markets. And a responsible approach to “buying dips” can assist every investor.