Trend following, often referred to as trend trading, is a systematic trading style that aims to profit from market trends. It is based on the principle of buying when an asset's price rises over a period of time and going short when it falls over a period of time, making it an ideal strategy for those who prefer a systematic approach to trading.
History and Successful Practitioners
Historically, some of the most successful traders have been trend followers. Jesse Livermore, often regarded as the father of trend following, was a prime example. In his time, he amassed a fortune equivalent to $1.5 billion in today's dollars, solely through his own trading.
Ed Seykota, another prominent trend follower, turned a modest $5,000 into $15 million over his career, achieving an impressive +60% net return over three decades. Michael Marcos, a successful trend-following trader who learned from Seykota, turned $30,000 into $80 million.
More recently, David Harding, a very successful trend following trader, founded Winton Group in 1997, a hedge fund that managed $20 billion as of September 2020, and he himself has a net worth of $1.3 billion.