trending is a scam?

[Calvinpa]

according to this guy it is.

anyone know of this guy? he seems to go against what every one here is saying. but he doesn't really explain any reason behind his anti-trend following advice. his website has nothing to do with the market either.

[Cameronevify]

That video is terrible. Stocks frequently exhibit short-term momentum, meaning the trend continues for a period of time. Of course there will be times when the trend ends, but that's why you have strict risk management rules and tight outs.

Trading against the trend means you're going to be getting run over frequently and it's extremely stressful.

[Careproctbodo]

Against what everyone here is saying? I don't see that.

His videos have to do with Forex trading but the same rules apply. What he's trying to say is some people rely too much on lagging indicators like moving averages and that's the reason they fail. He recommends the use of price action instead.

This is not anything new. I have said this multiple times.

[CarlosNap]

I rely on price action in my own trading as well, but looking at the trend gives you perspective on current price action.

I don't think anyone blindly buying moving averages or the like is ever going to be successful either.

[admin]

Let's think about the price discovery mechanism in the markets. Efficient Market Theory states that prices reflect all information instantaneously. Reflect on that for a second. That might be true to an extent in the very short term. For example, if a well covered company announces a takeover bid for another company the stock often moves instantaneously as soon as the markets open for trading. However, on the flip side, I argue markets are not prefectly informationally efficient. The best cases of this would be small caps and emerging markets and in some cases mid caps - markets where there is not a lot of highly qualified professional analyst coverage. Because of this lack of informational efficiency some of those that are better at uncovering information will be the first to arrive and take down stock. This buying activity may register on the radars of other traders who look into the company's prospects and they beging to acquire stock and the price mark up phase begins until everyone that is interested in the stock owns it and the distribution phase begins followed by decline.