0:03 Hey, hey. What's up, my friend? So, in
0:06 today's video, you will learn a trend
0:08 following system that has generated 2,864%
0:10 2,864%
0:13 over the last 25 years. This trading
0:18 system has about a 14% annual return and
0:21 a maximum draw down of 37%. In other
0:23 words, compared to a buy and hold on the
0:26 S&P 500, this system has higher returns
0:29 and lower risk. And the best part about
0:31 this trading system is that it makes a
0:34 killing during a crisis or a recession.
0:35 For example, during the docom bubble in
0:38 2000, the 2008 financial crisis, the
0:40 Russia Ukraine war. This periods like
0:42 this is where this trading system really
0:44 shine. This means you will make massive
0:48 profits while other traders are ah
0:50 losing their pants. So if you're
0:51 interested, right, then let's get to it
0:54 because I will explain to you the exact
0:56 trading rules, the entry, the exits, the
0:58 chart examples, and much more. So let's
1:01 get started. So trend following what is
1:05 it? So this is a trading strategy that
1:07 originated from the futures market. So
1:08 this is why it's called futures trend
1:11 following and it's used by
1:13 famous traders. You know the turtle
1:15 traders guess what they are trend
1:17 followers. Market wizards like ad sakakota
1:19 sakakota
1:21 and I don't know who who else I've read
1:22 a number of them right? They all are
1:25 trend followers as well. So this trading
1:28 strategy has been around for a long time
1:31 and it's
1:33 proven to work and there's a good chance
1:35 it will continue working for the
1:36 foreseeable future. So this is a
1:39 strategy that allows you to write trends
1:40 across different asset classes. You can
1:42 profit in bull and bare markets because
1:45 you will go long and short and you're
1:48 trading different asset classes like
1:51 indices, bonds, currency, metals, soft
1:53 commodities, etc. So this is actually
1:55 one of the secret source. Yeah. So let
1:56 me just walk you through the concepts
1:59 behind this strategy. So number one, you
2:01 want to be trading as many markets as
2:03 possible because it increases the odds
2:05 of you capturing a trend. So earlier
2:06 I've shared with you the different types
2:09 of markets we trade and of course I
2:11 shared with you over here
2:13 are the different types of markets like
2:15 currencies itself. It's not one market.
2:17 You can have multiple currency pairs.
2:18 Euro dollar, pound dollar, Aussie dollar
2:20 blah blah blah right? Maybe even 10 or
2:22 more. Same for metals, you have gold,
2:24 silver, copper, etc. So, you can see
2:26 that all these different asset classes
2:30 will give you many
2:34 markets to trade off.
2:35 And like I've said earlier, we are
2:37 pretty much going to buy markets that
2:39 are in an uptrend uptrend. We go long in
2:41 an uptrend and we go short in a
2:43 downtrend. And we'll write the trend
2:45 till it ends. And the reason or rather
2:47 the way we write the trend is using this
2:49 thing called TSL, a trailing stop-loss.
2:52 And again later on I'll share with you
2:53 the indicators that you can use on
2:56 trading view to execute it.
2:59 So let's talk about the trend following
3:00 system that you're about to learn. So as
3:01 mentioned we are trading across
3:03 different markets. So these are the
3:06 specific markets that I've put over here
3:08 that will be
3:10 used right for the back test later back
3:11 test later on. So currencies we have
3:13 pound dollar, dollar yen, Aussie dollar,
3:14 euro dollar, dollar against the Chinese
3:15 yen. So I'm going to go through them.
3:17 You can you can read it for for
3:18 yourself. time frame is the daily time
3:20 frame and our risk management is 2%. So
3:22 what this means is that when we put on a
3:24 trade and even if the trade goes against
3:28 us, we'll lose about 2% if it hits our
3:30 trailing stop loss. It's not guaranteed
3:33 2% because we are trading on a daily
3:34 time frame and waiting we are waiting
3:36 for the candle to close. So sometimes
3:37 the loss might be a little bit more like
3:41 2.2 2.3 2.4 2.5%. It is possible but
3:43 doesn't happen often. So these are the
3:46 the parameters that I'll be using for
3:49 back test later on. Now let's have a
3:51 look at the rules of this trading
3:54 system. It's really really complicated.
3:57 So brace yourself. You ready? Let's go.
4:01 Tada. That's it. Just two lines. Yeah.
4:03 So to go long, we will simply go long
4:05 when the price closes the highest over
4:08 the last 200 days. So simply put, right,
4:10 we're looking for the highest closing
4:12 price over the last 200 days. If the
4:13 market makes the highest closing price
4:16 over the last 200 days, we go long. And
4:18 we have a 6 ATR trailing stop loss. ATR
4:21 stands for average true range. This is a
4:24 volatility based trailing stop-loss.
4:26 And to show you how this looks like on
4:27 the chart, it will look something like
4:28 this. Let's say the market goes up,
4:30 comes down, and let's say this is the
4:33 highest price point over the last let's
4:35 say this the over the last 200 days. If
4:37 the market goes up and it breaks out, we
4:39 go long. Let's call it L. and we ride
4:42 the trend till it starts to reverse. And
4:43 then over here we sell thereby allowing
4:45 us to capture the meat of the move.
4:48 Let's call this m not mom but the meat
4:49 of the move. So that's the idea behind
4:51 trend following. And this is a long
4:53 example. A short example is just the
4:55 inverse. We go short on the breakdown.
4:57 When there's a lowest close over the
4:59 last 200 days. So something like this.
5:02 It closes below the lowest closing price
5:04 over the last 200 days. We go short. We
5:06 ride the trend down till it ends over
5:08 here. Let's say reverse. and we buy back
5:10 over here. So thereby allowing us to to
5:12 again capture the the meat of the move
5:15 over here. So this is in essence what
5:18 futures trend following is about.
5:20 And what about a trailing stop-loss? How
5:22 do we know when exactly to you know exit
5:23 the trade? So this is where I'm going to
5:25 walk you through a few examples so you
5:28 can see this in action. Now let's have a
5:32 look at some examples, shall we? So the
5:36 first one is a trading setup on coffee.
5:38 Okay. and couple of indicators that you
5:40 will find it useful. Let me show you the
5:41 first one. The first one over here you
5:44 can see is the donen channel. But this
5:46 one is actually modified to plot the
5:49 closing price. So where do you find
5:51 this? I actually developed this one
5:55 myself using a using an AI. So just look
5:57 for donen channel and this one is called
5:57 uh you can you should be able to find
5:59 this one bracket closing price. So
6:01 that's the one I'm using. Okay. And it
6:02 looks something like this. the settings
6:04 over here. Just change this to 200 and
6:05 you should have something that looks
6:08 something like this. So if I just they
6:11 should be quite donen channel closing.
6:14 Let's see what pops up. Oh, there you
6:15 have it. Right. Oh, my name here.
6:18 Anyway, yeah, so this is the one. Okay,
6:19 so I'm just going to remove the extra
6:21 one. There you have it. So feel free to
6:23 use that. And
6:26 And
6:28 next thing is Okay. So you look at it at
6:31 this point you can see that this market
6:34 coffee we're waiting for a setup and
6:36 entry trigger to go along. So when the
6:38 price touches this blue line so this
6:40 blue line over here demarket or
6:42 highlights the highest closing price
6:44 over the last 200 days. So if it closes
6:46 into this blue line over here it's an
6:49 entry trigger to go long. So what
6:50 happened next is kaput. There we have
6:53 it. this candle the market has closed
6:55 right is now at this point it's now
6:57 closed the highest over the last 200
6:59 days and since now it can only be
7:02 confirmed after the market has closed
7:04 you can't trade after the close unless
7:06 you want to do after market hours don't
7:07 recommend that wait for the next trading
7:10 day to open and then you trade it
7:13 so put right next day market open over
7:16 here and that's where you go long
7:19 right this opening price you go long now
7:20 the question is how do you then trail
7:22 your stop loss. So this where the second
7:23 indicator comes into play. This is a
7:26 chandelier exit. Okay. So if you want to
7:27 look for it, I think you can just go to
7:29 trading view.
7:33 I believe I use this one from this one
7:35 over chandelier exit. Yeah, this is the
7:36 one I used. Yeah, they have it looks
7:39 similar. I'll remove the duplicate. And
7:42 the settings are is over here 6 ATR and
7:44 20 period. Click okay. And there you
7:45 have it. You have this green line that
7:46 pops up at the bottom. So what you're
7:47 going to do is to trail your stop loss.
7:50 So when there when this market closes
7:52 let's say suddenly reverse and closes
7:55 below this green line okay you exit the
7:57 trade because your trailing stop loss is
8:00 hit it has hit 6 ATR trailing stop loss
8:08 okay so I I this one I have to be honest
8:10 I cherry picked this chart to show you
8:12 how it's like riding a trend looks easy
8:13 on a chart but remember this is a daily
8:16 time frame you have to endure all this e
8:17 and flow of the market, you know, you
8:19 can see it breaks out, it makes a
8:20 pullback, almost hitting your stop loss.
8:22 You still got to hold this trade, you
8:23 know, and then eventually breaks out
8:25 higher, makes another pullback, heads up higher
8:27 higher
8:28 again, almost hitting your trading stop
8:31 loss, and then go.
8:32 So that's the the nature of trend
8:35 following. There's a lot of uh
8:36 battle of your emotions if you ask me,
8:38 especially those of you who are new to
8:40 trading. This is a strategy that again
8:43 not most new traders is able to handle
8:45 honestly speaking. Okay, then you can
8:46 see over here. Let's see when it when
8:48 does it break below the trailing over
8:51 here. Finally on this candle over here,
8:54 the market breaks and close below your
8:55 trailing stop loss which is over here.
8:56 And since the market is closed, you
8:58 can't exit. So your earliest exit will
9:00 be on this candle over here at this
9:01 opening price. This is where you sell
9:05 this position for a nice profit. Okay,
9:07 so this is how the futures trend
9:09 following system look like. So and there
9:10 you have it, right? This is the idea
9:14 behind futures trend following. And now
9:17 since our rules are objective, we can
9:21 look at the results over the last 25
9:23 years. So you can see over here, this is
9:25 the equity curve I shared with you
9:27 earlier. And month on month, year on
9:29 year, this is where it's important. Have
9:31 a look. So you can see that as a trend
9:32 follower, you're not going to make money
9:33 every month or every year. I think same
9:35 goes for all trading strategies. Nothing
9:37 works all the time. But what's
9:39 remarkable about trend following in
9:41 particular futures trend following is
9:43 that during a crisis period during a
9:45 recession when the stock market is
9:48 taking a beating this strategy usually
9:49 does well. You can see in 2000 we have
9:52 the dotcom bubble up 22%. 2008 financial
9:56 crisis up 65% for this system. 2020 we
10:00 have COVID up 8%. No not huge. 2022
10:03 Russia Ukraine war up 25 or rather 56%.
10:04 So you can see that this is a system
10:08 that thrives during difficult market environment.
10:10 environment.
10:13 And if you look at the matrix
10:15 matrix
10:18 total return 2864 since 2000 so
10:20 annualized basis is about 14% annual
10:22 return. Your winning rate is about 45%.
10:24 You can see that it's less than half. So
10:25 you're actually losing more than half
10:27 the time or rather you're losing more
10:28 than half the time. Yeah, correct.
10:30 You're losing 54% of the time to be
10:33 exact. your payoff ratio is 1.74. So you
10:37 can see that on average your gains are larger
10:39 larger
10:40 pretty large right relative to your
10:42 average losses and your maximum draw
10:44 down in this system is pretty steep 37%
10:47 and it's not out of the norm right to
10:50 see draw down exceeding 40 50 or even
10:51 60%. So they are trend following hedge
10:54 funds they have maximum draw down of you
10:55 know in excess of 50% and that's really
10:58 the cost of being a trend follower. The
11:01 draw downs are not fun to go through.
11:03 It's painful. It will test your
11:07 emotions. It will test your resilience.
11:10 In fact, let me just go back to let's
11:12 see all I have all this data exported on
11:13 Excel. So, you can see over here this
11:15 all this data exported. You can see that
11:16 as a trend follower, there are periods
11:18 where you just have to kind of like suck
11:19 it up, right? You can see over here
11:22 since over here made a new high and then
11:23 kind of like, you know, draw down for
11:25 the next few years over here. Same thing
11:28 for this made a new high over here and
11:29 then you have to go for draw down for a
11:30 few years. It might look short on this
11:32 chart but this like a few years it's not
11:34 like few weeks or few months. So as a
11:37 trend follower your winning rate is low
11:39 as well as you know you have to be able
11:42 to endure this lengthy draw downs.
11:44 So pros and cons of future trend
11:45 following is future trend following is
11:47 number one there is no correlation to
11:48 the stock market. So this is a good
11:50 thing for those of you who are let's say
11:52 stock investors, stock traders, you want
11:54 a system or strategy that is
11:56 diversified. Futures trend following is
11:58 something worth considering because
11:59 later on I'll explain you know why this
12:01 is the case. This usually does well in a
12:03 bare market as you've seen earlier. The
12:05 downside to this is that this system
12:08 this strategy has a low winning rate.
12:10 Generally trend followers winning rate
12:12 are between 30 to 45% and it's difficult
12:14 for most traders psychology especially
12:16 if this is the only trading system that
12:19 you trade is really going to test your
12:23 your heart and soul. Okay. So but that's
12:25 it. There are things that you can do to
12:27 kind of alleviate this this pain
12:29 especially if you have multiple trading
12:32 systems or if let's say you are long the
12:34 stock market. You could be an investor
12:35 growth investor value investor. If the
12:37 stock market is bullish, your stock
12:39 investments are likely to make money and
12:40 trend following. Maybe the period
12:42 doesn't make or do it that well. Doesn't
12:44 matter. At least your stock investments
12:47 or stock trading is, you know, providing
12:49 cushion for it. At the same time, when
12:50 markets are bad, when your stock
12:51 investment portfolio take a hit, guess
12:53 what? Trend following will shine. And so
12:54 this means that your losses from your
12:56 stock investment will not be as painful
12:58 because you have trend following. Make
13:01 sense? Now, before you go, I'd like you
13:04 to get access to this free training. You
13:07 can get it at tradingwithra.com/go
13:09 or in the description or in the comment
13:11 section below this video. So in this
13:13 training you will discover three
13:15 rule-based trading strategies that work
13:18 and they're all backed by data. In fact
13:19 the strategy that you've just learned is
13:21 actually taken from this training. So
13:23 you will learn in other words two more
13:26 extra trading strategies and again I'll
13:28 walk you through the
13:30 trading rules the entries the exits the
13:31 risk management and chart examples so
13:33 you can quickly understand the concepts
13:36 of these strategies and that's not all
13:39 because I would also like to give you
13:41 the PDF slides of this training the
13:44 trading strategies cheat sheets so you
13:45 can quickly recap the rules of this
13:47 different trading system and the back
13:49 test report of all these different
13:50 trading systems. So you can see the
13:52 winning rate, the losing rate, what is
13:55 the payoff ratio, etc. All the back test
13:57 report given to you in this training for
13:59 free. So everything is free over here.
14:02 Just go down to tradingwithra.com/go
14:04 or I'll put the link somewhere in the
14:05 description below or in the comment
14:07 section below. Just click on it. You'll
14:08 come to this page and you can get
14:10 started immediately. So with that said,
14:11 I wish you good luck, good trading. I
