Over the last few days, you’ve been on a wild ride to discover the TRUTH about what it takes to become a consistently profitable trader — so you can be financially stronger to better provide the needs of your family and have the freedom to do the things you love.
If you missed the earlier post, then you can read it below:
You’ve learned that most people approach trading the wrong way. They are trading on the wrong timeframes, don’t have the correct expectations, and simply don’t have an edge in the markets.
Now if this sounds like you, don’t worry.
Because in this post, I’ll share with you a trading methodology that works and how it can overcome the issues that most traders faced.
Now you’re probably wondering:
“What is this trading method?”
It’s Trend Following.
A trading methodology that exploits trends around the world so you can achieve market-beating returns, without spending hours in front of the monitor.
You might be thinking…
“But why should I learn Trend Following when there are so many trading strategies out there?”
That’s a good question and here’s why…
You have freedom to do the things you love
If you recall, many traders fail because they are trading the shorter timeframes.
They rush home after work and stay glued to their monitor, trying to scalp a few pips here and there.
Then they go to bed at the wee hours only to repeat the same thing the next day — and this is done at the expense of sacrificing their time with family and friends.
So unlike short-term trading, Trend Following is traded on the Daily timeframe. This means your entry, stop loss, and exits are done on the daily timeframe.
If you do it correctly, trading will take you less than 25 minutes a day — which is great!
And it gives you the freedom to do the things you love (like playing with your kids or having nights out with your friends).
So gone are the days where you’re glued in front of your monitor — stressing yourself out for a few measly pips. That isn’t a long-term solution to your long-term needs.
You have an edge in the markets so you can trade with confidence
Here’s the proof…
There are many research papers on Trend Following and it finds that Trend Following has an edge in the markets.
But one particular research stands out and it’s called “Two centuries of Trend Following”.
This research has found that Trend Following is proven to work over the last 200 years — and even till today.
You might be thinking:
“Sure, it looks good on theory. But what about the real world of trading?”
I’m glad you asked.
Because some of the biggest hedge funds in the world adopt a Trend Following approach like Dunn Capital, Winton Capital, Mulvaney Capital, and Man AHL.
And that’s not all. You have Market Wizards like Richard Dennis, John Henry, and Ed Seykota.
Clearly… Trend Following is proven to work by academic research, billion dollar hedge funds, and — even Market Wizards.
You increase the odds of becoming a consistently profitable trader
Based on a survey I did with 500 traders, I realised that many of you faced these problems…
- Lack of trading capital
- The “need to make money” syndrome
Trend Following and here’s why…
It allows you to keep your full-time job so you can grow your capital quickly
By now, you know that Trend Following is a trading strategy that doesn’t require much of your time.
This means you can get a full-time job and use your savings (from your job) to increase the capital of your trading account — and let the power of compounding work for you.
In my opinion… this is the secret to building SERIOUS wealth with low risk. I’ll explain more later…
It removes the “need to make money” syndrome
What is the “need to make money” syndrome?
This is a syndrome where you break your trading rules (like shifting your stop loss, revenge trading, averaging your losers) just to make sure you don’t take a loss.
This happens because you’re reliant on your trading profits to pay the bills, so you do whatever it takes to prevent a loss — and it’s a matter of time before you blow up your trading account.
But if you have a job, things are different because you’re not reliant on your trading profits to survive.
So even if you have losing months, it’s not the end of the world because your job will provide your living needs.
This means you can focus on learning how to trade properly instead of worrying whether you can pay the bills this month (or not).
And won’t this help you become a consistently profitable trader in the fastest possible time?
You can build SERIOUS WEALTH
Here’s the deal:
The power of compounding lets you build serious wealth from the markets.
Now most traders don’t pay much attention to it as they are looking for a get rich quick scheme.
But no, you’re different.
You know trading is a long-term endeavour and it can help you build SERIOUS WEALTH.
Let me prove it to you…
If you make an average of 10% a year with a $5,000 account, after 20 years it will be worth…
To be honest, that’s probably not enough for you.
Let’s see how you can improve on it…
Since you have a job, you can take things a step further. You can use a portion of your income to increase the size of your trading account.
Let’s contribute $5000 to your trading account each year (which is less than $420 a month).
Again, the same rules apply. You make an average of 10% a year with an initial sum of $5,000 and you contribute $5000 to your account each year.
After 20 years, it will be worth… $348,650.
Now, this looks much better.
But, is this the best you can do?
Well, if you’re a Trend Follower, you can do better than 10% a year. Because if you follow the system I teach in The Trend Following Mentorship Program, you can achieve 20% a year.
And let’s see what it can do for you…
Again, the same rules apply. You make an average of 20% a year with an initial sum of $5,000 and you contribute $5000 to your account each year.
After 20 years, it will be worth… $1,311,816.
Now let me ask you…
Will $1.3m give you financial freedom?
Will $1.3m allow you to retire and have the freedom to do the things you love?
Will $1.3m give you a peace of mind knowing you can better provide the needs of your family?
The bottom line is this…
If you have an initial capital of $5,000 and can contribute $5000 (which is less than $420 a month) to your account each year, then you have what it takes to build serious wealth.
But here’s the real kicker…
There is NO LIMIT to how much money you can potentially make.
Instead of 20%, what if you make 25% each year?
Instead of 20 years, what if you compound your returns for 25, 30, or even 40 years?
Instead of $5000, what if you contribute $10,000, $15,000 or even $20,000 to your account each year?
Now the question is…
…How much money do you want to make?
You are hedged against a financial crisis
I’m sure you can agree that…
Whenever shit hits the fan, you’ll see the media talk about the collapse of the stock markets, how bad the economy is, and how many jobs are lost.
But here’s the thing:
Trading is a zero-sum game. This means that for someone to lose, someone has to win. But who are these winners?
You guessed it, Trend Followers.
Below you can see the S&P compared against Dunn Capital (a Trend Following hedge fund) during the worst financial crisis periods.
1987 Black Monday stock crash
The S&P 500 lost 29.6%.
Dunn Capital gained 72.15%.
2002 Dot Com Era
The S&P 500 lost 23.27%.
Dunn Capital gained 52.23%.
2008 Financial Crisis
The S&P lost 38.5%.
Dunn Capital gained 55%.
As you can see…
Trend Following offers you a hedge at the worst possible time in history.
When everything around you looks doom and gloom, you can expect Trend Following to provide stellar returns and give you security during these dark times.
You have a peace of mind
If you’re day-trading, you’re constantly monitoring the markets because a sudden news release, or event could stop you out of your position.
It’s stressful as anything could happen and you have to be a “slave” to the markets.
And unlike day-trading, Trend Following offers you a peace of mind.
The trend is your friend
When the market is trending and a big news event is about to be released, 1 of 3 things usually happens…
- The market continues trending
- The market does a pullback and continues trending
- The trend reverse
More often than not, the market does #1 or #2. This means the market will usually move in your favour.
And since you’re trading the Daily timeframes, your stop loss is large enough to withstand the pullbacks if it occurs.
This gives you a peace of mind knowing the news will not affect your position too much, and more often than not, it continues to trade in your favour.
So forget about NFP, FOMC, GDP, and etc. Those are simply “noise” to your trading and have no long term impact to your bottom-line.
You might wonder:
“But what if the trend reverses?”
Well… then you get stopped out and will lose a fraction of your trading capital.
No biggie because you live to fight another day.
You’ve seen what Trend Following can do for you.
And in the next section, I’m going to teach you a Trend Following strategy to profit in bull markets, bear markets, and even crisis periods.
A Trend Following strategy that works
This is a False Break trading strategy that I teach in The Trend Following Mentorship Program.
The concept behind the False Break strategy is based on 5 things…
- The future market’s direction is likely to follow the long-term trend
- Support & Resistance offers an area of value to trade from
- Traders are likely to short the lows of Support and it gives you an opportunity to profit from their action
- You have no idea how far a market will trend, so you trail your stop loss accordingly
- You trade many markets to increase the odds of capturing a trend
Now, let’s break these down into a trading strategy you can use to profit in bull and bear markets.
Here’s how it works:
If the price is above the 200-day moving average, then wait for it to pullback to Support (trading with the long-term trend).
If the price pullbacks to Support, then wait for it to reject lower price and close higher (trading from an area of value).
If there’s a false breakout at Support (waiting for short traders to get “trapped” before entry), then go long on the next candle open with stop loss 1ATR below the low.
If the price moves in your favour, then look to trail your stop loss using the 50-day moving average (trail your stops as the market moves in your favor).
Trend Following works when trading across a variety of markets because it diversifies your risk and increases the odds of capturing a trend.
An example of an equal weighted market universe:
Forex – Eurusd, Gbpusd, Audusd, Nzdusd, Usdcad, Usdjpy, Eurjpy, Gbpjpy
Indices – S&P500, Nasdaq, Nikkei, Hang Seng, Asx200, DAX, Euro Stoxx 50, FTSE 100
Bonds – 30 Year Treasury, 10 Year Note, 5 Year Note, Bund, Bobl, Schatz, Eurodollar, Euroswiss
Agriculture – Corn, Wheat, Soybean, Soybean Oil, Oats, Rough Rice, Live Cattle, Lumber
Non-agriculture – Gold, Silver, Brent Crude Oil, Gasoline, Natural Gas, Palladium, Platinum, Copper
The nature of Trend Following is to have many small losses and monster winners when you do catch a trend. This will more than compensate for the little losses incurred along the way.
Thus, you want to risk a fraction of your trading capital (like 0.5% on each trade).
Here are some trading examples:
US T-Note Short:
Soybean Oil Short:
And that’s all to it!
With this simple trading strategy, you can now ride massive trends across the markets and grow your wealth steadily over time.
It’s worked for me, it’s worked for my students, and it can work for you.
Of course, there’s much more you can do if you want to improve your trading skill, far more than I can fit into one blog post.
For example, you might have questions like…
How do I draw Support & Resistance correctly?
How do I trail my stop loss properly?
How to scan the markets quickly for trading setups?
How do I trade breakouts and pullbacks?
If you’re interested in finding details, step-by-step answers to these questions, I’ve got good news.
The False Break trading strategy is only one small part of The Trend Following Mentorship Program (The TFMP).
It opens on 24th January, Wednesday, and is perfect for you if you want to trade part-time and make 10%, 20% — or even 40% a year.
So you have the freedom to do the things you love and better provide the needs of your family.
If you want to join The TFMP, then keep a lookout for my next email.
But for now, leave a comment below and say…
“I’ll do whatever it takes to become a consistently profitable trader!”