Trend Following

Portfolio & Strategy

A trading strategy that identifies and trades in the direction of established price trends. Trend-following strategies buy when prices are rising and sell when prices are declining, the opposite of mean reversion. Trend-following is particularly effective during strong bull or bear markets but can suffer in sideways or choppy markets where trends are unclear. Many systematic strategies incorporate trend-following components.

Mentioned in this definition

Bear MarketMean Reversion

More in Portfolio & Strategy

Asset AllocationBenchmarkDiversificationEfficient FrontierGamma Exposure (GEX)HedgeLong PositionMarket RegimesMomentumShort Position

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