Dr. Elder Trend Followers

[Soverus Khan]

Any followers of Dr. ELders' trend following systems? If so, please comment on results, MM, and any tweaks to indicators.

Always adding to my "swing and position" arsenal.

Especially now while we chop and consolidate through this current market.

[Leth]

Originally Posted by Soverus Khan

Any followers of Dr. ELders' trend following systems? If so, please comment on results, MM, and any tweaks to indicators.

Always adding to my "swing and position" arsenal.

Especially now while we chop and consolidate through this current market.

Like Elder's triple screen system? Ive studied some of them at one time, they seem more like swing trading systems than anything. They stay out of choppy markets. True trend followers trade through the choppy markets to make sure that if a big trend begins...they are on it. if you look at futures data...the average amount of choppy trades going long or short before a big trend is about 7 out of 10. so the average winning trade positions which cover the small choppy losses is around 30%. unlike elder, the majority of trend followers use the old fashion lagging indicators (all indicators lag in my opinion since the future can not be predicted with any certainty) such as moving averages, price channels, and volatilty measurements (atr).
I do like some of elders psychological banter...it falls in line with most trend followers which is....trade with your system and rules. i believe that no matter what system you use, on a non-intraday basis; as long as you use good psychology and money management...you can consistantly make money over the long term.
ok..i just told everybody about my view on intra-day trading....ill probably get some flack on this one.

michael

[Soverus Khan]

I was hoping to get a response from someone who has refined or added an edge to the basic technique along with Elder's indicators.

I tend to see too many conflicting patterns in the system he uses. Maybe if I could turn a blind eye I would be able to test it in an unbiased manner, but the chop in the middle of a range lowers expectancy by far too great a margin.

Maybe someone sees (or doesn't see) something I don't?

Always looking for an additional swing system to test and refine.



edit: By the way Leth, thanks again. That was the third time through and as usual, I picked up a couple of aditional tidbits.

[Leth]

anytime my friend

if anyone in the forum wants to know; here is what i do to endure choppiness as a trend follower...
first..i trade 7 diverse securities at one time (e.g. the seven major currency pairs)....this of course is much easier when you trade end of day.
then...i only use no more than 5% of total equity one any one idea rounded down to the nearest number of contracts. usually, while two or three of those securities are trending and giving me a hefty profit...the other four or five are a bit choppy therefore accruing small losses. and very rarely (once in a great while), you'll get what they call a black swan and all 7 of your securities are trending nicely at the same time. anyways, im always in the market so im trading both the long and the short side. the big trends make up for the small losses. i know exactly how much money im willing to lose on any one idea. Even though im willing to lose 5%, my signals usually take me out at around 2 to 3% on average. It may not seem like your making alot of money with this method by only betting 5%, however, using 10:1 leverage will more than make up for it. Now, if i were trading stocks, i would never bet more than 10% with 2:1 leverage on any one idea (never going short due to the 1 uptick rule); and with options, never more than 2% with 10:1 leverage (long or short). there are so many combinations you can use, but this just happens to be what works for me. its a simple money management system, but difficult to stick too.
i will admit though, if your more interested in taking a living (day trading or swinging) out of the market, this probably is not the most effective way to manage funds unless you already have a million bux in your account. this is more geared toward retirment (albeit early) by reinvesting all profits.
now...in my honest opinion, elder is trying to combine trend following money management with swing trading which seems confusing to me since it defeats the purpose of swing trading. since swinging is a bit more short term than your typical trend following model, the ideal approach would be to search for stocks that are already in a validated trend and bet a little more (increasing your risk when trading possible bounces).
i think alexander elder makes more from his books and workshop sessions than he does in his trading. of course, i cant prove this nor do i care. but his views baffle me sometimes. i also believe he should focus a bit more on money management ideas that coinside with his trading style. also, he seems to use multicollinear oscillators for confirmation of a trade position...which the majority of the time conflict with each other and you can end up missing out on a profitable trade.
anyways...just my 2 cents. of course, just because it doesnt work well for me and my psychology, doesnt mean it won't work well for others.

khan...what conflicting patterns have you noticed?

if any of you are interested in the fundamentals of dr. elder's systems, you can view it here:
http://www.investopedia.com/articles.../03/040903.asp