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Sep 25

Trend Following Update – Exiting Long Crude Oil

We saw further downward momentum in crude oil today, breaking support and triggering our exit which we’ve executed at tonight’s open for a profit of $2,440.00 per contract.

We were a whisker away from getting an exit signal in our short 30yr position too. That’s been a great downtrend since our entry in mid-May but it looks inevitable it will give us an exit very soon. We’ll wait for price to confirm.

Currently we are LONG S&P, NASDAQ, Euro, Pound, Gold, and SHORT 30yr, Dollar.

Long Crude Oil ($CL_F) 7/5 +$2,440.00 per contract

Many find this concept difficult to grasp, but when trend following on a longer-term basis you need to be prepared to give up some gains in order to be sure the trend (at least for your timeframe) is over. Hindsight is a wonderful thing. Not surprisingly I’ve had some flak from traders incredulous that we could ‘give back’ so much profit, pointing at the highs around $110+ saying they would’ve taken it off there, after all, it was overbought, extended, the RSI was over 90 etc etc. Sure you would. What they forget is, when we entered the trade it was up for 7 of the last 8 days, they said we were buying the top, it was overbought, extended, the RSI was over 90 etc etc.

You think you would have taken profit above $110? You wouldn’t have even been in the trade in the first place.

Only a trend follower would’ve taken that trade. If you believe being right is more important than making money, if you are psychologically wired in such a way that you will struggle to let a once-profitable position turn into a losing one, even though it could lead to a far more substantial gain if you did, then trend following is most definitely not for you. You won’t be able to do it. So don’t. But also don’t give a hard time to those of us who can and do.

AlphaCapture

 

Here are our remaining positions by asset class:-

EQUITIES

Long S&P ($ES_F) 9/18 -$600.00 per contract

Long NASDAQ ($NQ_F) 7/18 +$2,730.00 per contract

RATES

Short 30yr ($ZB_F) 5/13 +$9,093.75 per contract

CURRENCIES

Short Dollar ($DX_F) 9/19 -$135.00 per contract

Long Euro ($6E_F) 9/19 +$137.50 per contract

Long Pound ($6B_F) 9/12 +$1,568.75 per contract

COMMODITIES

Long Gold ($GC_F) 8/16 -$3,250.00 per contract

 

 

 

2 comments

  1. Gaurav S

    hey Jon,

    How do I learn about correct exit points in trend following. is there article/blog post/book that you recommend.

    Thanks,
    Gaurav

    1. Jon Boorman

      Any exit should be an invalidation of your entry rationale. Some people use simple MA crossovers, others might buy on 50-day high, sell on 25-day low, you can also use measures of trend definition (momentum, above MA’s etc), trend strength (ADX), another popular one is an ATR stop. I would search for articles on all of those. Many will be found in trend following books too.

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