BO46: When should You stay Out of a Market?

Top Traders Unplugged

Niels Kaastrup-Larsen

Business, Business News, Investing, News

4.8 • 670 Ratings

🗓️ 30 March 2020

⏱️ 2 minutes

🔗️ Recording | iTunes | RSS

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Summary

We discuss when a Trend Follower would be neither Long nor Short.

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Transcript

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0:00.0	here's one that came to your Twitter account Jerry um Jerry talked about being flat in a
0:12.3	recent episode can you elaborate on when a trend follower would be flat and for how long
0:17.8	so maybe you want to pick up on that Jerry Jerry? Sure. I mean, I think that
0:22.5	when you analyze the markets and do back testing, you'll probably see that one of the better ways
0:31.8	to set up your system would be to have the entry and exit parameters be different and maybe the larger
0:41.1	number would be the entry. So maybe we'll buy the 50-day breakout. We'll go long at the 50-day
0:46.5	breakout and then we'll get out at the 25-day low. Now, that's too short term, so don't do that.
0:53.5	But this will obviously produce some short trades, some flat trades, sorry.
0:59.5	And so I think this is just a result of doing a back test and seeing that, oh, okay, I see the entry should be a little bit higher number than the exit.
1:13.4	That's what the optimal portfolio or trading system might look like. And, you know, sometimes just in eyeballing the charts,
1:21.5	you know, you can say, oh, definitely a long trade. Oh, definitely a short trade. That's not really
1:25.8	moving too much. So even intuitively, it makes
1:28.9	sense before you do the back test that, yeah, it's perfectly fine to be flat. You know, hard to say
1:34.2	how long you would be flat. It's not really an issue or a problem. It's just what most people
1:41.9	have gravitated towards.
1:45.2	Yeah, and that's right.
1:50.5	So essentially, you know, it's the neutral zone that happens when you use price breakout methodology.
1:54.5	There's always going to be a zone where you neither hit the upside,
1:57.5	or the downside stop or breakout. So So yeah, absolutely.

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