Reasons why trend-following is more effective and why trend-following is close to a sacred cup (holy grail)
Ways to grow from daily market activity and ways to grow from the overall market, listed
“To make money in the daily market”
Counter-trend trading
is increasing because it acknowledges losses somewhere
Trend-following
is increasing because it acknowledges profits somewhere
“To make money in the overall market”
Counter-trend trading
will ultimately lose
Trend-following
will keep yielding profits if pursued to the end
Counter-trend trading
Risk: Return tends to become more risk-dominant as you trade
If you incur a loss, stop trading immediately; this allows you to keep increasing
Trend-following
is a method aimed at returns from the start
If you apply that to daily market activity, the only way to profit is to pursue short-term gains
In the overall market
Trend-following profits last in the end
Because it is a trend-following logic that works
Even when thinking about live roulette, you can understand
Trend-following ultimately yields profits
The Holy Grail is established from trend-following
Reasons why counter-trend trading is foolish
Because you can profit every day, you think counter-trend trading is advantageous
Because daily losses can be offset by daily profits, you think it is advantageous
Later, when you persevere to increase, you realize the market becomes trend-dominant and you cannot handle it
Realizing through trial and error that it’s pointless
That’s all
Waste of time, so instead of counter-trending or anti-Martingale
It’s better to think of methods with larger profits
Napping with reverse martingale is big profit, but the latent loss is large