Trend Following & Momentum

Systematic ways to ride trends and cut losers.

1. What Trend Following Is — Trend following means buying what is rising, selling what is falling and letting clear rules decide when. Here is the core idea, why it can work and what it costs you in return.
2. Time-Series vs. Cross-Sectional Momentum — There are two main kinds of momentum: comparing an asset with its own past, and comparing assets with one another. Here is how each works and how they can give different answers.
3. Moving-Average Trend Systems — Moving averages are the simplest trend filters. Here is how a 200-day rule and a 50/200 crossover performed on SPY since 2007 in our price data, including what they avoided and what they missed.
4. Breakout Systems — Breakout systems buy when price makes a new high over a set period and sell on a new low. Here is how channel breakouts work, the famous traders who used them and what our SPY test showed.
5. Riding Winners, Cutting Losers — The math of trend following depends on small losses and large gains. Here is why cutting losers fast and letting winners run matters, and how trailing stops put that into practice.
6. When Momentum Crashes — Momentum strategies can suffer sudden, severe losses, usually when markets reverse sharply. Here is when momentum has crashed, what happened in 2022 and in our 2026 data, and how traders manage the risk.