Trend Sigma
  straight to the moon  
Three trend traders and their systems.
All are interesting, two are ancient,
and one is ...

Nicolas Darvas

... an Outlier

Jesse Livermore

The outlier trading system for trend riders

There have always been huge trends in the markets. They are best characterized by the one thing they have in common: The typical trader and investor missed them!

Here is our approach to change that. On the surface it is quite simple...

  1. Trade only significant trends. Such a trend has to have an underlying reason with a large potential for change. It must be an outlier -- Trend Sigma. We are trying to find those chances.

  2. Try to get on the trend with a system that keeps losses in check. If a trend is there, it will survive the stop. If it doesn't survive, there is no trend. This part is the art of trading.

  3. If a trade is far enough in the black, disconnect the system and hold the position with a stop near the original entry or switch to a system that allows for larger retracements.

All three parts are important. The first two are easily said but hard to accomplish, but they support each other:

  • The effective trading system

    Significant trends are hard to find. This is also a trial and error game. The many trends that turn out to be short-lived need a good trading system to keep the results of the aborted entry attempts acceptable.

  • The selection of a true trend

    Real trends have smoother runs and are easier to trade.

At its best the trading system yields a profit on the failed entry attempts alone. Every now and then a position gets switched to the longer term holding mode and becomes a substantial trade.

It is possible. Most value oriented investors and also sophisticated traders just don't see it. They love to be experts in fundamentals, economics, or technical analysis. Their expertise is fine, but it is probably also what makes them overlooking the simple thing.

The relatively easy if not only way to make tremendous money are the outliers that seem to have been flying too high from the beginning on.

Can't be true! They are overvalued, overbought, overrated, and/or overhyped. Very soon they will be nothing more than: Game over!

And yet, they keep on rising...

Trading System
"a profitable investment"

Make the right investment now and transform yourself into a successful true trend trader.

T. Silverstone