Trend Following and Tail Risk
Market Insights
By Bruce DeLaurentis
Across the globe and throughout history, merchants and traders have relied on trend following strategies. Some of the earliest
forms of trend following can be traced back to ancient Athenian merchants, and it has been practiced for centuries even before
the advent of the modern stock market (Hasansodzic & Lo, 2010). The earliest trend followers combined basic price information
with superstition, while as time progressed, methods became more advanced with ledgers and charts. Fortunately, for the
purposes of this article, we have at our disposal modern tools and methods to provide the reader with an introductory
understanding of how trend following can manage tail risk.
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