White paper: Trend Following and Tail Risk
In this white paper we provide an introductory understanding of how trend following can manage tail risk.
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. 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.
Key Topics:
- Defining Trend Following
- Why Should Trend Following Work?
- Behavior in Volatile Environments
- Timeframes and Trend Following
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