From Trend Following to Positioning Around Institutional Flows
Summary
The article distinguishes following a visible trend from trying to anticipate how large participants may use crowded positioning. It argues that traders should first assess the broader trend, while recognizing that directions can differ across chart time frames: a decline on an hourly chart may be a pullback within an uptrend on a daily chart. Moving averages and visual inspection of price charts are offered as basic ways to judge trend, though the author does not prescribe a systematic rule.
As an illustration, the article discusses a sharp rise in gold near the end of a week in November 2014, when the broader trend had been downward. It also points to weekly CFTC positioning data from early November, noting increases in both noncommercial dollar longs and shorts, with the larger addition on the short side. The author interprets this as evidence of institutional positioning. These examples are anecdotal: the article gives no defined entry, exit, or risk rules, and does not establish that positioning data reliably predicts reversals. Its proposed “borrow the trend” approach remains conceptual and requires further research.
Key ideas
- The author distinguishes following an established trend from anticipating how large market participants may influence price.
- Trend direction can vary across time frames, so traders should consider the broader chart context.
- The article suggests combining price trends with positioning data such as CFTC reports.
- A gold rally and changes in dollar positioning illustrate the argument, but do not validate a repeatable strategy.
- The article does not specify entry, exit, or risk-management rules.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.