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Trend Following

Trend following strategies are an investment strategy that takes advantage of long, medium, or short-term trends in various market settings. A range of different methodologies are used to calculate trends in the market. An important thing to note about trend following strategies is that they do not aim to predict the trends that occur in the market, but rather jump on them as they are occurring. They are more so based on momentum.

Trend Following

Trend following strategies are typically used by Commodity Trading Advisors (CTAs) who implement a variety of quantitative models to determine when a trend has been established in a specific market and subsequently invest based on the trend following signals given from the model.

There are two main approaches to trend following strategies: systematic and discretionary trading. Systematic trading is automated and has distinguished rules that determine the entry and exit points, as well as risk management based on a set of tolerance levels. Discretionary rules, on the other hand, are not as established as systematic trading rules and are more adaptive, requiring more attention and analysis from the trader implementing the strategy.

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Examples of HFR Indices that employ Trend Following strategies are listed below:

    Monthly Performance for Mar 2024 Annualized Performance
Favorites Status Index Name ROR (%) Index Value YTD (%) Last 12M (%) Last 36M (%) Last 60M (%)
HFRI 500 Trend Following Directional Index 3.82 Value blurred out. 9.64 10.97 Value blurred out. Value blurred out.
HFRI 500 Macro: Systematic Directional Index 3.90 Value blurred out. 10.49 10.69 Value blurred out. Value blurred out.
HFRI Trend Following Directional Index 3.71 Value blurred out. 8.13 9.96 Value blurred out. Value blurred out.
HFRX Macro: Systematic Diversified CTA Index 3.51 Value blurred out. 8.81 11.42 Value blurred out. Value blurred out.

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