178: Nick Radge – The Blueprint: Create a Simple Trend Following System
Chat With Traders
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The Selection Bias Problem With Absolute Trend Following Strategies Absolute and Relative
An absolute trend following strategy such as the one we're discussing here yes that would be a problem but you would add a ranking mechanism in there and again the ranking would be something pretty simple like the rate of change over the last period of time. It gives us a mechanical way from which to make that selection and from which we can back test accurately so by using that rank of change rate of change to rank those signals we're always going to get the same same back test results okay. Now when you are limiting to 20 positions or a fixed number of positions how does that work? We talked about those two types of trend following strategies absolute and relative that doesn't happen with relative okay because
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