Top Traders Unplugged SI351: The Two Tribes of Trend ft. Richard Brennan
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Jun 7, 2025 Rich and Niels delve into the choppy waters of trend following, tackling the rift between standalone market behavior and portfolio-level strategies. They discuss how tariff policies and institutional positioning are reshaping assumptions. There's a fascinating look at AI’s growing influence in trading and the hidden costs of poor data. The episode also explores the essential nature of robust backtesting and the pressing need for adequate capital to navigate today's challenging market landscape.
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Two Tribes of Trend Following
- Trend following has split into two camps: idiosyncratic trend followers focusing on individual markets, and correlation-conscious followers focusing on portfolio-wide behavior.
- Post-2020, idiosyncratic trend following regained favor due to market fragmentation and deglobalization reducing correlations.
Impact of Turbulent Market Dynamics
- Recent market dynamics, including tariffs and policy shifts, have caused unique whipsaws affecting all trend followers.
- These changes highlight the fragility of legacy assumptions and the need for adaptability in trend following.
Retail Access to Institutional Tools
- Retail traders can now access institutional-grade software and small futures contracts (mini, micro, nano) for diversified trend following.
- This democratization allows serious trend following with less capital and professional tools once reserved for institutions.