Trend & Long

Macro Perspectives: Tue 27 Jul 2021

Thus far 2021 has been a great year for systematic trend following traders.

Many of the markets traded by CTAs have also reached new highs recently. Equities are on a one-way street higher. Natural gas and coffee look bullish, as do iron ore, copper, and crude oil. All onward and upward.

Unsurprisingly, many people think market all-time highs can only mean one thing: expensive. Which in turn means that one should sell (rather than keep or add to the position).

Nothing could be further from the truth, but it’s very easy to have that viewpoint. It’s like an itch we want to scratch. An almost irresistible urge to exit profitable positions although the longer-term trends are still in play.

Avoid that mousetrap. You surely don’t want to miss out on these great uptrends only because you subjectively believe the markets to be too expensive. Even if markets are in a bubble, your position should be long until your exit is hit.

That’s all there is. That’s the rule.

Nobody knows what the markets will do and where prices will be tomorrow, next week, next month, or next year.