Focus on your own trading and the trends you are looking to profit from

We know that markets can move from a trending to non-trending state, or vice versa, at any time. But as Ed Seykota says, there is no such thing as 'the' trend. 

Also, different traders will have different interpretations about the type of trend they are looking for - one person's long-term trend may be another person's short-term trend.

The important point here is that how anyone else defines a trend is irrelevant to your own trading and performance.

Your job is to create a set of parameters on your chosen timeframe which will talk to you and say whether a market is trending or not, or whether a trend has run its course and an exit signal is generated.

In themselves, there are no magical qualities in the entry and exit parameters you use. They are simply a mechanism allowing you the interact with your chosen market at the appropriate price levels, in an attempt to profit from a price move which meets your definition of a trend. Nothing more, nothing less.

From there, you simply need to ensure you take action on the entry and exit signals you are given.

A good example of this occurred in Spring 2009. Traders who were trading longer-term parameters than me were still sitting in short positions and riding downtrends. My own method, however, started giving me lots of long setups and entries in stocks during late March and early April.

This is not to say that my method is any better than any other. And on the other side of the coin, due to the 'shorter-term' nature of my own method, I can be more prone to whipsawing. 

The important point here is that I was obliged to listen to, and act upon, what my own method was telling me. What other traders were doing was irrelevant to my own trading and performance. If I didn't, what was the point of spending time and effort developing my own method?

By it's very nature, trend following lends itself to being either a fully systematic, or a rules-based discretionary approach. Therefore, the parameters and criteria you assign to determine whether a valid entry or exit signal is generated are 'hard and fast', and inflexible. 

To some, that will seem a weakness - plenty of people like to think they can use their own intuition, and think they are being 'smart' by overriding their rules at some point. 

Alternatively, they may be swayed by other traders and their opinions or predictions about what may or may not happen. These people may well be looking at the market(s) through a different lens, in that their own definitions of the price moves they are looking to capitalise from may well be different to your own. 

Remember that those trend followers who have traded successfully over a sustained period of time have learnt to faithfully follow their rules:

"I still go through periods of thinking I can outperform my own system, but such excursions are often self-correcting through the process of losing money." - Ed Seykota

This is why you often hear trend followers talk about focusing on their process rather than the outcome, and ensuring they adhere to their rules, rather than worrying about the day-to-day fluctuations in their equity curve.

What is an unarguable fact is that, whenever a significant price move occurs, trend followers who trade that particular market will have been given an entry and exit signal at some point within that price move. 

To demonstrate this, take a look at the performance history of the successful trend followers and CTA's. While the actual performance results may differ (due to their chosen timeframe and entry / exit parameters and risk controls), you can often spot a general 'trend' and identify the periods of profitability where big price moves have occurred.