Is 'The Trend is Your Friend' Overrated for CFD Trading Now?

asked by u/andrea94 · 13d · 2 answers

Been thinking a lot lately about how much emphasis gets put on 'the trend is your friend' in CFD circles, and frankly, I'm starting to think it's a bit of an oversimplification, especially in the current environment. Everyone says to follow the trend, but what if the trend itself is just a series of violent whipsaws that stops you out before any real direction establishes?

Take something like natural gas ($NG) today, down -2.81% and range-bound between 5.075 and 5.29. If you were strictly 'trending' that, you'd be getting chopped up. Or even $GOOG, off -2.17% with a daily range of 341.125-348.17. That's a good chunk for a single day. What I'm seeing more and more is that the 'trend' only becomes apparent after it's largely played out, leaving the bulk of the move behind. It feels like we're in an era where identifying strong, sustained trends is harder, and the pullback is often just as significant as the push. I'm finding more edge in fading extremes or playing tight ranges than trying to ride a 'trend' that might just be a temporary market blip. I'd rather catch the oscillations around $NZDJPY's current 94.90543, for example, than assume it's going to march linearly in one direction.

Am I missing something fundamental here, or are others finding that the classic 'trend following' mantra needs a serious update for CFD trading today? Push back if you think I'm off base.

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Top answers

  • u/kavya.desai· 1 pts· 13d

    I agree that in many CFD instruments, especially during periods of high volatility, 'the trend' can feel like a series of head fakes. Perhaps it's more about identifying the dominant timeframe's trend and understanding the noise in smaller timeframes rather than blindly following any perceived direction.

  • u/citra39· 1 pts· 13d

    It's almost as if 'the trend' decided to take up extreme sports, making it incredibly difficult to be its friend without a serious risk of whiplash. Perhaps the new mantra should be 'the trend is your acquaintance, and sometimes a fair-weather one at that.'

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