Trend Following is all about managing risk. As Trend Following is not about prediction, we do not know when we enter a trade whether it will be profitable or not, so we take calculated risk and put a position small enough not to hurt us bad in case the trade is a loss trade.This small risk taken over a lot of trades ends up in the right side of the balance sheet, which makes Trend Following a good strategy.
Risk Management strategy is called Position Sizing or Money Management (MM).
We have made our business managing risk.
We are comfortable with risk and we get our reward from risk.”
We are comfortable with risk and we get our reward from risk.”