How to ‘trend follow' commodities
So the question now that we're asking is how do we trend follow commodities and how do we put in some long volatility trades into this trade to create that nice mix?
Chris Cole kept it super simple with respect to backtesting Commodities Trend Following.
He used a simple 50-day moving average signal, buy or sell, on a broad basket of commodities.
That's it. Just the 50-day moving average for him to backtest this.
All he did was ask, if it's above the 50-day, then we are positioned long, if it's below the 50-day, then we are positioned short.
Now Patrick Ceresna personally hates this strategy. He believes its too much active management.
So what is the solution? Watch the video above to find out.