Trend following – NOTHING is perfect.

Diversify.

Just last night I posted:

“Not many people are expecting the market to move up strongly with rising rates, and booming commodity prices. Times like this make trend following look good. I know from bitter experience, it never lasts. Too bad.”END

Today, some huge air was let out of the metal trend. Silver was off nearly 20 percent at one point. Not a stock, but the METAL itself. That is a serious selloff. Major. Ouch. Gold was down nearly 5 percent when I last checked. Also – MAJOR.

Today is a day that makes trend followers vomit. Trend followers, who exist mainly in the managed futures markets, often have 15-20 percent peak to trough drawdowns on their capital.

The guys that have been around the longest, have had 50 percent drawdowns. I know because I have had real capital disappear in this fashion.

Those that have not, are lying or they would be managing all the money in the world.

There is no perfect system – just those that offer better money management strategies including diversification across markets and timeframes.