Price Action

How Long a Trend Lasts

The trend is your friend is not advice, it is a claim about persistence: that a move already underway is likelier to continue than to end. That claim is countable, and counting it changes what you do. Most trends are short, a few are enormous, and the average sits in a place almost no trend ever visits — so a method built for the average is built for a market that does not exist. This paper counts run lengths properly, shows why you cannot tell a short run from a long one while you are inside it, and derives from the shape of the distribution why cutting losses short is arithmetic rather than folklore.

Difficulty

Intermediate

Reading time

42 min

Pages

23