Guide · 30 plays
Trend following: what it predicts, and when it works
Prices that have been rising tend to keep rising for a while, and falls tend to keep falling. A trend play doesn't try to call tops or bottoms: it holds while price stays on the right side of an average or trend line and steps aside when it breaks.
Why it might work
News spreads slowly, investors anchor to old prices and then chase, and big holders build and unwind positions over months. Each of these makes moves last longer than a random walk would.
When it fails
In choppy, sideways markets a trend rule is whipsawed: it buys after a rise, sells after a dip and pays a little each time. It also gives back part of every move, because it waits for the turn to show before acting, and it can't dodge a crash that happens in a day or two.
What the research says
- Brock, Lakonishok and LeBaron (1992) found simple moving-average and range-break rules had real predictive power on the Dow from 1897 to 1986.
- Sullivan, Timmermann and White (1999) showed the best of those rules stopped beating the market after 1986 once data-snooping was accounted for: rules that look best in hindsight often fade.
- Meb Faber (2007) showed a 10-month moving average kept most of the market's return with much smaller drawdowns across asset classes.
- Hurst, Ooi and Pedersen (2017) found trend following worked across a century of futures and bond and currency markets, with its best years in the worst bear markets.
Every trend following play, ranked
Share of stocks where each play did better than holding, since 2005 or as long as the stock has traded, after costs. Click a column to sort.Sort with the menu above the list.
| Play | Beat holding, risk-adjusted | Cut the worst fall | Beat holding on return | Calls right | Switches / yr | Time in | In now |
|---|---|---|---|---|---|---|---|
| 10-Month SMAMeb Faber | 33% | 84% | 25% | 30% | 1.8 | 65% | 195/377 |
| Granville 200-DayJoseph E. Granville | 29% | 87% | 20% | 15% | 5.4 | 59% | 186/377 |
| Stage AnalysisStan Weinstein | 28% | 89% | 20% | 23% | 3.5 | 56% | 173/377 |
| Golden CrossMarket tradition | 28% | 81% | 25% | 36% | 1.4 | 66% | 232/377 |
| 200-Day RulePaul Tudor Jones | 27% | 83% | 21% | 14% | 7.9 | 66% | 214/377 |
| AroonTushar S. Chande | 25% | 83% | 22% | 37% | 10.0 | 57% | 149/377 |
| Ichimoku CloudGoichi Hosoda | 25% | 86% | 19% | 28% | 5.5 | 58% | 138/377 |
| MACD Zero LineGerald Appel | 25% | 83% | 19% | 29% | 8.6 | 59% | 150/377 |
| Seykota 15/150Ed Seykota | 24% | 78% | 19% | 25% | 1.4 | 70% | 254/377 |
| Bull Market Support BandBenjamin Cowen | 24% | 82% | 20% | 26% | 5.1 | 63% | 183/377 |
| DP Trend ModelCarl Swenlin & Erin Swenlin | 23% | 85% | 20% | 29% | 4.7 | 62% | 159/377 |
| Stage 2 + Mansfield RSStan Weinstein | 23% | 90% | 17% | 26% | 4.2 | 45% | 126/377 |
| Zero Lag EC CrossJohn F. Ehlers & Ric Way | 22% | 82% | 19% | 30% | 7.6 | 58% | 152/377 |
| MAMA/FAMA CrossJohn F. Ehlers | 22% | 84% | 19% | 31% | 10.5 | 58% | 160/377 |
| Hull Moving AverageAlan Hull | 20% | 85% | 19% | 36% | 6.5 | 57% | 123/377 |
| Guppy Multiple MAsDaryl Guppy | 20% | 87% | 16% | 28% | 6.2 | 55% | 133/377 |
| Ripster EMA CloudRipster | 19% | 77% | 16% | 22% | 17.2 | 60% | 168/377 |
| TEMA CrossoverPatrick G. Mulloy | 17% | 83% | 16% | 36% | 11.9 | 50% | 188/377 |
| Williams AlligatorBill Williams | 17% | 88% | 18% | 41% | 14.2 | 48% | 97/377 |
| SupertrendOlivier Seban | 17% | 82% | 17% | 36% | 7.2 | 57% | 149/377 |
| Vortex IndicatorEtienne Botes & Douglas Siepman | 17% | 79% | 16% | 35% | 25.9 | 56% | 154/377 |
| Trend TemplateMark Minervini | 16% | 93% | 14% | 18% | 7.2 | 27% | 78/377 |
| PB EMABitcoin Playboy | 14% | 71% | 14% | 26% | 28.9 | 57% | 185/377 |
| Zweig 4% ModelMartin Zweig | 14% | 82% | 15% | 35% | 10.5 | 59% | 150/377 |
| Parabolic SARJ. Welles Wilder Jr. | 14% | 80% | 15% | 38% | 22.3 | 54% | 182/377 |
| Schaff Trend CycleDoug Schaff | 13% | 82% | 14% | 37% | 11.1 | 53% | 188/377 |
| ADX TrendJ. Welles Wilder Jr. | 12% | 93% | 13% | 33% | 7.2 | 28% | 39/377 |
| Kaufman Adaptive MAPerry J. Kaufman | 11% | 66% | 12% | 24% | 36.2 | 55% | 177/377 |
| Elder Triple ScreenAlexander Elder | 9% | 93% | 10% | 34% | 9.5 | 27% | 69/377 |
| Holy GrailLinda Bradford Raschke & Larry Connors | 5% | 100% | 10% | 42% | 2.0 | 3% | 4/377 |
When it worked
The family did best against holding in the 2008 crash (+23% median gap) and worst in the 2020–21 rally (−27%). Median gap in return against holding (per year over stretches longer than 18 months; crypto excluded).
| 2008 crash | Recovery 2009–19 | COVID drop | 2020–21 rally | 2022 bear | Since Oct 2022 | |
|---|---|---|---|---|---|---|
| Trend following | +23% | −10% | +19% | −27% | +8% | −10% |
Where it worked
By kind of stock: how often the family's plays beat holding on risk-adjusted return, and the median Sharpe ratio gap.
| Group | Beat holding, risk-adjusted | Sharpe gap |
|---|---|---|
| Real estate | 30% | -0.09 |
| Financials | 28% | -0.09 |
| Software & devices | 23% | -0.19 |
| Industrials & rentals | 23% | -0.15 |
| Energy & power | 21% | -0.15 |
| Industrials & materials | 20% | -0.19 |
| Indexes & ETFs | 19% | -0.13 |
| Healthcare | 18% | -0.19 |
| Media & telecom | 17% | -0.15 |
| Semiconductors | 16% | -0.21 |
| Consumer & retail | 16% | -0.23 |
| Metals & mining | 13% | -0.21 |
| Big tech | 12% | -0.13 |
| Sectors | 9% | -0.21 |
How traders use it
- Treat it as insurance: it costs a little most years and pays out in the rare bad ones, so judge it over a full cycle.
- Slower rules (weekly or monthly) whipsaw less but react later. Faster ones react sooner and trade more.
- Many traders use a slow trend rule only to decide whether to be in the market at all.
Right now
The trend following plays hold 40% of the stock-and-play combinations Be The Puck tracks (4,555 of 11,310) as of the Oct 13, 2026 close.
See which stocks each family holds · The plays and their rules
This analysis does not constitute trading advice. Please meet with an advisor or independently review sources before making any decision.