Trend followers are investors that take profit from the long-term moves of the traded security. A security is trending when it is headed in one direction, either up or down. The trend following strategy goal is not to forecast the future price of a stock, it aims instead at following an asset movement until an exit signal occurs. Trend following systems can be summarized as follow: Buy or Cover when the prices are moving up, and Short or Sell when prices are going down. Since trends are of different amplitudes, traders must pick major trends and holds positions in the direction of the trend in order to make the most profits. This kind of strategy can be applied to any market and asset; it can be long, short or long/short. Here is a list of some of the popular trend following systems: - Close price crosses over the moving average. The moving average could be simple, double, exponential, weighted.... The trader must also choose the moving average period. The QuantShare formula is: close > sma(close, 20) for the 20 period simple moving average. You can use the 'cross' formula, so the signal will be valid only for the crossing bar: cross(close, sma(close, 20)) - Moving average crosses over another moving average. The two moving average should have different period. The first moving average must have a lower period than the second one: The QuantShare formula is: sma(close, 50) > sma(close, 100) - The first moving average crosses over the second moving average and the second one is above the third moving average. Example: sma(close, 20) > sma(close, 50) && sma(close, 50) > sma(close, 100)  - The close price approach a support or a trend line then goes up. This pattern involves the use of advanced formulas to programmatically detect the trend lines and implement the trend following system. We will explain how to do that in another post. - Channel breakout: Close price crosses over the highest close price over a number of preceding bars. QuantShare example: close >= hhv(close, 30) - The MACD line crosses over the signal line (that is, the MACD histogram crosses over the zero line, because the MACD histogram is the difference between the MACD line and the Signal line). QuantShare example: Macd(14) - MacdSignal(14)  - The Trix indicator crosses over its moving average. QuantShare example: trix(14) > sma(trix(14), 10) These entire trend following systems can be implemented and backtested using daily, weekly, intraday or any other timeframe. A short strategy could be implemented for every entry signal discussed above. Example: for the two moving average crossing. Instead of sma(close, 50) > sma(close, 100), a short strategy could use the following formula: sma(close, 50) < sma(close, 100)
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