No one invests without an expectation of future profit. Even professional CTAs invest with the hope that strategies they employ after back testing will be profitable over the long run. More generally, they often believe that the financial markets they trade will continue to have exploitable trends for their foreseeable existence. Thus, trend followers have intelligent assumptions about the future backing up their application of their strategies. They often make the entire trade planning process completely mechanical, from choosing which instruments they trade to timing their entries, sizing their positions, and timing their exits. However, there’s no rule that requires you to time all of your entries with a trend following strategy in order to size your positions and time your exits with such a strategy. You can easily mix a fundamentals based entry with a trend following exit method, for example. For this reason, I broadly define a trend following trading strategy as in the box.
