How Trend Following Works: The Mechanics Behind the Strategy
Higher highs and higher lows sounds simple. The mechanics of actually trading it — entries, stops, trailing, and exits — are where the work lives.
Learning Path Stage 6: Find Your Strategy
Learning Level 2: Understanding
Trend following sounds intuitive until you try to execute it. When exactly do you enter? Where does your stop go? How do you handle the inevitable pullbacks without getting shaken out? When do you know the trend is actually over?
This article covers the mechanical answers to those questions: how to define a trend using structure (higher highs and higher lows), the three main entry approaches (breakout, pullback, and indicator-confirmed), how trailing stops work in practice, and how trend following's expectancy model differs from fixed-target strategies.
The mechanics are what separate 'buy in an uptrend' from an actual tradeable system.
FAQ's
Q: Do trend followers use take-profit targets or trailing stops?
Q:
Q: What's the difference between trend following and momentum trading?
Table of Contents
About Me
Krista Weber
After years as a VP of UX and a career in edtech, I retired early.
A few months later, I got bored enough to start learning trading.
What I didn’t expect was how much of UX thinking still applied. Just in a much more immediate and unforgiving environment.
This site is my attempt to learn it properly, and make the process clearer for anyone trying to do the same.
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