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Trend Following or Market Trend Manipulation?

Politics / Market Manipulation Jul 08, 2009 - 03:26 AM GMT

By: Andrew_Abraham

Politics

Trend following commodity futures trading as well as stock traders were villified last year as speculators. Even George Soros came out with the statement that the rampant rise of crude oil was due to speculators. Trend following commodity trading advisors are speculators but they do not manipulate trends. On of the main principles of trend following is that there is a trend to follow. Commodity traders surely can not start trends. Commodity traders are accused of throwing markets in disorder. As an example in Bloomberg news yesterday it was reported that The Commodity Futures Trading Commission ( CFTC) will announce plans to introduce curbs on speculation of commodities including energy.


So much for free markets? So much for going short as in last years stock market crash. Short sellers were simply following the trend. The trend for financial stocks was down, commodity trading advisors or stock traders shorted the stock indexes. They did not start the trend. Commodity futures traders did not make loans or grant mortgages unwisely. The banks and the credit card companys did.

We all remember the Hunt brothers who tried to corner the silver market. That was manipulation. How many commodity futures traders try to corner a market? How about none. They do not need to in order to be successful. Markets go up and down based on fears, panics, demands and supply. The simple fact is trend followers do not start trends or panics they simply react to them and make themselves available for them. They can go long or short. No opinion..just trend follow.

It is almost easy to blame someone or make someone the scape goat. Come on..really did commodity futures trading or stock index trading cause last years crash. But traders (short sellers) were made the scape goat and singled out as speculators that caused the stock market down turn. Did I forget something that anyone could have sold a contract on one of the regulated exchanges or a profunds bear fund. That is a free market. The blame game is a loser who had the same option as a winning trend follower who does not want to take responsibility for their losses.

How can Washington control a free market?

Andrew Abraham
www.myinvestorsplace.com

Andrew Abraham has been in the financial arena since 1990. He is a commodity trading ddvisor and co manager of a Commodity Pool. Since 1993 Andrew has been a proponent of quantitative mechanical trading programs. Andrew's major concern is not only total return on investment but rather the amount of risk that one would have to tolerate in order to achieve returns He focuses on developing quant models that encompass strict risk adherence and correlation. He has been a speaker at conferences as well as an author of numerous articles. Andrew has spent years researching ideas that have the potential to outperform indices as well as maintain fewer draw downs.

Visit Angus Jackson Partners (http://www.angusjacksonpartners.com) Contact: A.Abraham@AngusJackson.com (mailto:A.Abraham@AngusJackson.com)

© 2009 Copyright Andrew Abraham - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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