Every crisis has created major profits for commodity futures trading. When utilizing a Trend Following strategy a commodity trading advisor makes himself ‘available for oppurtunities”. Most of the time in commodity futures trading nothing happens. Interestingly enough, really nothing has to happen. However in commodity futures trading history virtually all of the crisis of the world have generated LARGE profits for commodity trading advisors. All one has to do is look at last years economic collapse. Many trend following commodity trading advisors did not just make double digit returns but some even made triple digit returns. It all depends on how much risk any particular commodity trading advisor wanted to take on. Some examples of commodity futures trading history are the collapse of LTCM, the implosion of the British pound, the first Gulf War, the natural gas/electricity California debacle,the Asian crisis in 1998, Barings, and even 9/11. There are always these economic storms. So many other strategies and investors were wiped out in these crisises, however trend following commodity trading advisors ( that probably many have never heard of) made fortunes. Why did the the trend following commodity trading advisors make money while the likes of George Soros,Everest capital,III advisors lost hundred of millions of dollars ( some like Soros 2 Billion dollars) in the Asian debacle in 1998. The reason trend following commodity trading advisors made money was they had a plan and many times these trend following commodity trading advisors were all ready on a trend that was starting before the big move. This is how it works. Trend following amounts to making alot of small bets that usually do not work and once in a while commodity trading advisors stumble on to some major trends and make a fortune.
History is full of these examples. When the next crisis will come is anyones guess…but what is more than certain commodity trading advisors who trend follow will catch the big moves.
The holy grail of trend following:
Patience and Discipline- Make yourself available for the next major move.