Why Trend Following Works | Systematic Investor | Ep.391

Description

What if trends in financial markets are not anomalies, but the natural consequence of how markets function? In this episode, Niels and Richard explore the structural foundations of trend following. Drawing on research spanning 68 futures markets across four decades, Richard explains why markets exhibit persistent trends, fat-tailed returns, and volatility clustering. The discussion moves from oil market shocks to deeper questions about feedback loops, participant behavior, and regime shifts in financial markets. The conclusion is striking: trend following does not rely on fragile patterns. It aligns with fundamental structural properties embedded in how markets actually evolve. #toptraders #investing #trendfollowing Episode TimeStamps: 00:00 - Introduction to the Systematic Investor Series 02:08 - Oil market shock and the structural setup behind the spike 06:10 - Why calm markets can hide explosive potential 11:47 - How oil shocks ripple through inflation and the global economy 15:29 - Why trend followers focus on process, not predictions 22:15 - A changing regime that may favor trend following 24:43 - The research behind The Fractals of Finance 25:25 - Market memory and the meaning of the Hurst exponent 31:22 - Why trends are structural rather than random patterns 36:25 - Fat tails and why extreme market moves are far more common than expected 41:12 - Divergent vs convergent market participants 45:29 - The hidden risks in traditional volatility targeting 49:33 - Phase transitions and regime shifts in markets 55:33 - Why trend following aligns with market structure 59:02 - Oil shocks, inflation risks, and the next potential market regime Full episode can be found here: https://toptradsersunplugged.com/si391 Subscribe to our podcast: iTunes: https://itunes.apple.com/us/podcast/top-traders-unplugged-niels-kaastrup-larsen-engaging/id888420325?mt=2 Spotify: https://open.spotify.com/show/2OnOvLbIV3AttbFLxuoaBW Follow us on social media: TWITTER: https://twitter.com/TopTradersLive (@TopTradersLive) FACEBOOK: https