Trend-following trading exits trades when:
(1) an initial stop-loss is hit, or
(2) when a trailing-stop is hit.
Selling with a trailing-stop is the only time a profit is booked in trend-following.
If you don’t know how a trailing-stop works, you can never experiment with it in your portfolio.
Dr. Michael Burry from “the Big Short” commencement speech:
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