Trading Regime Analysis

When you have been involved in trading or investing in the markets for a while you eventually come to the realisation that although most trading methods do actually work, they actually only work some of the time. Trend following works when markets are trending but does not work when markets are range trading. Conversely, range trading techniques work brilliantly when the market is in a range but are hopeless when there is a strong trend. Wise investors know that there is no holy grail to successful investing or trading but if you can identify the periods when trending behaviour or range trading behaviour is most likely to occur then your chances of long term success in the markets are increased dramatically. Trading Regime Analysis is a groundbreaking work on how markets behave and how to profit from this behaviour. The book describes that it is the human nature of markets which explains why this behaviour exists and whether one believes in fundamental or technical market analysis, the ebb and flow of volatility is the one undeniable truth that exists in financial and commodity markets. It is the up and down cycles of volatility that is the manifestation of human psychology as the ultimate driver of markets and volatility, like human behaviour, has a distinct cycle to it. Trading Regime Analysis describes in detail the methods that can be used to identify whether a market is about to start trending or about to enter a period of range trading and how these methods can be used over all time frames from intra-day to the very long term. The author introduces his own proprietary regime indicators, including the Trading Regime Indicator (TRI) and the Trend Following Performance Indicator (TFPI). These indicators allow the trader or analyst to identify clearly whether the market is likely to trend or if it is likely to trade in a narrow range. Trading Regime Analysis explains how best to use these indicators not just for volatility breakout trades but also for anticipating trend exhaustion and range trading. Gunn also highlights important applications for this analysis for institutional investors, asset allocators, hedge fund managers and retail investors.  Â