Trend following

A rules-based approach that raises exposure to assets in sustained uptrends and reduces it in downtrends, following the move rather than predicting the turn.

Also called: trend-following

Trend following leans into strength and steps back from weakness, using the direction of price itself as the signal. It does not try to forecast tops or bottoms; it responds to trends already under way and reduces exposure as they fade.

Its trade-off is well known: it gives up some return around turning points (entering late and exiting late) in exchange for cutting exposure during sustained declines. It reads the same trend dimension the Charter tracks, always alongside other signals rather than on its own.

Related terms

MomentumThe tendency of assets that have performed well (or poorly) recently to keep doing so for a time, a well-documented pattern used by trend and momentum strategies.
Market regimeA persistent market environment (trending, calm, or turbulent) that a rules-based reading identifies from price behaviour, rather than a prediction of what comes next.
Systematic investingInvesting by explicit, pre-defined rules rather than discretion or gut feel, so decisions are repeatable, testable, and free of in-the-moment emotion.