Every strategy in the world has its pros and cons. Long gamma traders bleed in many cases every month only to have big home runs once or twice a year that make their numbers. On the other hand, short gamma traders make money consistently month after month after month, but then have one bad trade that could wipe out all their profits. Neither strategy is better or worse than the other. It has more to do with what the trader is comfortable with. Some guys could never withstand the unbearable pain of watching their positions bleed month after month in the hopes of the big hit. While other traders would never be able to sleep at night with the possibility of a large move wiping them out. It all comes down to what you are comfortable with. The same is true for trend following funds and arb funds and long/short equity funds. The trend following funds can offer several consecutive years of 40% to 80% returns. But then they can have periods with 2 to 4 years when their funds chop and churn. Arb fund can give consistent 10% to 15% returns but one fixed income spread that goes the wrong way and the fund is suddenly down 50% with no way to re-coup the losses. Will trends continue in the future? Of course they will. They have for 500 years. The harder it becomes to stay in the trend, the more reward there will be for those that do. The numbers don't lie. Most trend followers do not buy the highs; they buy the pullbacks or in the case of short positions, sell the bounces. Trend following is not the same as momentum trading and buying breakouts.
And trend followers do not have "RISK" levels. They wait until the trend has been broken. In fact, their risk is quite the opposite. Their risk is not directional risk, but rather non-directional risk. In other words, their returns will suffer the most from chop, not from being wrong about the direction of the trend. And there is no "HOPE" factor. It's actually very mathematical. You stay long or short the trend until the trend has been broken. No emotion, no hope, no hype. There is far more hope from long gamma and short gamma option traders then there is among trend followers. Hell, even the arbitrage players go to sleep every night hoping their deals don't fall through or hoping some statistical anomaly doesn't wipe them out. Usually all it takes is a small 100 basis pt move to completely blow up a highly leveraged arbitrage fund. Trend followers believe, and for good reason, that it is foolish to try to predict the end of a long term trend. Short term trends maybe, but strong, smooth long term trends tend to go much much longer than any reasonable person could possibly guess. That's why they keep going. Price always fails at previous levels, at least temporarily. That's what gets so many people out of good trends. If price never stopped or paused or pulled back, well gee, trend following would be easy and fun for everyone.
And trend followers do not have "RISK" levels. They wait until the trend has been broken. In fact, their risk is quite the opposite. Their risk is not directional risk, but rather non-directional risk. In other words, their returns will suffer the most from chop, not from being wrong about the direction of the trend. And there is no "HOPE" factor. It's actually very mathematical. You stay long or short the trend until the trend has been broken. No emotion, no hope, no hype. There is far more hope from long gamma and short gamma option traders then there is among trend followers. Hell, even the arbitrage players go to sleep every night hoping their deals don't fall through or hoping some statistical anomaly doesn't wipe them out. Usually all it takes is a small 100 basis pt move to completely blow up a highly leveraged arbitrage fund. Trend followers believe, and for good reason, that it is foolish to try to predict the end of a long term trend. Short term trends maybe, but strong, smooth long term trends tend to go much much longer than any reasonable person could possibly guess. That's why they keep going. Price always fails at previous levels, at least temporarily. That's what gets so many people out of good trends. If price never stopped or paused or pulled back, well gee, trend following would be easy and fun for everyone.