Research brief 008

Where does trend following’s right tail come from?

A framework tested across 84 futures contracts separates the shape of the payoff from the market behavior behind it.

The idea worth investigating

Sepp and Lucic connect trend performance to return persistence, drift, filter length and trading costs. Their framework asks what creates large trend gains—and which ingredients generate expected profit.

The full analysis examines the study and the practical question behind it: A framework tested across 84 futures contracts separates the shape of the payoff from the market behavior behind it.

Paper-based analysis; no independent house test has been completed.

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See what changes the investment case.

The headline is the starting point. The subscriber analysis takes you through:

  • The payoff mechanics and the source of expected returns
  • Why signal speed changes the economics
  • The evidence needed to distinguish shape from edge
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