Overall, this book is of high quality. Another book by Andreas Clenow, "Following the Trend," is also a good read, although I'm not particularly fond of Clenow's writing style. This book discusses the formation and management of investment portfolios.
The concept of trend following was originally developed for futures trading. This is a world apart from the equity markets. Frankly, traditional trend following simply does not work for equities.
page 30
It's generally difficult to witness a multi-year bullish trend in the stock market. Even during a ten-year bull market, there are periods of both rise and fall, creating continuous pressure when maintaining a long position. In other words, stock market trends typically span a few weeks to a few months. Therefore, trend-following strategies for stocks should employ more responsive parameters.
What you need to understand is simply that using a trend following approach to short stocks is a very bad idea. You are not going to make any money doing it. Trend following simply does not work for shorting stocks.
page 45
Utilizing trend-following strategies to short stocks is indeed quite challenging to profit from. This aligns with my experience as well, especially in an era dominated by algorithmic trading where markets often exhibit slow bullish trends and rapid bearish movements, or prolonged bullish phases followed by brief bearish corrections.
When a stock has been going up for a while, the likelihood of it continuing up is greater than for it to turn around. A stock which is moving up faster than other stocks is likely to continue to move up faster than other stocks. This, in essence, is the momentum effect.
page 59