If you have been running a trend-following system over the past couple of years and found the results disappointing, it is worth knowing that you are in very good company. The largest and most established managed-futures programs in the world have faced the same headwinds. This is not a story about poor execution or a broken system. It is a story about the market environment itself, and understanding it can help you stay disciplined through a difficult stretch.
This post looks at what the data shows, why the environment has been so unfriendly to trend, and what it means for how you approach your trading from here.
What the scoreboard shows
The major public benchmarks that track professional trend-following performance tell a clear story about 2025. These indexes aggregate the returns of the largest CTA programs, so they are a fair proxy for how the strategy performed at the institutional level:
- SG Trend Index: +2.39% for the full year
- Barclay BTOP50 Index: +2.81%
- TTU Trend Following Index: +1.78%
Those are positive numbers, but they sit well below the mid-single-digit returns most traders expect from the strategy over a typical year, and the path to get there was unusually rough. In April 2025 alone, the SG Trend Index fell roughly 4.9%, dragging its year-to-date return to approximately negative 9.3% before a second-half recovery clawed most of the loss back. The result was a flat-to-modestly-positive year earned through a volatile, draining ride.
So if your own results over the same period felt like hard work for little reward, the benchmark data confirms you were trading into a genuine headwind rather than making mistakes.
Why the environment has been so difficult
Trend following depends on a few conditions to perform well. Over the past two years, the market has worked against nearly all of them.
Moves have not been lasting long enough. A typical trend system uses a lookback window of anywhere from 60 to 200 days. It is designed to capture moves that develop over weeks and months. But 2025 was dominated by headline-driven reversals — tariff announcements, central-bank guidance shifts, and geopolitical surprises that arrived and faded quickly. Systems would establish positions in line with an emerging trend, only to be stopped out a short time later when the news flipped. The cumulative effect of these whipsaws is corrosive to returns.
The macro markets have been poorly behaved. Interest-rate markets have historically been the highest-quality contributor to a diversified trend portfolio, offering long and relatively clean directional moves. Over the past two years, however, central banks — the Federal Reserve, the European Central Bank, and the Bank of Japan among them — have repeatedly hedged their guidance and reacted to each monthly data release. The result has been a series of breakouts in bonds and currencies that reversed fully within the typical trend window. That pattern of breakout followed by reversal is close to a worst case for a trend system.
Diversification has quietly broken down. A core assumption behind any multi-market trend portfolio is that the markets you trade behave independently enough to spread your risk. But when nearly everything collapses onto a single “risk-on / risk-off” axis, that assumption fails. You may believe you hold fifty separate positions when, in practice, you hold one position expressed fifty different ways. When that single underlying theme reverses, the whole book moves together.
What it means for how you trade
None of this is an argument for abandoning trend following. It remains one of the most robust, well-documented strategies in systematic trading, and difficult stretches are part of its long-run profile. The practical question is how to navigate the current environment without making decisions you will regret.
Recognize the regime for what it is. The single most useful thing you can do is separate strategy quality from environment quality. A well-built trend system in a hostile regime will underperform, and that is expected behavior, not evidence that something is broken. Knowing the difference helps you avoid the common and costly mistake of abandoning a sound process at precisely the wrong moment.
Resist the urge to over-optimize. When results disappoint, the temptation is to keep adjusting parameters — shortening the lookback, tightening the stops, adding filters — until the system would have performed well over the recent past. This almost always produces a system fitted to conditions that will not repeat. The discipline to leave a sound system largely alone through a drawdown is one of the hardest and most valuable skills in systematic trading.
Mind your risk and your staying power. Drawdowns end, but only for traders who are still in the game when they do. Position sizing that lets you survive an extended flat-to-negative stretch matters far more than any signal refinement. The goal during a difficult regime is to preserve capital and composure so that you are fully invested when conditions turn.
Remember that performance mean-reverts. Extended periods of trend underperformance have historically been followed by strong recoveries, and early 2026 has already offered encouraging signs of a turn. Traders who exit after a rough stretch frequently do so just before the rebound. The historical record strongly favors patience over capitulation.
The bottom line
Trend following has been through a genuinely difficult environment, and the largest programs in the industry have felt it as acutely as any individual trader. A market dominated by headline-driven reversals, central-bank flip-flopping, and rising correlation across asset classes has been close to the worst possible backdrop for a strategy that depends on sustained, independent directional moves.
If your system has struggled, the most likely explanation is the regime, not your process. The traders who come through stretches like this in the best shape are the ones who understand what is happening, resist the urge to tinker, manage risk so they can stay the course, and trust that conditions will eventually turn — as they always have before.
This article is for informational and educational purposes only. It does not constitute investment advice or a recommendation to buy or sell any security or trading strategy. Past performance is not indicative of future results.