Trend following / trend overlay

The standard implementation compares price to a slow signal like the 10-month or 12-month average and steps aside when price is below it. Across a century of data it reliably softens the worst crashes — and gives some return back through whipsaws, exiting and re-entering on false alarms.

Inside NISA the math worsens: selling frees your quota only the following year, so a trend exit can lock you out of re-entering tax-free at the bottom. That quota friction is why our verdict keeps trend following as a drawdown tool at best, not a return enhancer.