Trend Signals try to make a distinction between changes in the direction of the long-term trend and short-term price fluctuations. Even when the long-term trend changes direction only 2 or 3 times during a decade, nobody knows in advance when this will happen.

Years later, it is very easy to see when the long-term trend changed direction. Trend signals are designed to give a reliable indication as soon as possible after a change in the direction of the trend. There is a trade-off here between how soon and how reliable.

When the trend signal comes very late after the actual change in the trend direction, you as an investor will miss a lot of the potential gains. Therefore, the reliability of a trend signal is not 100% since we want signals as early as possible. Thus trend signals may sometimes give indications for a change that later appear to be false.

To cope with that, trend investors review the market trend signals on a regular basis. You adapt or correct your positions quickly when the trend is changing direction or when you have acted before on a false signal. Your long-term gains will be much larger than the occasional cost of acting upon a false signal.