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Thanks for Listening to My Interview on The Colloquium Podcast!

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Transcript of Adrian Reid’s Interview On The Colloquium podcast

Establishing a Systematic Approach to Cryptocurrency Trading with Adrian Reid

Speaker 1:

Welcome to The Capital Club podcast. This episode is brought to you by Excelsior Capital, an investment platform focused on democratizing private equity by providing individuals access to direct opportunities. To learn more about the firm and The Capital Club community, visit our website at www.excelsiorgp.com and connect with Brian on LinkedIn.

Brian Adams:

Hello and welcome to the conversation. Today, I have with me, Adrian Reed. Adrian is a full-time trader based in Australia and also the founder and trading coach at Enlightened Stock Trading, which focuses on educating and supporting traders on their journey to profitable, systematic trading.

Brian Adams:

So Adrian, you’re a stock person. If other stock traders are out there, curious, why should they care about trading crypto?

Adrian Reid:

Oh, such a good question. I think the biggest thing is that there is so much correlation in stocks internally within the stock market. People think, oh, I’ve got 10, 20 stocks in my portfolio, I’m diversified, and to an extent, you are. And you can also diversify in stocks with the US market and the Australian market and the Hong Kong market and so on, but you leave something on the table if you’re only a stock person. And if you only ever trade stocks, what happens when the stock market is not working for you? What happens when you’re out of sync or your systems aren’t working? You’re not going to make any money.

Adrian Reid:

The principle of diversification is go as far as you can, get as many diversified income streams or profit sources that you can. And the great thing about the crypto markets is they’re not correlated to stocks. There’s some degree of correlation because there’s risk assets and risk on and risk off assets, but fundamentally they move differently. They have different behavior. They have different cycles. They have different time scales that they move on. So, it’s a really great addition to a portfolio for diversification.

Adrian Reid:

Second thing that makes a really big difference is that the systematic approach in crypto is hugely profitable. So you can take a stock system that might make you 20, 30% return per year, and you can apply and adjust it for the crypto markets and you might make a hundred, 150, 200% return per year.

Adrian Reid:

Now, it has a little more volatility, but what this means is, you can have a small portion of your portfolio allocated to a risky asset like crypto, riskier, and the majority of your portfolio in stocks. And overall, your portfolio does dramatically better than it would if you are only in stocks. So, it just gives you a really great diversification opportunity, which I think, if you’re a conservative stock trader, you’re leaving a lot of money on the table and a lot of value, a lot of future wealth if you don’t do this.

Brian Adams:

I’ve heard crypto described as the venture capital of digital assets or of risk assets. Would you agree with that statement? And if so, how do you allocate accordingly if you’re going to put things on the risk spectrum versus your traditional stock and bond trading that you do?

Adrian Reid:

Look, I probably don’t completely agree with the suggestion that crypto is analogous to venture capital. It is in the risk sense. If you bought and hold and you could never sell or couldn’t sell for several years, the payoff is highly uncertain, just like it is in venture capital. But in crypto, it’s liquid, and you can trade it 24/7. So while it’s volatile and there’s huge payoffs like in venture capital world, it’s liquid. You can get in and get out, whenever you want.

Adrian Reid:

So I would say it’s more like penny stocks than it is like VC, I think in my mind, at least. And benefit of that is that it’s quite a different risk return profile than you would get in say, S&P 500 stocks. You can have an approach in crypto where you follow trends, but those trends are very short and sharp. And so over the space of two or three months, you might get many hundreds of percent return in a cryptocurrency. Whereas in stocks, if you follow trends over several months, you might get 10, 20, 30% return. So it’s a different profile of movement. This is back to the diversification point that I think this makes it so useful to have in your portfolio.

Brian Adams:

I was in artful with my previous statement. I meant from a standpoint of, some of these coins and crypto investments are going to do well, they’ll be longterm, huge return potential, but that’s maybe 10% of that universe. 90% have the ability to go to zero. So do you stick with just Bitcoin and Ethereum and the top five in terms of volume, or how do you think about diversification within crypto given the risk profile that some of these coins run?

Adrian Reid:

Oh, yeah. Good one. Good one. Okay. I understand now. If you were a buy and hold investor, then you’ve got to be really, really careful in crypto because we don’t yet know who the winners are. I think buying Bitcoin and Ethereum, it’s probably a reasonably sure bet at this point, but at the end of the day, there could be another technology, another token, another development that comes and wipes out one or both of those even. We don’t know yet, because we’re still pretty early in the whole life cycle of the industry.

Adrian Reid:

So from a buy and hold perspective, yeah, you’re absolutely right. There’s huge risk that a token that you hold could go to zero. And in fact, I would say, it’s even worse than what you said. You said 90/10, I reckon probably 98% are going to be worthless in the long run, because there’s going to be new and better and use cases we haven’t thought of yet, and they’re the ones that might be the winners.

Adrian Reid:

So from a buy and hold perspective, yeah, really, really risky. And I don’t buy and hold at all. So because I’m an active, systematic trader, I move in and move out of different tokens all the time. So I have many systems, many sets of rules, but let’s take a set of rules that gets me into a token that is trending up and breaking out and moving strongly, stronger than everything else. So I buy that, and the system will tell me when to get out, when it’s no longer moving strongly, it’s no longer trending up. And if that token then goes down to zero over the next three years, I don’t care because I’m out. What I’m doing when I trade systematically is I’m finding the ideal move that I’m looking for in the market, I’m jumping on it. I’m riding it. When that ideal move is finished, I get out and I move on.

Adrian Reid:

So the advantage of that is that we don’t have to worry about in 10 years time, is this token going to exist? Is this one of the winners, if you like? What we know is that this set of rules is profitable. And I find the tokens that are moving according to those rules and I buy it, and then I sell it when the move is done and it’s over.

Adrian Reid:

I think it’s a far safer way to trade because you’re not relying, you’re not betting on a winner. You’re just taking a position based on the move that’s happening in the market right now. Does that distinction make sense?

Brian Adams:

Absolutely, and it leads me to this next question that I wanted to get into, which is systematic trading. Could you describe for us what you mean when you use that term?

Adrian Reid:

Yeah, okay. Sure. So systematic trading is, let’s call it rules-based trading. So I have objective rules that tell me exactly when to get in, exactly how much to buy, and exactly when to get out. So if A and B and C happen, you buy. If D or E happen, you sell.

Adrian Reid:

Now what’s a really simple example? This is not a recommendation, this doesn’t work, it’s just to illustrate the concept of the system. The system might be buy when the coin, the token hits a new 200 day high. So today’s price is the highest price it’s been in the last 200. If that was true, it’s obviously going up. And our hypothesis is that, something that’s going up will continue to go up until something changes, trend following. So we buy if today’s close is the highest close of the last 200 days. And let’s sell if it drops 25% from the highest point that it’s been in our trade.

Adrian Reid:

So what that’ll do is that’ll keep us in the trade as it keeps going up, but if it turns around and goes down 25% at any point in the trade, you’re out. So it’s a set of rules that you can’t argue with. It’s math. It’s just defined on the chart. So a system is just a set of rules like that, where there’s no discretion. You don’t have to make a decision about, is this the game-changing technology? Is this move going to be sustainable? Is this a temporary pump and dump? You don’t have to worry about any of those things. You just find lots of tokens that are adhering to your rules and you trade them. And when the rules tell you to get out, you get out.

Brian Adams:

And are the rules that you use for an S&P stock different than what you would use for crypto?

Adrian Reid:

Yeah. The exact nature of the rules are a little different because stocks and crypto move quite differently. So what works well in an S&P stock is possibly, probably going to be profitable in crypto, but not optimal.

Adrian Reid:

And the way to think about this is, think about the S&P, takes 30 years of history, and think about the trends that it’s had, and then compress that by a factor of about seven, in terms of timescale, and then increase the amplitude of the movements by probably a factor of about five. That’s what the crypto market looks like. It’s much faster. It’s much deeper, and the moves are much bigger. So the rules that will work in S&P therefore probably aren’t ideal for what works in crypto. But the types of rules, the systematic thinking is pretty similar.

Adrian Reid:

Breakouts are helpful. You’re trailing stop-losses where you have an enter point that follows the price up behind the share price and gives it some room to move, but if it turns around and goes down too far, then you get out. That’s helpful. A stop-loss in the market is helpful. A profit target in the market is helpful. Similar rules, but just different settings, because the nature of the beast is different.

Brian Adams:

So let’s transition here into a broader conversation of day trading. We’re recording this in April of 2022, obviously during COVID, the meme stock phenomenon occurred. Robinhood became super popular. Crypto has seen huge volatility, but continues to gain traction with institutional investors at this point. Why is this so hard for folks to follow these type of rules? Historically, it has not ended well for, let’s just call it the retail investor within stocks, why is it so hard for these folks to actually make money at the end of the day?

Adrian Reid:

There’s a couple of things. The first one is most people don’t trade systematically. They might have some systematic elements, but most traders I talk to, at least before they come into my programs, have a huge amount of discretion that they may or may not really have pinpointed and understood. So they’re like, “Oh, this stock’s breaking out. Oh, but I don’t really like that one,” or, “I don’t like that industry,” or this or that. So, they reject the trade. Or the opposite, “Oh, this is a really good stock. I love it. It’s really highly profitable and the industry’s doing great, therefore I’ll go [inaudible 00:10:58].” This is discretion.

Adrian Reid:

And if you have the best set of rules in the world, it can very quickly and easily be ruined with discretion, because discretion largely comes from emotion, and emotion is absolutely not helpful when it comes to financial decisions. So the fear, the greed, the fight or flight responses that we feel because we evolved from cave men, we had to be prepared when we felt stressed, we had to be prepared to fight the tiger or run away, defend ourselves from the other clans, those sorts of things, we’re still feeling those as humans. And when the market threatens us or threatens our wealth, we have the same reaction, and that reaction takes away from our ability to make a sound decision, because it’s all about being ready to fight or to run, not think.

Adrian Reid:

And so I think one of the keys to longterm success is to identify and eliminate sources of discretion in your trading investing. Be truly systematic. Don’t be systematic with a whole bunch of caveats, because that gets the worst of both worlds. And a lot of people try and trade. You mentioned day trading to our timeframes in the second, but a lot of people try and trade by looking at the chart and making subjective decisions. But again, the same emotion comes into it. You just cannot be consistent that way. Most retail traders are systematic, and they don’t remove their emotions.

Adrian Reid:

The way you remove the emotions is by having a set of rules that you have absolute confidence in, and you follow them to the letter. The way you do that is test those rules and evaluate them correctly and fully, and make sure they fit your personality, your profile. So if you’ve got absolute confidence in rules, because you really tested them, you’ve analyzed them, you’ve looked at all of the different what ifs and buts and changed the rules to see if all of those concerns were valid or not, you’ve done thorough testing, then you have confidence to follow the rules.

Adrian Reid:

To the point where the way I trade now, I update my data. I run the back test or the scan to find my trades, I place the trades, and I don’t even think about it. I don’t look at the charts. I don’t do anything. I just follow the rules, but most people don’t do that. So that’s the real challenge.

Brian Adams:

So how much time in any given day are you actively trading or putting on a trade, would you say? You.

Adrian Reid:

15 minutes. And this comes to the timeframe question because most people, when you talk about being a trader, as a retail trader, they assume day trading, and day trading means buying and selling and buying and selling, and watching the markets and seeing what’s happening and trying to make money like a job. In fact, that’s probably the hardest way to make money trading because when you stare at the charts all day and you’re trying to make trading decisions as a day trader, you’ve got huge amounts of negative feedback. You’ve got lots of noise in the data, lots of little movements that at the end of the day mean nothing. And so huge amounts of stress. It’s actually very, very difficult.

Adrian Reid:

My approach is longer term. So I’ll look at daily charts or even weekly charts and apply my rules to those. So once a day, I have to update my data, apply the rules to the stocks or the universe of crypto tokens I trade and see what gave me a signal today. Then I place the trade, and then I don’t have to do anything until tomorrow at the same time.

Adrian Reid:

And so this is the other thing that to really stands out or makes a big difference between traders that succeed and traders that fail. Typically, the more activity you do, the harder it is to win. The more frequently you trade, the harder it is to win because your winners are small. But if you trade a hundred times a day and you’ve got very small winners, it doesn’t change your trading costs. You’ve still got to pay commission. You’ve still got the bid. You’ve still got all of those things. But if you trade once a day and you buy and move, your catch is really big, then it’s far easier to get over the cost of trading. The spread, the commissions and so on.

Brian Adams:

Yeah. Most of man’s problems come from not being able to sit quietly in a room by themselves. So you obviously have other offerings and business lines that you work on during the day. What do you suggest to people to fill up the rest of their time? If this is their full time job, if it takes 15, maybe two exits at 30 minutes, do you have strategies around that to prevent people from going to their base instinct of having to do activity to prove their value?

Adrian Reid:

Yeah, and I really, really struggled with this because when I left the corporate world in 2012, I’d been trading for quite a while to land, and in 2012, I made more money trading 20, 30 minutes a day than I did six days a week, 12, 14 hours day in my day job. I was like, okay, I’m done with this. I’m going to go be a trader full time. And I was sitting at home doing my trading and then I was bored, because I was like, okay, what do I do now? And I started inventing things to do. I was like, oh, I’ll just check this, and I’ll look at that and I’ll read this. And then my trading results, they didn’t improve let’s say because I was distracting with things that actually aren’t necessary.

Adrian Reid:

But what becomes most important is then not trying to fill your time with trading, as in buying and selling, but fill your time with trading more broadly as in, okay, let’s educate myself. Let’s try and build a new strategy. Let’s test how these two strategies work together. Let’s look at this other market and build something that will work for that. Work on the diversification side of things and build the portfolio rather than trading activity. The actual act of trading is a very small part of being a successful trader and probably the smaller it is the better because like you said, the best way to make money is to sit your hands and do nothing. Just wait. And we’ve got to have the patience to get into a trade, let it play out and then get out.

Adrian Reid:

So I spend a lot of time developing systems, the different rule sets, different types of market movements for different markets. I trade Australia, Hong Kong and the US in stocks and I trade crypto, and I’ve got over a dozen systems running altogether in all of those different markets. And that’s a better way to fill your time rather than actually buying and selling.

Brian Adams:

What does your media consumption look like? Financial media?

Adrian Reid:

Zero. Literally zero. I haven’t read a newspaper in 15 years. To be honest, I’ve picked one up a couple of times and looked at it. I say, “Ah, no.”

Brian Adams:

No, thanks.

Adrian Reid:

Boring. A, it’s really, really boring. And B, it doesn’t help my trading because when you’re systematic, the only thing that matters is does this ticker, whether it’s a stock or a crypto or whatever, doesn’t make the rules. The rules are based on price and volume, behavioral in chart. They’re not based on what does the Wall Street Journal say, or what does the Australian Financial Review say or what does Jim Kramer think? So I don’t do any of that.

Adrian Reid:

And actually early on, probably about five years into my trading journey, I eliminated all media. So I don’t watch the normal news or the financial news. I don’t read the financial newspapers and I don’t look at other people’s financial websites or market updates. And as soon as I stopped doing that, my trading got better, and it got better because what I started doing was adhering to the rules because there was no noise. And so I made less mistakes. I didn’t override my system as much because I was worried about what was going on, and it just made trading easier, much less stressful. So yeah, zero is pretty close to the truth.

Speaker 1:

Want to learn more about investing in alternatives? Get started by joining The Capital Club where you’ll get exclusive access to alternative investment opportunities, premium content and education, and an affinity peer to peer network of industry professionals. You can sign up by going to our website at www.excelsiorgp.com.

Brian Adams:

Yeah. I’ve heard the same thing from other folks who have been successful in this space as well. It’s a real testament, I think, to just how oriented the financial media especially is to creating a sense of urgency in people that they have to do something, that they have to be engaged 24/7 to your point about noise. So given all the infrastructure you’ve built, we don’t want to get into brass tax because you have multiple systems that people can go and check them out, but let’s turn the table. What are the things that you see repeatedly that cause people to really run risk? And by risk, I mean permanent loss of capital. What are some things that lead people to blow up, get out of the game? And you’ve got some really cool charts on your website about if you lose 20%, what it takes actually gain back that 20% over time. That time value of money is pernicious when it comes to these type of things. What are some fact patterns that you see over and over again where people repeat these mistakes?

Adrian Reid:

Yeah, good question. The first one is not having rules, not having a set of rules that is actually profitable. And this is the most important because if you don’t know for a fact that your rules have a positive expectation of making money, now over time applied over and over again in the market, if you don’t know that they are going to be profitable, then they’re probably not profitable. If you haven’t tested it and validated to make sure, you’re probably going to lose money in the long run no matter what you do.

Adrian Reid:

So first thing is get rules that work, and test and validate those rules so you have absolute confidence. Because most people will lose confidence as soon as they have a bit of a loss, because humans have been conditioned through school and work employment to go to work, get paid, go to school, get the grades. You do a certain amount of work, you get a certain amount of outcome. Whereas the markets aren’t like that. They don’t pay us because we turned up, they pay us over time and rebuild our wealth because we followed our rules, but they don’t pay us daily. They’ll pay us in somewhat volatile fashion of growing our equity, but also having draw downs that are painful to try and shake us out.

Adrian Reid:

Now there’s nothing personal. The market’s not attacking us, but the market doesn’t pay us in a linear fashion. And so if you don’t have absolute confidence in your rules, as soon as you have a bit of a dip in your account, most people will freak out and start misbehaving. They’ll bend the rules, they’ll break the rules. They’ll start trying to trade more aggressively to make their money back, or they’ll stop taking trades because they’re afraid of losing more. All of these behaviors, inconsistent with making money. So most people don’t have rules. And even if they do have rules, most people don’t follow them consistently because they don’t have enough confidence. Those two things.

Adrian Reid:

The next one is leverage. Now leverage exists not to help you make more money as a retail trader. Leverage exists, my view, to help the brokers who are providing the leverage make more money, because they get the interest charges and they’ll get you to trade bigger so the commissions are bigger and so on. And most retail traders will look at go, “Oh I can get 10 to one,” or I can get 50 to one or a hundred to one in crypto or in Forex or in stocks. Maybe it’s two to one or three to one, depending on where you are and how you trade.

Adrian Reid:

But increasing your leverage drastically increases your risk of blow up. Because at some point, there’s going to be a shock in the market and that shock will take you out. If you are using two to one leverage and your positions dropped 50%, you now have no money left. And most people think well, 50%, well that’s not likely. Say, well really? If you think it’s not likely, you haven’t looked at enough market history. Because if you go back even in stocks, go back 30 years and look at how deep the bull markets in stocks are, and there’s several examples where your account would’ve dropped by more than 50% if you were a buy and holder, or if you didn’t have exit rules, or you didn’t follow your exit rules. So leverage is one of the biggest reasons why people blow up because a small dip in the market can wipe you out.

Adrian Reid:

And then the last one, which I think is probably the most common is inconsistent or no formula to define position sizing. How much do I place on this trade versus that trade? And most people will look at a stock or a crypto token and go, okay, I really believe in this story. I’m going to put more in this. This one, it’s a bit risky, I don’t really understand it, I’ll put less in back. But in reality, the trader doesn’t know anything about those two. They’ve got no crystal ball, no idea whether this one is really better than that one. So they’ve got no basis on which to make that decision. It’s pure emotion. And so the risk, well, the thing that ends up happening is they go big on a trade and that trade goes badly and it has a really detrimental effect on their account.

Adrian Reid:

Whereas if you just size everything consistently and small, nothing can hurt you. But we have this as humans, we’ve got this need to be right. We’ve got this need to get rich and we’ve got this need to do it quickly. So some traders tend to go big because they believe this one is the one that’s going to make them rich, but it’s not. It’s probably going to be the one that’s going to make them broke. So trade lots of things and trade them in very small positions, equally sized or equal risk per trade, and then nothing can wipe you out. Doesn’t matter how often you roll, you’re going to survive.

Adrian Reid:

So those are probably the bigger things. Have a system that’s actually profitable. Have absolute confidence in that system through back testing. Don’t use leverage or don’t use very much and position size equally and consistently. If most traders did those things, that would survive long enough to learn how to build real wealth.

Brian Adams:

I’ve heard this from other managers and folks in the financial services space, just to make sure that you have the ability to stay in the game long enough

Adrian Reid:

Yeah, you’ve got to stay in the game because it takes time to learn. But also, you can make 200% this year, but if you lose a hundred percent next year, guess what? You’ve got no money, and that’s no good. We want to think about five, 10, 15 years time, you want to be really wealthy. You want to have really built something that matters. And if you blow up your account, you’ll never get there. And if you blow up your account and then you figure it out in 10 years time, you’re going to have so much less money than if you didn’t blow up because you weren’t being so aggressive. You weren’t being so reckless or trying to get rich next week, you were focused on the long run of building that capital and growing your base. That’s what really makes real wealth. It’s growing your wealth over time and not losing it. It’s the Warren Buffett thing. Don’t lose money.

Brian Adams:

Yeah. The first two rules for Buffett, don’t lose money and then don’t forget rule one.

Adrian Reid:

Yeah. The twist for traders though is on a trade by trade basis, you have to be willing to lose money. You have to take losses, but the way you apply Buffett’s thinking, don’t lose money and refer to rule number one in trading, is you think about it at an account level. Don’t lose too much money such that you can’t recover and grow on to build wealth.

Adrian Reid:

If you have one trade and it’s a loss, take the first loss, keep it small. When your stock loss gets hit, get out. Don’t hold on hoping, because that loss will just get bigger. And then at an account level, you’ll suffer. I think this is a distinction and a lot of traders go into this trying to prove they’re right. They buy something, it maybe goes a little in their favor, but then it goes down. It’s like, oh, I’ll just hold on until I can get out even. Getting out, trying to get out even is one of the dumbest things you can do as a trader because you are holding through a big dip to get out with no profit. Makes no sense at all, financially, mathematically.

Adrian Reid:

What you want to do is if something goes into a dip, you want to get out so your loss is small, and if it goes in your favor, you hold onto it so you have a big win. And when you have small number of big wins and several small losses, you make money overall. This is a big distinction that would help a lot of people.

Brian Adams:

Are there some parts to the market where you don’t think it’s possible to win as a retail trader? I’m thinking IPOs, specs, some other esoteric product types or certain type of trades that you just have a red line that say this is a no go zone for me and the folks that I work with?

Adrian Reid:

Well, let me put it this way. There’s places in the market where I definitely can’t make money, because I don’t have an edge. Can some other retail trader create an edge? Maybe. I don’t know how to analyze an IPO. Plus I have zero interest in doing that because I hate reading financial statements. I hate doing fundamental analysis, and I don’t really like looking at individual people and go, “Okay, can you lead this company to an amazing future?” I got no interest in that. So for me to try and pick an IPO and invest in it would be useless. I’d make terrible decisions.

Adrian Reid:

Where I know I can make money is I can create a set of rules and I can apply it to a historical data source like the stock market history or the crypto market history, and I can test to see if it made money. And if it made money, after the slippage and commissions in a way that I’m comfortable, then I’ve got an edge, I can make money. I can profit from that. But I don’t do anything that I can’t back test.

Adrian Reid:

So if I can get the historical data and I can apply my rules to it and I can see if it worked, then I’ll consider trading it. But if there’s no data, then I’m out. But it doesn’t mean someone else can’t make money. There’s lots of ways to make money. But most retail traders don’t have the knowledge, don’t have the experience to evaluate some of those more esoteric or complex things. So the retail trading, you’ve got to be really careful to make sure you’ve actually got an edge. And the best way to do that, I believe, is to have a system, apply to markets, to listed markets where there’s data, data history, and test it to make sure it works.

Brian Adams:

Given the fledgling nature of crypto, is there sufficient data in your opinion to put together some of these systems and processes?

Adrian Reid:

Yeah, it’s a good question. Because up until recently, recently as in the last couple of years, there was really not much Data. Now we’ve got five, six years of usable data and the more time progresses, the more data we are getting, because there’s now more and more and more tokens with several years of history. So yes, I believe now there is because I’ve got data sets that go back to say 2015, 2016, and it’s got all of the tokens that were listed at that time. And moving forward in time, there’s more and more tokens, and you can definitely develop systems that work.

Adrian Reid:

And we’ve had now several bull, bear cycles in crypto. So if you’ve got a few years of history, several bull and bear market cycles and enough tokens to test diversification, then yeah, you can develop systems. If you had a brand new market with no history, you can’t really do that. It’s a bit more of you have to know something fundamentally or you have to take a fundamental stance. This is going to change the world and buy and hold it, which some people did and did very, very well. But now you don’t have to take that stance blind. You can actually develop systems and apply them to data and make money just like you do in stocks.

Brian Adams:

So would the NFT market be something that you participate in?

Adrian Reid:

It’s not yet. From my perspective, there’s a few challenges. I’m not saying it’s a bad market, there’s definitely opportunities in there. But if you’re trading Apple stock, it doesn’t matter which share of Apple you buy, they’re all the same, provided they’re the same class of shares. But if you buy an NFT, that’s one thing, and that might have been traded a couple of times. So there’s no real history or depths of market for that. You don’t really know what it’s worth. You’ve got to take a stance that fundamentally this thing has value, and it will appreciate over time.

Adrian Reid:

Whereas when you have a truly liquid market that is on an exchange and tradeable, yeah, NFTs are tradeable, but it’s not like buying Apple stock. It’s not like buying, selling Bitcoin. You can develop a system that trades the movements. Whereas in NFTs, it’s more like, okay, this thing is going to be in demand for the next few years, I’m going to buy it and hold onto it. But you’ve got to have that faith, that belief to do it. It’s much more like the VC example. You might be right, one out of 10, and that won’t be enough to make you money, but you’re going to have to sit through a lot of losses because let’s face it, frankly, most of them are probably worthless.

Brian Adams:

And did you participate in any of the meme stock trading over the last two plus years?

Adrian Reid:

No. Well, I don’t consume financial media, so I was aware of it, I’d have to be blind, frankly, not to be, but I don’t go out and go, oh, they’re pumping this stock, I’m going to get in. Because one of the reasons most retail traders lose money is because they’re not following a set of rules that work. And as soon as you go, oh, I’m going to get in because everyone’s doing that, and this is really pumping. Guess what? You’re not following rules that work. Could you have made money? Yes. If you were nimble enough and if you actually got out of the top before it crashed or whatever, but what I’ve learned about myself is that if I just follow the rules that work, I will make money. But if I deviate from rules, if I start trying to trade on the emotions and my subjective opinion about what the markets are going to do, it’s much harder to make money.

Adrian Reid:

Sometimes I win. Sometimes I lose, and it’s much more volatile, much more inconsistent and much worse from a psychological point of view because you just don’t know. But I have trading rules that I’ve followed, systems that I’ve followed for 10, 15 years, and I know they work. There’s no doubt. I sleep well at night following the rules because yes, if the market dips or if those rules have a dip, I know it will come out of that. I have that absolute conviction. But you lose that ability when you start trying to trade subjectively. So my systems got me into some of those stocks, but it wasn’t because they were meme stocks. It’s just, they happen to generate a signal that matched my system. Does that make sense?

Brian Adams:

So 10, 15 years you’ve been doing this, 20 years, biggest lessons learned for you personally?

Adrian Reid:

Look, the absolute biggest one is have a set of rules that is profitable and build absolute confidence in those rules. Because if you have absolute confidence, you can follow them. You can have the discipline. Most people don’t have discipline because they don’t have absolute conviction and confidence in the process they’re following. So I build a set of rules, I test them, I build absolute confidence in them and follow them. And if I follow the rules, it’ll work because over time it makes money. That’s the biggest thing. Don’t try and guess or predict what’s going to happen in the future, just have a system that works.

Brian Adams:

I need to get one of your tutorials for my crypto portfolio, which just getting crushed lately, and I need some help. So if people are interested in learning more about the systems you have in place, your consulting work, et cetera, what’s the best way for them to get in touch?

Adrian Reid:

Okay. So I’ve set up a page on my website for your listeners. So if you go to EnlightenedStockTrading.com/Colloquium, if you can put a link or something somewhere, so people don’t have to remember how to spell it, then you can get a bunch of articles and tip sheets and a free course on how to get started and start thinking about trading systematically. I think that’s the best way because most people are so used to taking tips and reading and trying to form a subjective opinion. What I want to do is introduce the listeners to the systematic approach, show the value in that and the benefits. And then if they want to progress from there, then they can reach out to me. Obviously once you get on their email subscriber list, there’ll be plenty of opportunities to learn more, but that’s the best place to start.

Adrian Reid:

And if someone really wanted to jump in and say, “Okay, well I need systematic crypto guidance,” I have a course for the crypto success system, which teaches why the systematic approach works in crypto, what type of rules work and then present, what? We’ve got eight different systems now in that program for all different timeframes and markets and so on. So just learn about the systematic approach. Go online to StockTraining.com/colloquial, and you’ll get some resources there that’ll really help.

Brian Adams:

Awesome. Adrian, thank you so much for the time. And it was early morning your time, late my time. I’m glad that we could get this done. I definitely encourage people to reach out because especially within the crypto space, I think a lot of folks could leverage the resources that you’ve created and continue to provide. So thank you for taking the time.

Adrian Reid:

Yeah, my pleasure. Absolutely. Really enjoyed the conversation. Thanks so much for having me.

Speaker 1:

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