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FIR 145: How To Systematically Grow Your Portfolio !!
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Transcript of Adrian Reid’s Interview On The Financial Investing Radio podcast
FIR 145: How To Systematically Grow Your Portfolio !!
Grant Larsen:
Welcome, everybody. In this episode, we learn the secrets of systematic growth for your portfolio.
Speaker 2:
Welcome to ClickAI Radio, where you learn the secrets to transforming your small to medium business. Grant has been helping businesses transform using technology for over 30 years.
Speaker 2:
Advanced technologies, like artificial intelligence, have been available only to large companies and advanced technical teams. Grant will discuss how you can use to leverage AI and other technologies to grow your small to medium business. As a gift, Grant is offering his ebook, AI for Sales Growth, at clickairadio.com. Now, here’s your host and BizTech geek, Grant Larsen.
Grant Larsen:
Okay, everybody. Welcome to another episode of Financial Investing Radio. I’m excited to have in the house with me today, Mr. Adrian Reid, coming all the way from Australia. Which is fascinating to me that I have this opportunity to get connected with this professional trader on the other side of the planet, literally from where I’m sitting at the moment. First of all, Adrian, welcome.
Adrian Reid:
I’m thrilled to be here. Thanks so much for having me on the call`. And isn’t this just a fantastic part of the world? We can communicate from the other side of the world. We can help traders from all over the world. And there’s just really no boundaries now, is there?
Grant Larsen:
There really isn’t. I love that. And what I love is your willingness to get on and share tidbits and insights, to help the everyday trader, who’s really trying to figure out, “How can I grow my portfolio in a way that’s going to manage risk?” And I know you’ve got some excellent insights on that. But before we get into that, would you mind stepping back and thinking what’s your origin? How did you get into trading? What even brought you to that part of the world at this point?
Adrian Reid:
Yeah, absolutely. Sure. I’ve been trading for about 20 years or so now, plus or minus let’s say six months. And what first got me interested in it was actually well before that. Well before that, my family had a board game in our holiday house called the Stock Market Game. And I have these amazing, fascinating memories of playing the Stock Market Game and becoming a paper billionaire by going around the board and buying lows and selling highs and collecting dividends and stock splits and all of these things.
Adrian Reid:
And it was just a fascinating like, “Oh, this is the best thing ever,” was my recollection as an eight year old. Now, I didn’t trade or invest for a long time after that, but that was my first memory of the stock market.
Grant Larsen:
Wow.
Adrian Reid:
And when I started work, I pretty quickly came to the realization that I didn’t want to be in the corporate world forever. I was commuting, I was working extremely long hours. I had a lot of high stress right from day one of my first job. And I said to my dad at the time, “Oh.” Basically, “Is this what it’s like?” He said, “Uh-huh (affirmative).”
Adrian Reid:
“Well, I don’t want to do this forever. What do I have to do to not have to do this forever?” And we talked about investing and we talked about stocks and the stock market and real estate and other forms of investing. And so, I just started down that journey. And when I first came across some money from work, I started buying stocks. And I did the typical thing. I didn’t actually know anything, but I didn’t know that I didn’t know anything. I bought stocks in companies, that I recognized that I thought were big names, good companies. And [crosstalk 00:03:54] names.
Grant Larsen:
Well, this is going to go up. Right? Yeah.
Adrian Reid:
Yeah.
Adrian Reid:
This is going to go up. This is a great story. This is a big company. I recognize that this is going to work and I’m smart so therefore, I should make money. And of course, what happens? I bought at exactly the wrong time. It went down, I lost money. Very, very common.
Grant Larsen:
You bought at the peak, right? Yeah.
Adrian Reid:
Yeah, yeah, absolutely. And so, look, I played around with that for a period of time. And it took me three years of trying lots of different styles before I actually started making money and I turned the corner. I tried fundamentals.
Grant Larsen:
First of all, that’s impressive that you were able to. You didn’t trade to the point where you lost all your capital, right? You were at least wise enough not. Or did you at times say, “Hey, I blew it all out. I got to rebuild”?
Adrian Reid:
Oh, no look, absolutely. I have never blown up an account. I think one thing that I did well from the very beginning was I was very cautious about risk. And this is critical because if you blow up your account, the problem is you’ve got to then go back to work, save money. And that takes time. And then you’ve got to build up the courage and that takes time.
Adrian Reid:
And then you got to put the money in the market and then try again. And then chances are, you’ll blow it up again. As soon as you blow up and lose your money, you’ve just wasted months and months and months. From the very beginning, I took small trades, small positions, low risk. And I had learned a little bit about risk control from some of the books I read. And so three years, I was able to survive. And my accounts went sideways and down a bit and sideways and down a bit, but never really made any gains.
Grant Larsen:
Got it.
Adrian Reid:
But the thing that turned the corner was I read a series of books called Market Wizards, which no doubt you’ve read or seen.
Grant Larsen:
Yep.
Adrian Reid:
And Market Wizards is fantastic because it’s a series of interviews with professional traders who have done extremely, extremely well. And as I was reading through it, I realized that all of these traders have their own unique style. And some of them really resonated with me. And some of them were like, it was an alien from another planet.
Adrian Reid:
And what I realized by reading through those interviews is I had to find a style that really fit me, suited my personality. And the ones that resonated the most were the systematic traders. The ones that had rules and did tests to check those rules worked. And then followed those rules. And the reason they resonated it’s because they didn’t spend every waking and sleeping hour staring at the screen. They spent 15, 20 minutes, 30 minutes a day running their rules, placing the trades. And that was it.
Adrian Reid:
And that’s what I needed. Because I was working a job. I didn’t have enough capital to live on my trading back then. And so, I started trading systematically. And I took three months off work to develop my first trading system.
Grant Larsen:
Really? You took some sort of sabbatical? Is that what you did?
Adrian Reid:
Yeah. I just said, “Look, I want to do this.” And so I took three months off. And my boss basically laughed at me and said, “Good luck with that. Trading. Okay.”
Grant Larsen:
Yeah. Right, right.
Adrian Reid:
I didn’t get a whole lot of support then from anyone else, apart from my wife and my family. But you know what? When I implemented my first trading system, my results basically turned around on a dime. If you look back at my equity curve, you can pinpoint to the month where that trading system went live. And that’s because all of a sudden I was consistent and profitable. I had an edge. And from then on, it’s just a matter of patience of continuous improvement and adding capital. And then eventually, you get there.
Grant Larsen:
Let me ask you this, in terms of the trading system that you’ve developed and have matured over time, what’s your general timeframe? And are you in your positions for a few days? Several months. I mean, what range do you trade?
Adrian Reid:
Yeah. This is a good question. This comes back to the idea of it’s got to fit your personality. I’m a fairly patient sort of person. I don’t like frantic activity. I don’t like really fast-paced decisions and high stress. I’m a longer term hold. My favorite style is long-term trend following. I could be in a position for many months. But I’m quite, I’m quick, systematically, to cut my losses. If I enter a trade and it hits my stop-loss on day one, I’m out. I don’t care. I’m very comfortable with that.
Adrian Reid:
Trend following is my natural place that I gravitate to. But I have shorter term systems and mean reversion systems that are quite short term. Because now, having evolved as a trader and got comfort with what the markets can do and how they move, I can trade other styles outside my natural center, if you like. Anyway, it comes [crosstalk 00:08:49].
Grant Larsen:
It sounds like the key for you was establish that main style of trading. Get good at that, make that consistent. Once you’ve got that producing, now look at considering other styles. Did I hear you right?
Adrian Reid:
Yeah. Yeah, absolutely. Absolutely. Because I think as humans, we have a natural center or personality or style that will fit best with us. And let’s face it. Trading is hard, emotionally. If you are challenging yourself with a style that doesn’t fit and the market is challenging you with all of the volatility, the ups and downs, the uncertainty, it’s pretty difficult to stick to the rules. But if you have rules that are somewhat natural for you, they fit you and you follow them, then you can learn all the emotional lessons from the market. Deal with those, and then branch out. I think that’s key.
Grant Larsen:
Well, so earlier, when you made the comment, hey, you went to your corporate job and it was stressful. The thought that went through my mind was trading can be stressful. What is it that protects you? It’s a different kind of stress. How do you equate the two stresses? I’ve got corporate job, let’s say, and there are stresses there. But wait a minute, I’ve got trading and the stress, how are those different in your mind?
Adrian Reid:
I find the types of stress are different in terms of the duration, intensity and how much control you have over it. In the corporate world, what I found was I was just under constant pressure to do more and more and more and more and more and more. And anything that I could produce, the corporate machine still wanted more.
Adrian Reid:
And if I wanted to perform even better next time and get a bigger bonus, then I had to produce more. It was relentless. And it’s also extra imposed. You can’t do much about it, apart from resign from the job, if you no longer like it. You could manage on [crosstalk 00:10:42].
Grant Larsen:
It’s outside your control, is what I think you’re saying.
Adrian Reid:
Yeah.
Grant Larsen:
You don’t feel in control.
Adrian Reid:
Yeah. I felt that way. Now, in the markets, the market is also outside our control. We can’t control the market. But we can control certain things which are really, really important. We can control whether we are in the market or not. And we do that through our mechanical trading rules that we use in our trading systems. We can control how big our positions are, so that whether or not the volatility causes stress or not.
Adrian Reid:
If you position size very aggressively, you’re going to have more stress and more stomach acid in your life. If you position size conservatively, you’re going to have less. We can also control what strategies we use. If you are long only and you are highly leveraged, it’s going to be amazing and pretty stress-free in the middle of a bull market. But at the end of a bull market, as it’s turning, it’s going to be extremely stressful.
Adrian Reid:
But if you are long only, you don’t use that much leverage and you’ve got some short term systems and some long term systems, and you can make money from a bear market. And you can make money when the market turns, because you’ve got different strategies, then some of that stress is really dealt with because you diversified it away.
Grant Larsen:
Nice. If someone’s new to trading, does it make sense for them to approach it that way from the beginning? Or do they still need to get really good at say their first initial personality style related system? And then over time, then build that more equitable approach to trading?
Adrian Reid:
Yeah, really good question. I think the answer is you’ve got to start somewhere. And in order to start, you’ve got to make sure it’s not too overwhelming. I would say start with one system or one strategy that you can quickly build confidence with.
Adrian Reid:
And it really helps to have a guide to step you through that. But if you’ve got someone to model or someone to follow, you can quickly move from one simple strategy to a diversified portfolio. I teach traders and I teach a lot of brand new traders. And I’ve taken people from knowing absolute nothing to a very diversified portfolio in a couple of months.
Grant Larsen:
Oh, really?
Adrian Reid:
We’re not talking years.
Grant Larsen:
[crosstalk 00:13:00] months?
Adrian Reid:
Absolutely.
Grant Larsen:
Oh, wow.
Adrian Reid:
Couple months. Yeah. Because when you are given a set of rules that work and you are given the tools and knowledge to test and evaluate those rules for yourself so you can build confidence in them, then you can start trading them. And then you just, you start trading one set of rules. Then you get another set of rules and you test and evaluate that. And then you can start trading that. And then the next set and the next set. You can pretty quickly build a portfolio of strategies if you are not trying to figure everything out on your own.
Grant Larsen:
Right. Okay. You started to address some of the questions I had for you, which is how long does it take for someone to get proficient using your system? And it sounds like the first part is they could begin some level of proficiency within two months. Is that accurate or is it more than?
Adrian Reid:
Yeah, absolutely. I mean, so I have stock trading systems and crypto trading systems. And for both, a completely new trader who’s motivated and willing to learn and willing to ask questions, can be up and running with a system in a month or less. Then with a portfolio of systems within two to three months.
Grant Larsen:
And when you look at that person going after a portfolio, what sort of capital do they need to bring to this trading style?
Adrian Reid:
Yeah. My style is all systematic and each system is a diversified portfolio of instruments or positions that are hold. Let’s say, one of my trend following systems in stocks that makes money as stocks just continue up on their long trend. And then when stocks turn around and go down, it gets out and takes you to cash.
Adrian Reid:
That system might hold 20 simultaneous positions. Now, if you were trading the Australian market, the Australian market has this unfortunate rule where each trade has to be $500 in value. You cannot place a new trade for $200. It’s a $500 minimum. For that system on Australia, you’d need $10,000 to trade it properly. But in the US not so. And in the Asian markets, not so.
Adrian Reid:
You really, you can start with just a couple hundred dollars or a couple of thousand dollars if you choose the right market. And this is one of the reasons why the cryptocurrency markets are so great because you can trade a diversified portfolio in the crypto markets with very small positions and there’s no minimums. And the cost of are very, very small to trade it.
Adrian Reid:
Really, capital isn’t really a barrier to entry anymore. It’s really the learning that is the barrier to entry. You’ve got to have rules that give you an edge. And you’ve got to have absolute confidence in those rules. That’s what you need to win really.
Grant Larsen:
The biggest challenge, it seems over the years, in the years that I’ve been trading is the discipline trader mentality. The ability to stick with those rules. What tips or techniques do you have for sticking with the rules? Not letting the emotions overcome. Saying, “Hey, I’m just going to take the loss.” Not doing revenge trading et cetera. What are your tips for sticking with the rules?
Adrian Reid:
Yeah, this is great because before I became a systematic trader, I did discretionary technical analysis, and I did fundamental analysis. And I really struggled emotionally. And systematic trading really helped because there’s no ambiguity. If you have a system, which is objective, it tells you if A and B and C happens, you buy. If D or E happens, you sell. You don’t have to wonder, “Is it a buy signal or is it a sell signal?” I think most people will benefit hugely by trading systematically rather than with discretion. That’s the first thing.
Adrian Reid:
Second thing is your system won’t make money all the time, and it won’t be profitable in every trade. Your account is going to go up and down gradually on a path to building your wealth. You’ve got to be comfortable as the account swings around. And the biggest trick to getting comfort is building confidence in the rules. We have our rules. It’s like, I can give you the best trading rules in the world, but if you haven’t tested and evaluated them for yourself, then when they start losing money and going into drawdown, it’s going to be really hard for you to keep following them.
Adrian Reid:
But if you’ve tested them and you know, “Okay, for this set of rules, a 15% drawdown is perfectly normal. Or three or five losses in a row is perfectly normal. And if I just keep following it, I’ll come out the other side.” If you’ve done that work, not me telling you that’s the case, you actually doing the testing, then you can sit comfortably knowing this is perfectly normal.
Grant Larsen:
Do you provide the traders with a certain level of backtesting tips and techniques to prove that out?
Adrian Reid:
Yes, absolutely. I think this is the most important thing, because what most people ask is, “What stock should I buy? Or what crypto token should I buy?” That’s a very basic question. The next level of evolution is what rules should I follow?
Adrian Reid:
And if someone asks you what rules should you follow, they’ve evolved beyond trying to get tips. They’re trying to get a process. The evolution above that is these are my rules and I have confidence in them because tested them and I have evaluated them. The most important part of my program, my teaching is actually the backtesting, the evaluation, the optimization, the improvement of systems.
Adrian Reid:
Yes. I give systems, but I don’t want you to believe and trust me that those systems work. I want to give you the skills and to make that decision for yourself so you can actually follow them in good times and in bad. Does that make sense?
Grant Larsen:
Oh, total sense. Yeah. That way, then you have a greater probability of being disciplined, of sticking with that system and not bailing when you shouldn’t or not being able to get back in when you should. That’s [crosstalk 00:19:11]. Yeah, yeah, yeah. Critical aspect for that.
Grant Larsen:
When you think about the portfolios, you’ve talked about you’re doing stocks, you’re doing crypto. Do you have an approach where you separate the portfolio across those? Or is crypto always part of it? Or do you just focus in crypto with some of your trading strategies, but different ones in stocks? I know it’s a long question. [crosstalk 00:19:36] But how do you distinguish between the two trading styles?
Adrian Reid:
Yeah, it’s a good question. It’s a good question. And one of the things I realized when I started researching into systems is that different markets move and behave differently. Gold moves differently, to oil moves differently, to the stock indices moves differently, to the Australian stock market. My rules are developed for each market. Now, a great set of rules will probably work on several markets, but you design it for a certain market.
Adrian Reid:
I have rules for the Australian stock market, rules for the Hong Kong stock market rules for the US stock market. And I have rules for the crypto markets. And they’re different. What I have that sits above all of those systems is a capital allocation model. And I say, “Okay, for my portfolio, I have this X percent in system one, Y percent in system two, Z percent in system three,” and so on.
Adrian Reid:
And each day when I’m calculating the size for my positions, I go all the way to the top and say, “Okay, how much money do I have in my accounts? What are the percentages for each system? And then within each system, how do I size each trade?”
Adrian Reid:
And by cascading it down like that, you do a couple of things. You make sure you stay diversified. You don’t get concentrated. You make sure your risk on each trade is low and linked to the amount of capital you’ve got in that system and in total in your account. The systems are all separate, but they essentially trade a common pool of money and have an allocation to each system, which keeps everything safe and balanced.
Grant Larsen:
Okay. Having that in place then, that makes a total sense to organize it that way. And it sounds like, because I’ve traded lots of different markets, like you. Having the rules that are unique to that market makes total sense because each one of them has different personalities. Even with the same, let’s say if it’s US based stocks, then even each of those have their own personality and characteristics. And so, the question, trading Apple is going to behave differently than trading IBM. Right?
Adrian Reid:
Absolutely.
Grant Larsen:
Or [crosstalk 00:21:52]. They all have the… My question is, in your trading system, in terms of your rules, how far down do you get? Do you get to individual stock sort of rules? Or do you keep it to industry or sector rules? How far or down do you go with that?
Adrian Reid:
For me personally, I usually go down to a market. I trade one set of rules that would be applied to an entire market or a subset of that market. I have a set of rules that would be applied to stocks in the S&P 500.
Grant Larsen:
Got it.
Adrian Reid:
I have a set of rules that would be applied to the entire US stock market.
Grant Larsen:
I see.
Adrian Reid:
NASDAQ, Amex, NYSC. Not pink sheets for instance, I have a set of rules that is applied to the entire Hong Kong market and the entire Australian market. I play at that level.
Grant Larsen:
Got it.
Adrian Reid:
You can develop systems at a lower level. But the trouble is, the lower you go, the less trades you get in your backtest, the less confidence you have that the rules really work.
Grant Larsen:
Yeah. That’s what I was wondering. When I was thinking about your comment about backtesting, I started thinking, “Oh, wow.” Because I know the personalities of some better than others. I obviously don’t trade all of them. And after a while, you find a few that you feel like you start to understand, so you focus on those. And I started to think, “Wow, if you’re going to do that backtesting against each of those different types of personalities, that’s a lot of work to do that backtesting.”
Adrian Reid:
Yeah. The backtesting, it’s probably not as much work as you think, because the way I do it is I have a subscription to a data provider, which gives me all of the stock history for all of the stocks on all of the markets. I put that into some trading software. I use AmiBroker. There’s other software, but AmiBroker’s probably one of the best value trading backtesting softwares.
Adrian Reid:
And in the software, I codify the rules and the portfolio management principles and rules and the position sizing. And then I can backtest using those rules on the entire market all at the same time. Once I’ve coded it to run a backtest over 30 years of history, over thousands of stocks listed on the US market, it takes about a minute.
Grant Larsen:
Oh, really? Wow. Okay.
Adrian Reid:
Yeah. We’re not doing this manually.
Grant Larsen:
Oh, okay.
Adrian Reid:
But it’s not just a matter of pressing the backtest button and saying, “Oh, it’s profitable.” There’s steps you need to go through in the analysis to validate, “Oh, it’s profitable. It’s stable. The rules are all significant. I haven’t over-optimized or fine tuned my system to particular trades or the past data.” Backtesting is really a process, but the labor intensive stuff is taken out of it by the software. Does that make sense?
Grant Larsen:
Oh, it makes total sense? Yeah, because I’ve both written code on as well as used multiple backtesting systems. And I know they can become quite involved. My question is now, with that backtesting strategy that you have, as you then go to apply it, is it the human that’s clicking the button? Or do you leverage software that actually says, “Oh, well, hey. Here’s the point to actually execute based on these rules,” and therefore, it executes you that for you?
Adrian Reid:
Yeah, it can be both. On the crypto side, my trading is 100% automated. I literally, I don’t do anything. I just monitor that the program, the algorithm is working. And I get a report at the end of each day saying, “These are the trades you placed.” And I just make sure that that’s all in line.
Adrian Reid:
On the stock side, it depends on the style, the type of stocks you’re trading. If you were trading extremely highly liquidity stocks. Let’s say you were only traded stocks in the S&P 500, it’s pretty easy to fully automate that. Well, it’s less troublesome to fully automate that. I don’t want to say it’s easy because there’s a bit of tech involved in the automation.
Adrian Reid:
If you’re trading penny stocks or smaller caps, where there’s a little more risk of slippage and you want to be a bit more careful with your entries, it’s probably less wise to trust that to a piece of software to place your trades for you. I do my stock trading manually, but I’m moving to automation on that side for selected systems. Not for every system.
Grant Larsen:
Fascinating.
Adrian Reid:
But I think the advantage is, on the stock side, I’m only trading once a day or once a week. And so it still takes very little time, even though the execution is not automated. I literally spend 15 to 20 minutes a day placing orders and that’s all I do on my trading. It’s really quite quick when you trade systematically.
Grant Larsen:
That’s amazing. If I pull it back then to, you got a brand new trader. They’re going to put in about two months of effort before they can maybe get a portfolio in place. I’m assuming initially, that’s probably manual trading activities, but over time, then they take on more and more automated capabilities. Is that fair?
Adrian Reid:
Yeah. They could if they wanted to. If they were comfortable with the technology to do so.
Grant Larsen:
Got it.
Adrian Reid:
Some people, they’re not programmers by background and some of those, the APIs and all of that, it’s not straightforward. You don’t have to do that. I’ve traded for 20 years and I’m still doing some trades manually, but 15, 20 minutes a day doesn’t stress me out too much, so I’m okay with that.
Grant Larsen:
[crosstalk 00:27:10] Yeah. Yeah. If you are stressed out, Adrian, then yeah, I’d say, “Wait a minute. No, that’s not stress. 15 to 20 minutes.” Quick question. When you talk about the profile of the students, so the people that you take through this, can you describe a few profiles of people that tend to do well at this?
Adrian Reid:
I have literally taken all sorts. I have, on one extreme, the people who gravitate most naturally to systematic trading are typically analytical types. Engineers, scientists, accountants, people who are comfortable with computers and code. And they will typically pick it up very quickly. They’ll see the value in the analysis. They won’t be stressed out by the software, the analytical work or the coding. And they’ll be off to the races very, very quickly. But at the other end of the extreme, I’ve taught artists, someone with a dog walking business. People who are stay home moms, stay home dads, with no analytical background.
Grant Larsen:
Perfect.
Adrian Reid:
It works for all sorts, but the common driver or factor amongst all of them is desire and fascination. You’ve got to really want to learn to trade the markets. What I say to people when they come to me and say, “Can you teach me to trade?” It’s like, “Well, yes, but why do you want to learn? And what do you think about the markets?”
Adrian Reid:
And people who say, “Ooh, look, I just think I should invest. I don’t really know anything. And stock seems easier than property because I’ve got no money.” It’s like, “You know what? It’s probably going to be a hard journey for that person.” But for someone who comes to me and says, “Look, I just love the way the markets move up and down. It’s fascinating to me. I’ve tried, but I lost money and I don’t know why. And I just want to learn.” That person will succeed ultimately with the right guidance.
Grant Larsen:
Right. Awesome. That’s wonderful. Okay. If someone wanted to find you, how do they find you? What’s a call to action here so they can get in touch with you?
Adrian Reid:
Yeah, absolutely. The business and the website is Enlightened Stock Trading. And for your listeners, Grant, I’ve put together a page with some free content and courses just to get people started.
Grant Larsen:
Awesome.
Adrian Reid:
If they go to enlightenedstocktrading.com/fir.
Grant Larsen:
F-I-R.
Adrian Reid:
F-I-R For Financial Investing Radio. Enlightenedstocktrading.com/fir. Register there, and they’ll get a bunch of cheat sheets about how to avoid losing, how to make money and how to build confidence in your systems. And a course on the millionaire trader code, which gets your mind right and shows you the path to success.
Grant Larsen:
Excellent. Wow. Thank you for doing that. I didn’t know you’re going to do that. I appreciate that. Thanks for-
Adrian Reid:
Oh. Yeah, no pleasure. It’s exciting because what I want most of all is to stop people from getting into the market uninformed and just losing their money. Because a little bit of education will keep people alive. And a little bit more education will actually show you how to make money. What I’m aiming for is, first of all, make sure people who are getting into the market just don’t lose everything in the next two weeks, because that happens more often than you’d think.
Grant Larsen:
Yeah, absolutely.
Adrian Reid:
[crosstalk 00:30:23] avoid that so people can be in the game.
Grant Larsen:
And with the increased volatility in the market today, does the systematic trading you still feel work well? I mean, it’s obviously, it’s not that secular bull market that we’ve experienced over the last plus decade or more. That’s changed. Any thoughts on that?
Adrian Reid:
Yeah. The key here is diversification. As you evolve as a trader, you’ll become more and more diversified and you can make money from more different market conditions. You can make money from quiet, up markets, from volatile, sideways markets. You can make money from volatile, downwards markets. You just need to set of rules. None of the market conditions need to be scary. It’s just a matter of finding rules that work and applying them consistently.
Grant Larsen:
Of that condition.
Adrian Reid:
And those rules turn themselves on and off. Well, at least in my world. I create the systems to turn themselves on and off when the time is right. My long side trend following turns off when the market isn’t in a bull phase. I’m not going to keep taking signals all the way down to the bear market because that’s just silly. It’s low probability. But I will sell stock short when the indices roll over and everything is clearly going down. And I’ll hold those short positions until the market comes up or until I’ve got a decent profit and it hits my profit target. It doesn’t matter what the market’s doing, you can have a systematic approach that works.
Grant Larsen:
Great. I wanted to make sure that point came out. That this is not just about… Because earlier we talked about, “Oh, well I put it in. I think the long term.” The reality is, for the different market conditions, you have the set of rules to handle what the current market conditions are. That’s key.
Adrian Reid:
Yeah, absolutely. That’s really, really important. You’ve got to diversify. Doesn’t matter what you’re trading or investing in, no one thing is your path to wealth. You need to have different strategies, different approaches. And systematic trading is no different.
Grant Larsen:
Adrian, it’s been a pleasure. Thank you. I know it’s already tomorrow. It’s Saturday.
Adrian Reid:
I’m from the future.
Grant Larsen:
In Australia. He’s from the future here. What’s the market look like? Yeah, just let me know. Right?
Adrian Reid:
Unfortunately, the market’s closed in the future because it’s Saturday.
Grant Larsen:
Ah, that’s right. That’s right. Well, Adrian, thank you for taking the time, especially on your weekend. I appreciate you doing that. And I look forward to chatting with you again, because I’d like to do a followup with you in some time. And everyone, please take a look at that call to action that you shared on that URL. What’s that URL one more time?
Adrian Reid:
It’s enlightened stocktrading.com/fir.
Grant Larsen:
F-I-R. Thank you very much. Okay, everyone. Thanks for joining. And until next time, get some systematic trading.
Speaker 2:
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