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Successful Trading with Adrian Reid
Successful Trading with Adrian Reid
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Transcript of Adrian Reid’s Interview On The LifeBlood podcast
Successful Trading with Adrian Reid
George Grombacher 0:00
Come on Well, leopard, this is George G. And the time is right, welcome. Today’s guest is drawn apart for Adrian Reed. Adrian, are you ready to do this?
Adrian Reid 0:19
I’m excited. Just do it.
George Grombacher 0:20
Let’s go. Adrian is a stock trading coach. He’s the founder of enlightened stock trading, he’s committed to helping people to gain control so they can get on the path to real freedom. Adrian, tell us a little bit about your personal life’s more about your work and why you do what you do.
Adrian Reid 0:37
Yeah, absolutely. Thank you so much. Okay, so I’ve been a trader for 20 plus years now. And trading has been a long time hobby turned into full time, vocation turned into business and mechanism to change the world. Because the more people I can help to grow and build their finances, build their wealth, bigger the impact. So for me, that’s kind of why I do what I do. It’s, it’s all about helping others master their, their, their financial kind of destiny. And the reason I did that is because I quit the corporate world in 2012, I retired because I was making more money trading than I was in my full time job. And so I left and I started trading at home. And then I realized that I had no one around me there were no successful traders. I didn’t know anyone and most people who tried it, were losing money. And people started asking, and I started helping, and then all of a sudden, it became a business and, and a passion to really do that and help people. So
George Grombacher 1:35
here we are, here we are. Who knew?
Adrian Reid 1:40
Exactly right. The accidental things that turned into miracles? I don’t know.
George Grombacher 1:44
Yeah, I appreciate that. It’s fascinating. The markets, I think I am I’ve worked in in finance for a long time. But I absolutely do not consider myself to be a trader, nor do I consider myself to be an expert the markets have, have the markets changed with technology, and just everything. Obviously, that has changed over that 20 year period. Oh,
Adrian Reid 2:11
yes, absolutely. A lot has changed. But it’s not necessarily changed for the worse, some things are better and easier, some things are harder and more challenging. First of all, costs have come down dramatically, which has made trading particularly on a shorter time, scales, easier to do. The barriers to entry are really low. So anyone can get started today on their phone with a small amount of money. But the barriers to entry, and the barriers to success are two quite different things. Anyone can trade and have a go. But in order to succeed, you need more than just to have a go, you need to have some rules that work. You need to have the confidence and conviction in those rules. And you need the discipline to actually follow them. And I think that’s that barrier to success has not changed, you know, probably for the last 1500 years. It hasn’t changed. It’s just technologically easier for people to get started today. Yeah, but cuz it’s so easy. A lot of people are really losing money. And that’s a big problem.
George Grombacher 3:13
Yeah, certainly, with our I was gonna make a weapons of mass destruction joke. The timing is probably not awesome for that. Anyway, with with our weapons of mass destruction, our cell phones, yes, I can hop on a myriad of trading apps these days, and all of a sudden, not not now I’m trading stocks. But just because I’m trading doesn’t make me a trader. And I think that I think you can tell me, like 80 85% of the folks that are doing it are losing money. So like, just couldn’t agree more. And I want to kind of stick on this market changing with so many people flooding into the market. And then just the way that that Tech Tech and algorithms and and strategy have flowed in? Has that changed the rules of trading? Or are those still the same?
Adrian Reid 4:08
Look, there’s some fundamental principles of trading that have not changed, you know, you must diversify far more than you think. You must cut your losses and not let them grow big because if a loss grows big, then your account is in jeopardy. You’ve got to keep your losses small so that you can you can recover from them. You must accept those losses, because it’s an it’s an inevitable part of trading. So you have to accept that you’re going to have losses, take them gracefully and quickly, and then move on to the next trade. You have to let your winners run. If you’re always trying to Bank A quick profit, you’ll always have small profits. But if you allow your winners to grow, then those winners get big enough to offset the losers. So these are some principles that haven’t have not and probably will never change their, their core and fundamental to Success in the markets. But what has changed and evolved gradually over time are the entry and exit triggers that really work? You know, there’s some things that worked 10 years ago that no longer work today. There’s some things that work today that didn’t really work 10 years ago. And so the market does shift and behaviors change a little bit. And you’ve got to have rules that that work in the current environment, and then monitor those for decay. And back to the point of diversification, if you have several different sets of rules, and one of them the case it doesn’t matter so much, you just stop trading that one, and you introduce a new set of rules, and you have a portfolio of rules that work. That makes sense.
George Grombacher 5:45
Yeah, yeah, I think that that’s, that that’s exactly what I was sort of trying to trying to get at. And so how do I then as a trader, is that really the endorsement for having community right there for having other people that know what they’re doing that you have access to? Or do you get to a point? And or do you get to the point where you are The technician, and you can recognize, I think he used the term decay? And so I need to move on or tweak this? How does that process work?
Adrian Reid 6:19
Look, great question. I think there’s a combination of things here, because at the beginning of it, of a traders journey, there’s, there’s a lot to learn. And there’s also a lot of disciplines to create. And you can go and try and do that on your own. Or you can cobble together your own community of traders who are trying to do it on their own. But the chances are, that’s going to be a long and very expensive process expensive in terms of losses in the market, it typically will take people three to five years of, you know mucking around trying different approaches, to eventually get to a point where then this scraping together some profits somewhat consistently. If you instead take the approach of getting a getting involved in a real trading community with a, you know, a mentor and a course and actually learn the principles, you have to invest in that. But that really shortens your learning curve. So instead of the three to five years of, you know, mucking around and having big losses and losing losing your account, over and over again, you might have two to three months of learning, and a bit of investment to get the skills, and then you’re off to the races. And at that point, after a couple of months of learning, you would probably have a couple of sets of rules that are profitable, and you’re confident in, you would know how to run those, you’ll also learn how to test those rules so that you can monitor them to see are they still working? And this is all stuff that I do with my students. You know, it’s all about, here’s some strategies that work, here’s how you test them and validate them so that you can be confident What questions do you have his hunger test to answer those questions, so that you really get in control of your own trading?
George Grombacher 8:00
Nice. Got it. That makes a lot of sense. I was just writing this morning about, we’re dealing with a lot of uncertainty. And we’re always dealing with a lot of uncertainty. But when we make a decision, this is something I’m interested in doing. I want to know that barring catastrophe that this is going to work, right that the system that I’m going to follow. So when people engage with you, they say, How do I know this is gonna work? What do you say?
Adrian Reid 8:27
Good question. The thing is, it always feels like there’s a big leap of faith. I mean, the first thing is, by trade these systems myself, so when I’m teaching someone, I’m doing the thing that I’m teaching with my own money, so that’s one thing. Second thing is I don’t actually want my students to blind have blind faith in me. So I teach them the rules, I say this is this is how the system works. This is why it works. But I also teach, this is how you test it to validate it for yourself. Because at the end of the day, it’s your money. It’s your account, and it’s your psychology, you’ve got to be able to follow the rules. So the rules are one, just one small part of it. But once I empower someone to test and validate the rules for themselves, then you can get rules from anywhere, you can get them from books, you can get them from websites, you can get them from chat forums, and you don’t have to trust anyone anymore. Because all of a sudden, if you know how to test, you can take those rules, you can put them into the software, and you can say hey, okay, over the last 20 or 30 years, did this actually make money? How big was my drawdown gonna be? How high will my returns? How often did I have to trade? How long will my winners held for how big will my winners How big are my losers, all of those things become, you know, readily available. And so you’re in control, you’re in the driver’s seat.
George Grombacher 9:48
Nice. So, the the, the principles that that we touched on right at the beginning, that we must accept losses. That’s hard for us human beings. So we really want to hold on because we don’t want to, you know, admit that we were wrong about something. So how do I know it? Or is there a way that I can be honest with myself and say, okay, my personality will be successful doing this, or doesn’t that matter?
Adrian Reid 10:18
I’ve had success with a huge variety of students. So I’m not sure that there’s really a personality type, you have to have to make this work. The key driver of success really seems to be confidence in the rules, is if I could give you a set of rules, and they were the best set of rules in a world that I gave you no confidence in those roles, you’d follow them while you’re making money. But as soon as you start losing money, confidence quickly gets eroded, right? But if I gave you the rules, and I gave you the skills to test and validate those rules, so you knew exactly how they were going to behave, exactly what to expect, then it’s much easier for you to follow those rules. So that’s, that’s a big part of it. Second pilot is for one person, one set of rules might be good for another person, another set of rules might be good. You think of someone who is really patient doesn’t like to have a slow temper, really thoughtful, happy to just let things play out, a long term trend trading system is probably going to work for them. But someone who’s a bit more hyperactive a bit more, you know, impatient to get on to the next thing, a short term mean reversion system would probably be better. Now, there’s a bit of matching the strategy to the person, which helps right at the beginning. But then once once someone gets into trading and really masters that systematic approach, you can you find that you can quickly diversify into other types of strategies that you didn’t naturally sort of feel an affinity with the beginning, jot it,
George Grombacher 11:50
that makes a lot of sense. How many different strategies? Do we comment does a person commonly employ? Deploy?
Adrian Reid 00
Yeah, that’s gonna it’s gonna depend on a few things a little bit about how much capital you’ve got, you know, the more capital you’ve got, the more you can diversify. I like to aim for, at least for something long term, to ride big, big strong trends up something short term to profit from the dips, and rallies within that trend, something on the short side, so that when the market goes down, you, you make money, and then also diversifying into different markets. So if someone is in the US, and they only ever trade the US market, you’re at the whim of what the US market does. Now the US market has been great for the last how many years, you know, decade. But it won’t always be so and it hasn’t always been. So sometimes other markets are better. And so I also like to encourage to diversify, you know, offshore into different markets, which is nowhere near as scary as you think. Because it’s all just stock charts. And it’s all just objective rules. So I can try I’m in Australia, I can trade US stocks, I can trade Hong Kong stocks, I can trade Australian stocks, and it still only takes me 20 minutes a day.
George Grombacher 13:13
So walk me through that process. Let’s just say that, that I say this sounds awesome. How do I how do I get started? How much just all the resources that that will require me to put forth to become successful.
Adrian Reid 13:28
Okay, cool. So you need a couple of things to get started, you need a little bit of capital. Now, depending on which market you trade, it could be as little as $500,000. Or it could be as much as $10,000, the US market is pretty easy to get into this low minimum trade size. So you don’t need a huge amount of capital. So there’s the market, you need a broker, the broker, or the platform you’re trading on doesn’t matter nearly as much as what people think, you know, everyone’s like, Oh, do you use Thinkorswim? Or do you use Interactive Brokers? Oh, do you use this or that, like, that’s not the main game, the main game is having a set of rules that work and you following them. So capital and a broker and some rules. The way the systematic approach that I use and teach is, you have a simple set of rules that you apply to the market each day or each week. And when you you have some trading software where you run these rules, and it spits out which trades or which stocks meet those buy criteria today, and which stocks meet your sell criteria today. And so the daily trading process is simply a matter of updating your data, running rules, finding the buy signals, finding the sell signals, placing those trades and turning off the computer. And so it literally takes 20 to 30 minutes into end to run a portfolio of you know, somewhere between five and 10 systems every single day. Now the learning to get started is is another thing if you want to actually accelerate your learning get into this in you know, a couple of months rather than several years, then it takes, you know, a course and a mentor and some guidance on how to do that. So my program, the trader Success System, for instance, will take someone from complete beginner through to very advanced, confident, systematic trader with a very diverse portfolio of systems across different strategies, different markets, and we’ll do that in as little as a couple of months.
George Grombacher 15:26
Nice. Okay. I think certainly, people’s ears probably perked up the idea of just being able to learn the system over several months, and then spend 20 to 30 minutes a day, reviewing everything, plugging everything in. And then from there, this is one of those really depends kind of a question, I’m sure. But for people that wanted to get to a place where they could replace their full time income of, let’s say, $50,000 a year, how much money would they need to be putting forth? How would that work? Yeah, look,
Adrian Reid 16:03
this is, this is probably one of the biggest misconceptions that people come into the market with, it’s like, oh, I’m going to be a trader, I’m going to trade for a living and replace my income. Can I do that with my $5,000? And the answer is, sadly, no, you can’t. Because you got to work out the math, let’s say the very best traders and fund managers in the world average in the long run 30 to 40% return per year. So start with that most newbies will come into the market thinking, Oh, can I double my account this month? Or maybe can I double my account this week? And the answer is yes, you probably can. But the following week, or the following month, you’re going to blow it up and lose everything because you’re taking so much risk and leverage. So what I really want people to think about is a long term sustainable career in trading. Now, not a career in the sense of it takes 12 hours a day, for seven days a week, it’s like you said 20 to 30 minutes a day, after you’ve done the learning. And you can run it alongside your job and build your wealth. So if you’re starting with five or $10,000, and you can compound your wealth at 2015 20 30% 40% per year, you’ll be doing very well, then what you’ve got to do is save money, add it to your account and build the account size, eventually, when the account size is big enough, then it starts to earn, you know, equal to and then more than your salary. But if you just did math on that, it’s not a small number. Unfortunately, it does take a fair bit of capital to replace any real income. But what’s interesting, and let me you know, just give you some reassurance on this. The biggest psychological freedom comes not when you can quit your job, it comes when you know you’ll be able to quit your job. I remember I remember sitting on a bus. This is many, many years ago, and probably only five years after I started. I remember seeing a bus going to work thinking, oh my god, it’s working, you know, my account is actually growing. And it’s like making money. And it’s only that much time. And I still got my career. And both things are making money. And like it sounds crazy. But when I when my account was only at about $30,000 I knew I was gonna make it. I was nowhere near it. But that psychological trigger of I have this working. That’s the big first step of towards freedom. And you’ll be amazed how much better it feels when you’ve got that. And you’re totally up to the office and the boss is being a douchebag or whatever, it’s, you can cope with that because you’ve got something else. So don’t put so much pressure on the trading into Yeah, I’m going to trade for a living next week you want. It’s actually a hard game. But it’s a rewarding game. And the good news is, if you’re trading with $10,000 or a million dollars, it’s still only 20 or 30 minutes a day with this approach. I love it. So as you build the account, the returns get better and better and better for every unit of time you put in.
George Grombacher 19:13
That’s well said. Adrian, the people ready for that difference making tip? What do you have for them?
Adrian Reid 19:20
The biggest thing you can do is acknowledge that if you don’t have rules, you’re probably gambling and gamblers don’t win, at least not consistently in the long run. So what you need to do is take a big step back, reduce your risk, put in place a set of rules, you can actually test and validate to ensure they work. And then follow those rules consistently. And just keep doing it. Crank money into the account and before you know it you’re going to be wealthy. That’s the case trade with a system that works keep your risk low and stop blowing up your account. because people take so much risk and so much leverage trying to get rich next week that they keep losing their money. And if you keep losing the money, you never get to the end goal, you’ve got to actually grow the account. And to do that you can’t destroy the account, you’ve got to stay in the game. So stop trying to get rich tomorrow and start trying to get yours get rich in five years time. And I think you’ll find that you’ll be a much better trader and much more successful.
George Grombacher 20:28
Well, I think that that is great stuff that definitely gets come up tomorrow. Thank you so much for coming on. Where can people learn more about you? How can they engage with you and your program? Thank you.
Adrian Reid 20:39
been an absolute pleasure to be here. Thank you so much for having me. I’m enlightened stop trading.com forward slash lifeblood. I’ve got some resources there to help people get started. So it’s a free resources just to get you into the market to learn some more about some of these principles. So that you can take a big step forward in your trading and learn a bit more about my approach. So enlightened stock trading.com forward slash lifeblood
George Grombacher 21:03
love it. If you enjoyed this as much as I did show Adrian your appreciation and share today’s show with a friend who also appreciates good ideas go to enlightened stock trading.com That’s e n li gh t. E N Ed, stock trading comm slash lifeblood. And Adrian set up a great landing page with a ton of great resources on it for you. Thanks, Adrian. Absolute pleasure. Thank you so much. And until next time, keep fighting the good fight. We’re all in this together.