Welcome to The Enlightened Trader newsletter. I missed last week as I was travelling, but to be brutally honest there was nothing much going on of interest in the markets anyway!

Of the markets I monitor in this newsletter (US, ASX, TSX, HK), only the US market held strong this week. The last few days have seen reasonable declines in all the others.

Stock Market Update

The US market continues to be held up by large-cap stocks, and the capitalisation-weighted indices hide the weakness in the broader market. Of the major US Exchanges, The New York Stock Exchange and the American Stock Exchange are both weak, and the Nasdaq is leading the market up.

Within the Nasdaq, it is the largest stocks that are rallying – the Nasdaq 100 index (capitalization weighted) is rallying hard, up 26% since the beginning of January, but the Nasdaq 100 equally weighted index is only up 11% in the same period. Clearly, large tech stocks are the flavour of the year so far!

This brings me to the biggest story this week: NVidia, which yesterday jumped from a previous close of $305 to $385 at the official open on a massive guidance upgrade. NVidia is currently up 155% YTD showing that even in a weak and lacklustre market, there can be shining lights of momentum.

The lesson in these observations is that it is not enough to be diversified across markets; there also needs to be some diversification within the markets – Large Caps vs Small Caps, Tech Stocks vs Other Sectors as well… you just never know where the major moves are going to come from, so make sure your portfolio covers all the bases!

Bitcoin has been pretending to be the most boring market in the universe for weeks now, just edging down slowly with low volatility. The Average True Range is just over 4% of the Bitcoin price, which is historically pretty low. Despite the declines since the start of April this year, the primary uptrend remains intact. One thing we do know is that historically the major bull markets in Bitcoin have been born out of low-volatility markets.

The crypto market may have been giving you losses and major boredom and even causing you to feel like pulling the pin and taking your money out… but this is exactly the behaviour that you would expect before a big run because when more people are on the sidelines, it doesn’t take much of a rally to start pulling new money in and accelerating the price up. Just as you are tempted to quit is exactly when you should pay attention – the markets reward persistence and patience, and they punish impatience mercilessly!

Trading Tip of the Week

I was reflecting on my own trading journey during a discussion with one of my students in The Trader Success System this week, and I was explaining my three biggest regrets that combined have cost me millions of dollars in potential profits. I have done well out of my trading, but it could have been much better.

When I think about the cost I have incurred because of these regrettable actions, I thought it would be ultra-valuable to share them with you in the hope of helping you avoid them and improving your future trading profits.

So here we go …

Regret 1: I took 3 years to learn systematic trading

You have heard that time is money, right?

Usually, when we hear this phrase, we associate it with our day job… we are always rushing to get things done, and we want to get paid NOW for the time we put in.

But for a trader, the most important component of time is the amount of time it takes to get profitable. This is critical because the longer it takes to get profitable, the longer you wait for the compounding to start, and the lower your ultimate wealth will be.

The 3 years it took me to learn has cost me well over a million dollars in lost compounding – that is why in The Trader Success System my students learn how to trade consistently and systematically in the first 2 months so they can get started fast, and then move on to more advanced skills and build out their portfolio.

If you are still trying to figure it out, ask yourself whether you would be better off getting the help you need to master it and get going properly once and for all…

Regret 2: Waiting too long to diversify

When I finally figured out systematic trading, I started with my first system, a long-term trend following system for Australian stocks. That system made me my first $50k profit… and that trading strategy built my account to over $500k for the first time (over quite a few years).

I made the mistake of falling in love with my strategy, which had worked for me so well for so long. Because of this, I didn’t diversify early, I just stuck to ASX trend following. So I made good money, but looking back on it now, I suffered 25% drawdowns several times and had long flat spots in my equity growth when the market wasn’t trending nicely.

I would have done much better if I had diversified into other strategies, markets and timeframes sooner. I resisted trading stocks internationally for too long because I thought I didn’t understand those other markets well enough… but now I realise I was letting an irrational fear of failure hold me back.

In reality, all stock markets are so similar that traders do not need to stick to just one.

I now have different systems for each market that I trade, but they are all based on end-of-day price and volume data, and they are all either Trend Trading, Mean Reversion, Rotational Momentum, or Short Side systems. Trading with various strategies, markets and timeframes smooths things out and ensures you don’t suffer through lacklustre performance in one market while overseas markets rocket ahead, leaving you in their dust.

This is why in The Trader Success System we have ready-to-trade systems for US Stocks, Australian Stocks, Canadian Stocks, Hong Kong Stocks and European Stocks, as well as several ETF systems… we also have trend trading, mean reversion, rotational and short systems… and we have intraday, daily, weekly and monthly systems that our members can use.

I want my students to avoid the same mistake I made by not diversifying early enough.

Regret 3: Taking money out too soon

By 2008 I had made some really solid gains in my account, and we had bought a pretty decent sized house in Sydney with a mortgage. Given the financial crisis was in full swing, my wife and I decided to ‘de-risk’ our lives, so we took money out of the trading account and paid off the mortgage. We have lived debt free ever since then.

This felt amazing… I was thrilled to be able to do that as a result of my trading profits. The banks didn’t own us any more, and life was great.

BUT 15 years later, this is one of my biggest financial regrets because had I left that money in my trading account, we would be so much better off now because of the growth in my trading account since that time. I basically started trading again with a small account after having mastered systematic trading because I took so much money out.

Instead of doubling down and pouring money into my account, I withdrew a huge chunk to pay off the mortgage. The lost compounding because of that decision is EYEWATERING!

I am not saying don’t pay off your mortgage, but I do want you to consider the full opportunity cost of any financial decision you make BEFORE you make it.

So there you go – my 3 biggest trading regrets… Ignore these lessons at the peril of millions of dollars in future regrets!

Student of the Week

My student of the week this week is Stephanie!

Stephanie joined The Trader Success System at the end of last month and has been powering through the program. All three of my coaches have commented separately about how insightful her questions are and how great it is that she is so curious to truly understand and get to the core of all aspects of systematic trading.

One of the fantastic things about the Trader Success System is just how quickly students move from total newbies to insightful confident traders asking probing questions that keep us on our toes.

I have often said that the thing I love most about teaching trading is watching the nature and depth of student questions change as they really ‘get it’. This is happening faster than ever, and Stephanie is a perfect example!

Well done Stephanie – it is an absolute pleasure having you in the program.

News from EST

There are 2 big things I want to share with you on the EST side… I am days away from publishing the “Wisdom from the Masters of Systematic Trading” eBook on the Kindle store. Thank you to all of you who proofed an advance copy and took the time to give me feedback, I very much appreciate it! 🙏🏽

The second (and most important thing) is that we will release the Stock Automation Engine in June. The Stock Automation Engine fully automates everything from Amibroker order generation to order placement and position sizing in Interactive Brokers and trade tracking and recording. I know many of you have been waiting for this patiently, and I can’t wait to get it out to you. I will release all the details in the next 2 weeks, and it will be available soon after that.

I have to tell you that fully automating your trading is LIFE-CHANGING. I know because I have my trading running on a VPS fully automated, which means:

• at 10am when the market opens in Australia, I am usually happily walking on the beach with my wife and puppy
• in the middle of the night, when the US market opens I am sound asleep
• when I am travelling and don’t have internet access, my trading continues mistake free
• all of the painful record keeping and monitoring slippage happens automatically
• I can diversify more broadly without killing my lifestyle
• If the power or internet goes down at home my trading doesn’t miss a beat
• when I am travelling, all I need is my phone to check everything is working, I don’t even carry a laptop most of the time now!

As I said, It has been life-changing for me!

If you want to upgrade your trading process with The Stock Automation Engine, CLICK THIS LINK TO REGISTER YOUR INTEREST AND get a 20% Launch Discount! Once you register you will be the first to hear the details and get access at a special discounted launch price.

On the Home Front

You can order basically anything online, can’t you?!? A few weeks back, I told you about my new Aquaponics garden that I am setting up… well it takes a while for the system to settle down and get ready to add the fish.

Last week it was finally ready, so I ordered 30 Silver Perch fingerlings online from a hatchery. A few days later, a styrofoam box turned up at my doorstep with a large oxygen filled plastic bag with water and 30 live fish in it! It was sent via courier, and all 30 fish survived and are now loving their new home in my backyard pond.

🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟🐟

Once they get big enough, it’s going to be like catching fish in a barrel at home 🤣😂🤣😂🤣😂

I told Stephanie we now have 31 pets (30 fish and a dog), but she doesn’t like the idea of eating pets, so I guess we have 1 pet (the dog… obviously) and 30 livestock 😉

Are you ready?

If you are ready to finally take control of your trading and want to discuss whether the Trader Success System Mentorship or one of our other courses is right for you, comment with the words “NO REGRETS”, and I’ll organise a time to speak with you and show you how to master systematic trading FAST!

Hope to hear from you soon.

Adrian

Founder & Master Coach, Enlightened Stock Trading