Stock Market Update | Nasdaq on the Edge – See What Happens Next…

In my stock market update last week we discussed the two likely scenarios for the US markets in the near term (Continued rally OR Another leg down). This week started strong, but with the US Political $&!% show continuing to rattle the markets the US markets fell back towards the recent lows. 

I truly can’t comprehend why Trump feels it is ok to attack the sovereignty of other nations, question borders and bully countries that have been allies for decades. We will no-doubt be feeling unexpected ramifications from these events and the completely unnecessary trade war for many years. 

I honestly feel sad that this is where the US Leadership is politically and I am grateful to be on the other side of the world. Although sometimes I truly don’t think I am far enough away. 

Staying away from the news is good for the soul… especially now!

Needless to say the markets don’t like the uncertainty and if 5500 on the S&P500 or 19150 on the Nasdaq is breached then we can reasonably expect another rapid down leg in the US markets. 

Of course we need to remember that people over react and we shouldn’t try to predict where the markets are going. It is far better to be prepared with the right strategies to profit regardless of the scenario. 

Interestingly (and thankfully) the weakness this week was much more pronounced in the US than Australia and Hong Kong. Australia actually scratched out a positive week (just) and while the Hang Seng did correct this week the chart is still looking strong (for now) and hasn’t made a new lower low.

Looking at the weekly chart of the Nasdaq 100 below, if the recent low at 19150 is taken out, there could certainly be a move down towards 18400, or 17000 in a more extreme scenario. 

Take care, this dip could keep on dipping!

Here’s a look at the Global Market Indices:

As you can see, not a lot of green in the last week, but here are some systematic trading principles that help us survive (and even make money) in situations like this:

1. Trade an international portfolio of systems: We never want all of our capital exposed to one country or region because the geographical and political risk is too high, as we see right now in North America.
2. Trade Long / Short on multiple markets: When you have systems that go long and short in multiple markets, corrections are much less concerning. At the moment in the EST portfolio there are long systems that are doing well on the long side (not in the US) and there are systems that are poised to profit if the US market collapses further.
3. Sector concentration is risky: I have spoken to many traders who focus exclusively hold US tech stocks. This will work great some times and make you feel like a genius, and other times the volatility will make you want to puke when you look at your portfolio. I like a portfolio of systems that includes multiple Markets / Strategies / Timeframes. Yes I have a long side momentum strategy for US tech stocks which I love, but I would never allocate 100% of my capital to one market like that!
4. Allocate capital to meet your objectives: If you are in an uncomfortably large drawdown at the moment and freaking out then there is something not right with your capital allocation, position sizing or leverage. The Nasdaq decline in the last few weeks is NOTHING compared to what has happened in the past. We need to design our portfolios so we can comfortably tolerate events much worse than this.
5. Remember this is a long game: Market panics and political instability are relatively short lived. In the long run the markets will calm down and recover. I have heard of many traders quitting because the market has been too difficult and they are not making money. But when you take a 10-20 year view, a challenging period becomes much less of an issue.

Automate your trading to reduce the burden: Automated trading does not eliminate the emotion, but it certainly helps reduce it. We can more objectively monitor when we are not in the trenches placing orders ourselves. I find my automation really helps my psychology during periods of uncertainty and waiting for market shifts. Click here if you want to see how myself and many of my students are fully automating their portfolios.

The Crypto markets have not been much better this week. Bitcoin is pretty much flat but altcoins are falling again. This market is still a watching brief to see if there will be another down leg.  

All in all this was a shaky in the markets. Political tensions, trade wars, falling consumer confidence, rising VIX are all things that make markets nervous. If you need help to build the confidence to follow your systems and establish a portfolio to smoothly navigate periods like this then please click there to apply to join The Trader Success System. Our goal with all members is to put you in a position of control so that you can trade with confidence no matter what the market does.

Mental Drawdowns:
The Hidden Saboteur of Your Trading System

Most traders obsess over financial drawdowns, but what about mental drawdowns? The ones that silently sabotage even the most robust trading systems.

You know how it goes… your trading system looks perfect on paper. Your rules are solid, your backtest results are impressive. But when it’s time to execute? Suddenly, you hesitate. You skip trades. You downsize positions. You question your own system.

This isn’t just a blip—it’s a mental drawdown. And it can quietly bleed away your profits, confidence, and discipline without you even noticing. It’s more dangerous than financial drawdowns because it starts within your mind before the damage shows up on your P&L report.

Here’s what to watch out for:
🚩 Avoiding trades that meet your entry criteria.
🚩 Tweaking your system mid-run due to doubt.
🚩 Overanalyzing every small deviation in performance.
🚩 Emotionally drained even when your account balance is fine.

Most traders don’t realize they’re in a mental drawdown until they’ve wrecked their system or abandoned a perfectly good strategy.

Want to know how to detect and break the cycle before it ruins your trading? Read the full article here

Read the full article here

Trading Tip of the Week

Approach Trading System Development Like a Scientist

When developing trading systems, always document your process step by step. Treat it like a science experiment—write down your hypothesis, method, results, and conclusions for each test.

This helps you avoid rabbit holes and ensures you can pick up where you left off without losing momentum. Use tools like OneNote to organize your notes, including the code you’ve written and the backtest results.

By recording the next step after each stage, you’ll maintain clarity and progress efficiently, even if life interrupts your work. This approach builds a solid foundation for systematic trading success

Quote of the Week

Lesson from The Trader Success System  

In our Breakthrough Workshop this week, members of The Trader Success System attended a panel discussion between myself, Coach Adam and Coach Carson. We had a deep discussion about trading system development.

We covered a broad range of issues from beginner to advanced… The goal of the discussion was to provide valuable guidance based on real-world experiences to help traders improve their trading systems and boost their performance.

Here are some of the lessons that were discussed during the session…

System Testing and Optimization:

• Testing and validating trading systems thoroughly before applying them in real markets is critical.
• Backtesting helps identify strengths and weaknesses, providing confidence in a system’s reliability.
• Continuous refinement of systems based on performance data ensures better long-term results.
• Learning from mistakes and testing new ideas are vital parts of the development process.

Risk Management:

• Keeping drawdowns manageable is key to consistent growth.
• Effective risk management involves not only controlling risk per trade but also considering broader factors like market exposure, system correlation, and capital allocation.
• Risk management systems must be thoroughly tested and implemented consistently to protect capital.

Diversification:

• It’s essential to have a diversified portfolio of trading systems to minimize risk and enhance profitability.
• Combining different systems reduces the impact of drawdowns from any single system, leading to smoother returns.
• Diversification allows traders to benefit from different market conditions and reduce dependency on a single strategy.

Psychological Factors:

• Detaching emotions from trading decisions is essential for success.
• Systematic trading helps eliminate emotional interference by providing clear rules and processes to follow.
• A structured approach makes decision-making faster, more confident, and less stressful.
• Reducing emotional influence is crucial to maintain consistency, especially during market drawdowns.

Implementation Efficiency:

• Establishing clear rules and processes allows traders to manage their systems in less time and with greater confidence.
• Automation can enhance efficiency, enabling traders to handle larger portfolios without increasing workload.
• Clear systems lead to faster, more precise decision-making and more consistent results.

Ongoing Improvement:

• Continually refining and improving trading systems is necessary for staying competitive and adapting to changing market conditions.
• Reviewing performance data, learning from mistakes, and adapting strategies are key components of ongoing improvement.
• The goal is to maintain and enhance profitability while reducing overall risk exposure.

Closing Thoughts

The workshop emphasized the importance of approaching trading system development in a structured, systematic way. From system testing and risk management to diversification and ongoing improvement, applying these principles will lead to more consistent and profitable trading outcomes.

We diver DEEP into all of these issues in The Trader Success System, so if you want to learn more about developing your own trading systems, click the button below to find out more about the program.

Learn More About The Trader Success System

I would love to hear how you are feeling about your trading at the moment. Depending on how everyone is feeling I will tailor my content and updates to focus on how everyone is feeling right now – shoot me a reply with which word best describes how you feel about your trading right now from the following:

• Confident
• Cautious
• Uncertain
• Anxious
• Panic

I appreciate you – thanks for reading this week’s stock market update.

Remember – You are only one trading system away!

Adrian Reid

Founder, Enlightened Stock Trading