Lecture Notes on Systematic Trading with Adrien Reed

Introduction

• Guest: Adrien Reed - Systematic Trader
• Background:
  • Started with fundamental analysis, then technical analysis as a discretionary trader, before transitioning to systematic trading.
  • Trades across multiple markets (US, Hong Kong, Australia) with systems that can profit in both bullish and bearish conditions.
• Connection: Adrien’s social media profiles in the description.

Key Topics Discussed

1. Journey into Trading

• Early Influence: At age 8, played "The Stock Market Game" which initiated interest in trading.
• Path to Trading:
  • Graduated university and realized traditional job wasn’t for him.
  • Sought advice from his father about early retirement; started researching stocks.
  • Tried various strategies, including fundamental analysis and technical analysis, with limited success.
• Transition to Systematic Trading:
  • Read "Market Wizards" which inspired systematic trading.
  • Developed his first trading system after extensive research, which became profitable.

2. System Development and Trading Systems

• Development Principles:
  • Tested various systems, including trend following and mean reversion.
  • Designed systems that work for different markets.
• Mean Reversion Trading System:
  • Discussed principles behind a mean reversion strategy that utilizes RSI and volatility filters.
  • Emphasized importance of liquidity, entry and exit rules.
• Automation of Trading:
  • Adrien uses a fully automated trading system that handles trade execution, data updates, and performance monitoring.
  • This reduces emotional and operational stress associated with trading.

3. Market Behavior and Strategy Adaptation

• Market Differences:
  • Strategies may need to be adapted for different market conditions (e.g., US vs. Australian stocks).
  • Example: A trend following system works in Australia but needs adjustments for the US market.
• Behavioral Patterns:
  • Discussed the necessity of understanding market behavior for system development and adjustment.

4. Risk Management

• Capital Allocation:
  • Importance of determining how much capital to allocate across multiple systems.
  • Use of backtesting to evaluate performance and exposure.
• Stopping Trading on a System:
  • Criteria for ceasing to trade a system include prolonged underperformance or significant drawdowns.

5. Personal Insights and Lessons

• Formative Moments:
  • Importance of clear goals in trading and life.
  • Learning to ask questions and not fear looking foolish is key to growth.
• Expectations:
  • Trading is not a get-rich-quick scheme; it requires patience and commitment.
  • Automation and systematic approach can enhance trading success and reduce emotional stress.

Conclusion

• Key Takeaway:
  • Successful trading involves a systematic approach, clear goal setting, and the ability to adapt strategies to changing market conditions.
  • Learning from experiences and being open to asking for help is crucial.
• Resources:
  • Get the complete rules for the mean reversion system at enlightenstocktrading.com/free.
• Follow Adrien Reed on social media for insights and updates.