In this short commentary, trader Adrian Reid examines the common practice of capping the number of daily trades in a trend‑following system. He illustrates the downside of spacing entries across multiple days when a new bull market erupts, highlighting three main points: (1) delaying entry creates an opportunity‑cost loss because early profits are missed; (2) the strongest, most profitable signals appear first, so limiting trades causes you to skip the best opportunities while later signals tend to be weaker; (3) while this logic holds for pure trend‑following, it may not apply to mean‑reversion strategies, which would need separate testing. Reid concludes by urging viewers to download his free "Trader Acceleration Bundle" for systematic, objective trading and to subscribe for future videos.
Chapters
In your trading, have you ever been tempted to limit the number of trades you take per day so that you can respond to market moves gradually rather than getting in all at once? In trend following, this feels like a really great idea, but is it? Let's say a new bull market starts, and on day 1 of the new bull market, you get 25 signals. But you say, whoa, I don't wanna take 25 trades in one day. I'm only gonna take 5. And then the next day, I'll take 5 more. And then the next day, I'll take 5 more. Until I'm fully loaded. I'm spacing it out. What are you actually doing? We're delaying our investment. So what— there's an opportunity cost there, right? Because if the trend continues and we don't get in on the first day, then we miss out on the first day's profit and we get on the second day. There's a delta there. So that's one thing. Think about the nature of the signals as well. Which stocks will signal first in a new bull market, the strongest ones or the weakest ones? The strongest ones, obviously. And if you don't take all of the strongest signals because you're limiting your number of trades you're taking per day, you're gonna skip some of the strong signals. You'll take some of them, and then you'll have another bunch of open slots for the next day. And then the next wave of stocks signals, are they stronger or weaker than the first ones? Weaker. So by delaying, you're not necessarily getting the best signals for trend following. That may or may not be true for mean reversion. We'd have to test that and see. But for trend following, I would say that's certainly true. If you wanna learn how to trade objectively like this with proven systematic strategies, go to enlightenedstocktrading.com/free to download my free Trader Acceleration Bundle. And don't forget to subscribe so you don't miss the next video.
