Adrian Reid explains that consistently predicting market bottoms is not possible and argues for a systematic, diversified trading approach that remains agnostic to whether a rally is a true bottom or a temporary bounce. He describes how systematic systems scale exposure gradually—taking long positions as rallies prove themselves while retaining short exposure—so a trader can perform regardless of market direction and sleep well at night. The speaker also defines long and short positions with a simple numeric example.
Chapters
Look, that one of the big mistakes that people make is trying to predict, I want to say this right up front, no one can accurately predict the market consistently over and over again because we don't have a crystal ball and we don't know what events are going to unfold. I mean, it might have been the market bottom. And so I sent out the communication. It's actually, if you read all my emails, it's a bit tongue in cheek about calling the bottom. But you want to sort of understand the implications, I think, in terms of what ifs. If that was the bottom and it goes up from here, what will happen in my portfolio? If that wasn't the bottom and it's just a temporary rally and it collapses and goes further down, what would happen in my portfolio? And you know, you're successful as a trader, particularly as a systematic trader, if you don't care what happens, right? If, if that was the bottom and it rallies from here, my systems that make money when the market goes up will continue to load in and give me more and more exposure and now make money on the way up. If that wasn't the bottom, then what will happen is there's a bit of a rally. I've started to buy stocks to make money on the way up, but I'm not fully invested yet because my systems enter kind of gradually as it proves itself. Does that make sense? I've got a bit more long side exposure, but if it turns around and falls, then I also have some short side exposure. And if you, you know, for someone listening who doesn't know what the long side and the short side means, Long side is when you buy something hoping it will go up in price so that you can sell it later at a higher price and make a profit. Short side is where you borrow a stock from a broker and you sell it first. So you sell it at $100 a share, let's say, and if the market falls and you buy it back at 50 and you give it back to your broker, you make the $50. So it's like the long side, when it goes up, you make money. The short side, when it goes down, you make money. So if that wasn't the bottom and it's just a rally and it's going to collapse, then my short side will continue to make money. So I don't really mind whether that was the bottom or not. And that's the way you want to be. You want to be agnostic to what's going on in the market and you want to be able to sleep well at night, regardless of what happens. And if you're diversified across markets, strategies, timeframes, and you have a systematic approach, then it's actually very easy to sleep well at night and trade at the same time.
