Short Q&A-style video by Adrian Reid explaining there is no single ‘magic’ indicator for buying/selling stocks. Reid advises traders to systemize ideas into rule-based trading systems, backtest and robustness-test those rules across markets and parameter ranges (e.g., using Amibroker), and only trade rules that demonstrate historical profitability. He emphasizes that past losses predict future losses while past profits need careful testing to suggest future viability.
Chapters
Is there a clear way to know when to buy and when to sell a particular stock?
And this is a great question when you're starting out right, how do I know when to buy, when to sell? And the answer is there's many ways to know. There's many ways to actually be profitable trading stocks in the market, okay? But.
What you need to understand is there's no magic indicator, there's no rule that is universal, okay? But there are rules that work and there are rules that don't work. The trick is, how do you as the new trader learn the difference? And the way you learn the difference is by realizing that you don't want to focus on that individual trade, that individual stock. You need a set of rules that you can test system so that you know that the system is profitable. Because if I said to you, well, you know, a good time to buy a stock is when it hits a 200 day high and the volatility is low and the XYZ indicator is doing ABC. And then a good time to sell is when it hits a 25% trailing stop. If I just tell you that, you know, that might be profitable, but you don't actually have the confidence in those rules because you haven't done any other work yourself. You haven't investigated it. So the best way to find whether or not a particular rule is profitable or it's a good time to buy and a good time to sell is to take those ideas, put them into a complete system, use a package like amibroker to back test those rules and make sure they're profitable. And what you'll find is that a lot of the things that people talk about in books and online, a lot of them just aren't profitable. So you really need to test things for yourself. I have a bunch of trading systems. Again, when you join my program, students get access to like 18 different trading systems in the trader success system. And you can take some of them and use them, or you can modify them for your own purposes. But the whole structure of the way I teach is that your success is determined by the amount of control and confidence you have.
And the way you get that control and confidence is by taking those rules, testing for yourself, see that they work over time, and then pressure testing them by, you know, optimizing, by doing a robustness test where you vary the parameter values by testing them on different markets and prove to yourself that they work. And then you can apply those rules consistently and make money. So I hope that helps. There is no magic one rule, but the idea of systemizing your stock trading is a game changer. It will put you in control, it will increase your learning, accelerate your learning curve so much, because you don't have to wonder, is this real profitable? Is that real profitable? You don't try things out. What you do is you take your ideas, you put them into a system, you test it until you find out if it's profitable or not. And some people will say, but back testing, that's just past data. You know, that's not the future. So it's worthless. Which is, to be honest, complete bullshit. Because if you have a set of rules and they didn't make money in the past, you know, if you applied those rules in the past and they lost money, they are not going to make money in the future. They're absolutely not going to make money in the future. So past performance, past losses from a strategy or a system pretty much guarantee future losses. Past profits don't necessarily guarantee future profits, but there's a good chance that if you test it right, if you test it the right way, with a good process, that past profits can turn into future profits. So back testing your rules, learning to trade systematically is absolutely the best way to succeed at this.
