Adrian Reid shows traders how to reduce risk in systematic trading systems. Increase positions across stocks, diversify into multiple markets, run different parameter versions of the same system, and operate non-correlated systems so gains offset losses.
What should you do if you're not comfortable with the level of risk that your trading system is taking on? My guidance is, if you're not feeling comfortable with the level of risk you're taking, think about the simple things first, the high-impact sledgehammer things you can do, which are what? Increasing number of positions the system takes so you reduce your stock-specific risk. Diversifying into different markets, having systems in different markets so that you're reducing the market-specific risk. Diversifying parameter sets, having multiple versions of the same system so you're adjusting your timing risk, and having non-correlated systems so that they can offset each other when one is profiting and one is not. If you want to go deeper into how systematic trading can help you improve your results, there's more videos on the Enlightened Stock Trading channel.
