EP 031: Low-Correlation Equities Trading – How to avoid being tied to the market w/ Luke Cummings

Aaron Fifield Podcast 1 Comment


This week I spoke with Luke Cummings, an Australian equities trader with 14 plus years of experience on his side.

After making a last minute decision that journalism wasn’t a good fit, Luke went into a finance degree which lead him to become a stockbroker, which then lead him to become a trader.

Now days Luke remains an active trader, and operates a hedge fund based in Sydney, as well as running The Long And Short Of It – a model portfolio service and trading blog.

We keep things fresh in this interview, by discussing trading methods and strategies that haven’t been spoken about in previous episodes. And additionally, Luke shares some of the common traps that often catch entry-level traders, and how you may be able to avoid the avoidable with insight.

Enjoy team!

“You can tell a lot about a person when they’re under pressure and losing money.”

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“Assuming it’s impossible to do what the very best are doing, is a mistake.”

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Lessons learnt in this interview:

  • Luke speaks about the ‘efficient market hypothesis’ which is often taught in universities, and how it was a real eye opener to discover inefficiencies in the market.
  • The challenge of not knowing if you’re just lucky, or if you’ve found a sustainable angle to exploit the market.
  • The unexpected benefits Luke gained from a finance degree, and working in customer service at an online broker, which shaped him into a better trader.
  • Luke explains a loophole strategy that involved purchasing discounted securities and proved to be very profitable in his early years, until the rules changed – closing this window of opportunity.
  • An overview of Luke’s rules-based discretionary trading methods, and involvements with day trading, plus longer term strategies.
  • Luke shares insight to one of his favourite setups, the ‘Takeover Strategy’. Plus how you can identify these same opportunities without riding rumors,  and with the added benefit of low-correlation to the broader market.
  • The common traps and mistakes made by entry-level traders, and a few tips that may help you to avoid the avoidable.
  • And much, much more…

Links and resources mentioned:

  • Takeover Strategy (PDF) – Here’s a link to the document which outlines the ‘Takeover Strategy’ discussed during this interview, it also includes a few case studies with detailed charts.

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