Price Wars: The Pillars of Trading

Thanks for joining me, Credible. Anonymity has become synonymous with crypto culture, starting with Bitcoin’s creator(s) Satoshi Nakamoto. Can you tell us about your choice to remain unidentified in this space? What are the benefits and/or drawbacks?

When I first started posting content I wasn’t anonymous. At some point I decided it would be better to establish my brand by using my logo as my profile picture. I wanted something people could instantly recognize. The idea was that this Twitter account was first and foremost geared towards technical analysis on crypto markets, rather than myself. I didn’t want to distract people from the focus, which is my content. The one downside to this is that I feel individuals can better connect to someone that they can see, and being anonymous is a sort of barrier between me and my followers on a certain level. It is something that I have thought about many times, and its very possible that one day I will go back to my old picture and no longer be “anonymous” per se.

What is it like to have a large following on Twitter? Do you feel pressure to consistently produce high quality content?

Tell us about some of the opportunities that come with earning your place among the most respected and followed crypto traders.

I don’t feel much pressure to be honest, however I do realize that with my following I have a platform and with that platform comes a certain level of responsibility. Ultimately each individual is responsible for his or her actions when it comes to the markets, but I try to avoid tweeting “FUD” or “hopium” for these reasons.

Most of my content is based on serious expectations I have for the market and is backed up with technical analysis. As far as opportunities, I would say the biggest one is the ability to network with like-minded individuals. If I ever have any questions about a certain asset or need a second opinion I have “easy access” to some of the top minds in the space, and this is invaluable in my opinion.

Who are your mentors in this space? How have they shaped your approach to trading and your general attitude about and involvement in crypto?

I wouldn’t say I have any specific mentors in particular, although this is something I definitely wish I DID have when I first started diving into technical analysis. That being said there are many individuals I have learned from since joining Crypto Twitter. The best thing about Crypto Twitter is that you have a multitude of talented individuals all doing the same thing in different ways. It definitely opened my eyes up to alternate methods of analysis and allowed me to have a more open mind about trading in general.

Without giving away your identity, can you tell us something about your background and how you became a cryptocurrency trader?

This is a very interesting story actually. I have always been a business-minded individual and all my friends know this. When I was younger I used to buy and sell trading cards and video games and as I grew older I began buying, repairing, and selling used electronics. I grew it into a fairly large online business. My friends saw this and often came to me with questions about investments and other business opportunities.

One day, one of my close friends’ younger brother texted me about Bitcoin asking me if it was a good time to invest. I can’t remember what the price was at that point, but I want to say it was somewhere around $1000. This was maybe the fourth to fifth time I had heard about Bitcoin but once again I dismissed it (without doing any research) and told him the growth was unsustainable. Then, some weeks later, I was talking to one of my cousins and she brought Bitcoin up as well and asked me for my opinion on it. I remember asking her what the price was now and she said it had just hit over $4,000. I was shocked. This time I really took notice because I couldn’t believe how much it had appreciated since my friends little brother had texted me earlier. That was the day when I began researching Bitcoin and cryptocurrencies and I ended up buying my first one while it was still under $4,000. Soon after I sold it at $11,000 and subsequently missed the entire run up to 20k.

After missing out on a near 100% gain and the “juiciest” part of the bull run due to a misunderstanding of a certain momentum indicator I told myself I would never make such a mistake again and began religiously studying technical analysis day in and day out. I really learned how to trade during the bear market, not the bull run that lead up to it.

In your opinion, what sets a great trader apart from a good one? How would you describe your trading style and mentality?

I would say that any profitable trader is “great” and that a trader can’t just be “good”. Trading isn’t easy and you need to master multiple aspects of trading to be successful. There is a very fine line between successful traders and unsuccessful ones and you are either one or the other. There is no in between. At least that’s the way I see it. If you can master the emotional and psychological aspects of trading, the risk management aspect of trading, and the technical aspects of trading, then you can be a successful trader and if you are a successful trader than you are a “great” trader.

I am primarily a swing trader as I have a few other business ventures that I attend to on the daily and so I don’t have the time to play many of the smaller moves. That being said, I find scalping very interesting and in the future it is a style of trading that I may devote more time to if the opportunity presents itself.

My mentality when it comes to trading is to- above all- be patient. When I first started trading I set personal goals for myself, such as make “X” amount of dollars per day. I soon realized that that simply isn’t the right approach for me. I found that a mentality like this would make me impatient and force me to enter sub-par trades in an attempt to hit that daily goal. So now I take my time and wait for the best trade setups. I have found that this has automatically made me a more profitable trader while taking fewer actual trades.

The terms "HODL" and "Buy The Dip" have become cult-like rally cries in crypto. As a trader, what do you think about these macro strategies?

Does someone who actively trades on shorter time frames have an advantage over the guy/gal who buys and holds?

I think that in a bull market, these strategies are great and should be used in combination with active trading. Personally, I will likely set up a “HODL” portfolio of long term holds that I won’t actively manage and then a separate portfolio of assets that I will actively trade once the next bull market commences. I think for most, “HODL”ing and buying the dip is the BEST way to play a bull market simply because most can’t effectively trade a market to begin with and a lack of emotional control can wreck havoc on a new traders portfolio even in a bull run.

In a bear market however, “HODL”ing and buying the dip is the worst thing someone can do. I have seen plenty of individuals “dollar cost average” all the way down from $20,000 and most are now severely underwater and have no fiat left to buy bitcoin with at current prices.

Meanwhile, individuals who recognized that $6,000 was a false floor for example and weren’t so adamant about “HODL”ing have cashed out and can now literally double their stack of bitcoin if they so choose. In a bear market it makes little sense to HODL while in a bull market it can make a lot of sense for a lot of people.

Tell us about some of your most successful trades. Did you build your stack largely off a few trades or was it a much more cumulative effort?

When I first started trading I made a lot of money very fast, and I lost just as much even faster. Quite simply I had no idea of risk management or position sizing so both gains and losses were amplified. Since then I have obviously learned the importance of risk management and position sizing so most of my “stack” has been built with smaller, consistent trades as opposed to a few “big hitters”.

Most of our readers have spent some time on "Crypto Twitter" (CT) and see charts posted by traders promoting a specific setup or winning trade. These charts almost always include lines labeled "Support" and "Resistance".

Can you give the readers your definition of these terms and some background on why they are valuable?

Sure! “Support” and “Resistance” are the cornerstones of all technical analysis. To put it simply, areas of “support” are areas on a chart where there is demand from buyers for a particular asset at a particular price, and areas of “resistance” are areas on a chart where there is supply from sellers for an asset at a particular price. These are key levels of interest for both buyers and sellers. As a buyer, you would want to enter at “support” levels because you know that price has a higher likelihood of holding at these levels due to demand (buying pressure) from other buyers like yourself. As a seller, you would want to take profits or sell at “resistance” levels because you know that there is going to be increased supply (selling pressure) at these levels that may hinder price from continued appreciation.

Knowing where these key levels are on a chart are vital for being a successful trader as they allow you to place a well defined stop loss and take profit targets in order to minimize your losses and maximize your gains.

I often see charts drawn with zones of support/resistance instead of hard and fast lines. How would you differentiate the two and their application to your trades?

Zones of support and resistance are areas of confluence and/or consolidation on a chart where there has been a lot of buying and selling activity in the past indicating high levels of trader interest.

Support and resistance lines are found by looking for specific price levels on a chart that have seen repeated reactions with price in the form of candle closes or wicks. For me, the zones are more important on an intra-day basis while hard and fast lines are more important to watch during key low and high time frame closes.

Could you explain the difference between horizontal and trendline support/resistance? Do you incorporate both into your trades (if so, how do they interact)?

In my opinion the primary difference between horizontal and trend line support/resistance is that horizontal support and resistance shows you specific price levels of interest but does not give you any idea of the time at which those levels will be met.

Trendline support and resistance on the other hand gives you key price levels to watch out for as well as an indication of WHEN these levels may be hit. I do incorporate both into my trades but my use of horizontal support and resistance levels is more significant. For the most part, I only use sloped trendlines in order to make out price channels which can help me identify if a price movement is corrective (short term deviation from the primary trend) or impulsive (a progressive move in the direction of the primary trend).

If we think of a marketplace as a battleground between bulls and bears, how does trade volume play a role in which side declares victory?

What can you tell us about how you incorporate volume into your trading strategy?

Although there are differing opinions on this specific topic, my belief is that the higher the volume is while price is trending, the more strength there is behind it, regardless of the direction in which it is moving. For me, I primarily use volume to determine if the move I am seeing is corrective or impulsive in relation to the larger move at hand. For example, if we see a drop on high volume and then a steady rise on lower volume it would imply that the rise is simply a corrective move ( not backed by any real strength) and that we can expect to ultimately see a continuation of the prior downtrend. In the same way if price rises, peaks, and then begins falling on declining volume, we can assume that this is just a short term correction before price continues upwards.

Declining volume can also often simply imply that we are seeing a consolidation period before expansion, and in this case the declining volume is neither bearish nor bullish. It simply implies that buyers and sellers have reached a standstill and that a larger move with increased volatility in either direction may be coming soon.

We’ve talked about Support/Resistance and Volume and how they act as pillars of Technical Analysis. Are there other foundational elements to a successful trader’s strategy?

I believe the answer to this question would vary depending on who you ask. There are many traders that trade using different strategies and each will likely place a high level of importance on various factors. I know many traders who use a plethora of indicators to trade, some that rely almost exclusively on chart patterns, and others that trade purely based on price action.

For me personally, I like to utilize Elliot Wave analysis, horizontal support and resistance along with price action, and occasionally RSI. That being said, I do think every trader would agree that understanding the fundamentals of market structure is vital to being a successful trader, regardless of which of the above strategies you choose to use.

We’re officially in the longest bear market in Bitcoin history. Exchanges are closing, funding has dried up for many projects, people have left in droves and the misery is palpable.

Is this just another dip and a false declaration of crypto’s demise? What are your thoughts about this current market and where we’re headed?

I actually wrote an article on Medium that covers this exact topic. I do believe that this is just another dip, albeit one of greater magnitude than any that we have seen in the past. Let’s imagine the market as a cycle of peaks and troughs with smaller corrections in between. Since 2011, we have seen three major bear markets, each correcting the multi-year bull run that preceded it. I believe that these bear markets were all mid-cycle corrections of a much a larger cycle that began in 2011 and that peaked at 20k last December. This bear market then is not just a mid-cycle correction but actually a complete cycle correction, or, the first “trough”, of all the progress bitcoin has made since 2011.

For this reason I expect it to be much longer than most are anticipating. As you mentioned, funding has dried up for many projects and many will not make it through this bear market, but that is ultimately a benefit for the crypto market as a whole as many of these projects shouldn’t have even been here in the first place. I think that this bear market will help to remove the false projects from this space while at the same time allowing for real growth in infrastructure of those projects that are legitimate, ultimately making the entire space stronger in the end.

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