On Tuesday, the 9th of June, Bingbon hosted popular crypto trader Big Cheds for an AMA.
Big Cheds is a popular and respected trader on Twitter and runs his own blog where he shares knowledge about crypto trading.
Here is a wrap up of some of the questions asked by the community.
Q: How did you get started in trading, and what is your story with cryptocurrency?
Thank you for asking, and thank you to everyone for joining us here today. I have been trading for more than 10 years, and started to get serious around 2013/2014 where I traded OTC penny stocks, and started to get serious about my trading practice. Around that time I began to study Japanese candlesticks, and have specialized in that form of TA. I am also currently studying classical or western TA, and am studying for the CMT Level 1 exam. In the middle of 2017 a friend of mine introduced me to cryptocurrencies, and I began to focus my online presence from the OTC to crypto. By then I had built up a large following, sharing my chart knowledge and basic risk management skills to help the newer traders, and that is where I grew the reputation as a “newbie helper.” I transitioned those skills into cryptocurrencies, and my audience only grew from there, as I grew as a trader, teacher and mentor. And that brings me here to you today.
Q: What are the basic indicators to read a chart?
As a beginner trader it is best to keep it simple, and focus on one or two indicators to get started, rather than trying to adopt a more complicated strategy that an advanced trader might use. I would recommend starting with the RSI, or relative strength index. You can use this as a basic guide to understand the broader trend of any stock/asset, and help gauge if that asset is overbought or oversold.
Beyond that I would use volume, as that is the most important indicator, and tells you the strength of a move. Keep in mind as a general principle you will see more volume at the top and bottom in a chart. Lastly I would recommend studying some of the basic Japanese candlestick signals, such as hammers, spinning tops and doji, as they express the psychology of the market. If you are serious about the discipline I would recommend any book by Steve Nison, especially “Japanese Candlestick Charting Techniques.” One should absolutely use the Bollinger Bands in any form of technical analysis. They help indicate over bought and oversold, and are also excellent in helping you understand the power of any candlestick signal.
https://www.investopedia.com/terms/b/bollingerbands.asp
Q: Even though you trade TA instead of fundamentals, are you taking the actual US situation (macro events) in consideration on or trades?
As for macro events, I am watching these events unfold and all the while enjoying all the talking heads predicting what will happen next. Most of them have no idea. From my point of view it seems that the broader equities market seems to be disconnected from the “facts on the ground,” vis a vis the global economy shutting down for months, and the current unrest we are seeing sweeping across the globe. That being said, no I am not taking any of that into account. I study the price action presented on the chart before me, and gauge the direction and strength of trend from that. I may take into account what I am seeing on social media to compare with the signal on the chart, but that is about it.
Q: If you had to give advice to a newbie like me, which one do you prefer: isolated margin or cross margin?
In regards to Cross versus Isolated margin, in my view the goal of any trader should be risk management and capital preservation. When you are starting out you are most likely acting more impulsively and not properly managing your risk, by limiting the amount of exposure you put into any single position. With that in mind, I would recommend they use Isolated Margin, as that will help you “define you risk,” limiting the total potential loss. As a new trader you have to give yourself time to learn, you have to give yourself as many repetitions as possible while you learn the trade, and that only comes from trial and error. If you risk too much in any one trade early on, you will be robbing yourself of the chance to keep on trading, and keep on learning.
Q: Where should one start first: margin trading, spot trading, or futures trading? What are the pros and cons of the examples given above?
This is a great question, and there is a lot to unpack here. If you are just getting started your best bet is to trade spot. Margin trading is high risk and high reward as anyone will tell you, and as new trader it is a good idea to avoid high risk. While you are leverage trading you can trade up to 150x, which is perhaps the equivalent of driving without a seatbelt. Spot trading is a simple bet on the price going up or down, with no leverage (no amplifier), and as long as you use a stop loss and remember to take profit you will have a good shot at being successful. Once you have mastered trading spot, you may feel confident enough to move on trading leverage, starting small at 5x and moving your way up. Futures trading is another option after you have learned how to trade spot. With this option you are able to speculate on the future price without having to hold the underlying asset. That has its advantages, but I personally recommend starting with spot. That way you can keep it simple and have some skin in the game.
Q: For newbies in trading, what is the easiest for chart analysis: CRYPTO or FOREX. Also to expand on that, do you see any major differences trading across different categories?
Great question. In general technical analysis, or TA will work on any market with volume. The more volume the better, that way the signals you receive has some value in them. Forex and crypto markets are similar, but I would argue that crypto markets are much more volatile, and with that you have more risk/reward. You really never know when it may happen, but at any time Bitcoin can pump 20% one way or another. That volatility will upset most Altcoin charts, as BTC leads the way and stop losses will get triggered. You hear a lot about those “darth maul candles” with crypto, where there is a huge daily range and a small actual candle body. This is called a “high wave spinning top” in candlestick theory, and symbolizes the crypto market. Forex is a little more stable, so based on that alone I would say forex is probably easier to analyze for chart analysis. Overall though there are many similarities, which is why I enjoy trading them.
Q: What did crypto mean to you during your battle with cancer?
Shortly after I discovered crypto I was diagnosed with cancer, and as i was going through treatment I watched Bitcoin hit 20k, and then we had the ensuing Altcoin season. While this was going on I had my twitter account, which I used to communicate what I was going through, and my followers shared in my journey and offered me their strength. Crypto was an amazing distraction for me as well, as i kept my focus on the charts and continued to provide valuable information to my followers. That purpose helped to keep me going. The strength and inspiration i received from my followers inspired me to one day write a book, which I have just published.
Q: Do you think trading brings anxiety and anger in a losing trade, how do you control emotions? Any mind exercise or and meditation you could suggest?
Yes. Fear of losing out causes the trader to chase a position they should not be in. Fear of losing causes a trader to refuse to cut for a loss when their trading plan has failed. Greed causes a trader to refuse to take profit on a trade when they should. Boredom causes a trader to enter a position just because they crave some action, they crave to gamble. After you lose a big trade, often you jump back in to an even riskier trade just to make the money back. Here is what you can do: Start with a trading journal. Every time you enter a trade, write down in this journal why you entered the trade, and then when it is over write down your observations of the price action, as well as your own emotions. Over time you will build up a nice database for you to reflect on, and to learn from. would also recommend doing some basic yoga or meditation (stretching and breathing) to help you get in the right frame of mind before you trade. Do not trade while you are drinking, or doing drugs.
Q: Aside from BTC, which other cryptocurrencies do you like to trade? What kind of timeframe are you normally trading on? Fast trades (a few minutes), or longer-term holds?
Other than Bitcoin, I like to trade the Altcoin/USDT pairs here on Bingbon. I tend to focus on the charts with the most volume, and plays like TRX, ADA, XRP for example always have volume and interest. When I am trading, I start with a daily chart and work my way down. I use the daily chart (Or weekly chart) to understand the broader trend, and then use a smaller time frame like a 1 hour chart to pick my entry. For even faster trades like leverage trading, I use 15 min and 1 hour. Longer-term holds are based on 12 hour, daily and weekly chart view. I hope that answers your question.
Q: Can you share your risk management? I have some doubts, because sometimes they said risk management is about the funds, and some said it’s about leverage.
Risk management is as important, if not more important than technical or fundamental analysis. I was a poker player for many years, and there is a widely accepted bankroll management strategy that applies nicely to trading crypto, forex or really any other market. In general you should NEVER put more than 5% of your total trading(or investing) funds into any one play. This way you will allow yourself the chance to learn from mistakes, and enough time to develop proper strategies to maximize future gains. Secondly, always use a stop loss. When you enter a trade you should have a specific price level in mind that you will cut your losses at. This way you are defining your risk, rather than letting the risk define you. Lastly make sure to “scale in” and “Scale out” of your positions. If you plan to say wager $3000, split that up until 3 buys, and not at all once. Buy where you think the bottom is, then if it goes a little lower buy more, and then you can fire your final “bullet” a little lower if need be. The same applies to taking profit, sell some as you approach resistance, sell some more on the break, and then ride the last amount when a reversal signal hits. Be flexible.
Q: Do you recommend copy trading to beginners?
Copy trading is an excellent feature, and it is fun to see what happens when someone else is pulling the trigger. That being said, you will never learn how to be a trader, nor will you ever be in control of your own destiny with this approach. There is a common saying, “Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime.”
Q: Most of the Altcoins move in the same direction with Bitcoin whenever it pumps or dumps. Is there really a connection between Bitcoin and Altcoins?
So yes, most of the Altcoins move with Bitcoin, because Bitcoin is the king. There is a key measure you can watch to understand the overall money flow in the market, “Bitcoin Dominance.”
In any case that is a good explainer on the concept. So what is the connection to bitcoin and Altcoins beyond that? If you look back to the 20k run, as I talked about earlier the alt-coin season came AFTER that, once bitcoin had topped off. Generally speaking the best market for altcoins is when bitcoin is consolidating, because the money flows out of BTC and back into more speculative plays. When Bitcoin is moving up, many people dump their Altcoins to ride the king (Bitcoin), and when it is consolidating they pull money out and ride altcoins. When Bitcoin is in a clear downtrend, Altcoins USD value suffers, as they are worth X/BTC.
Q: What could be your most exciting adventure in terms of crypto trading that could help most of new traders joining? Will you recommend Bingbon to new traders? What did you like about it?
My most exciting adventure in crypto has to be when I watched Litecoin go from $30 to $400. I was not in crypto back when $BTC was that low, so for me it was the excitement of that massive Litecoin run. I would recommend Bingbon to new traders. There are many markets they can trade, they have access to most of the popular altcoins, and they can use the copy trader feature. They are also a secure and trustworthy exchange, and for that reason I stand behind them.
Q: Do you have any premium discord for trading? And have you worked as copy trader for an exchange yet?
I do not have a premium discord. I am however a founding analyst at Bitcoin Live, the best in class educational platform for crypto.
And to answer the second part of that, no I have not worked as copy trader for any exchanges yet.
Q: How can people follow you?
Thank you to everyone for joining us here today.
I can be found on Twitter, Youtube and if you are just getting started you check out my blog for new traders.
If you are interested in my cancer memoir, you can find it here.
And lastly, do not forget to sign up for Bingbon!
Thank you for having me today! Good luck to everyone, stay safe.
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