“So you trade too?” Yes. I explain it fairly often and like to connect with other traders so I figured I’d sum up where I’m at and how I got here on this page:
My History: Stocks to Forex to Crypto
I got started in trading with gold and silver ETFs for a year or so during the 2011 run to $1950 and $49. In early 2016, I started with Forex brokers. I like them a lot better, since they are:
- 24/5 — less worry about overnight gaps
- rather than $5-10 transaction fees, there are tiny percentage based commissions, down to something like $0.04.
- rather than 3:1 or so leverage on a few ETFs, leverage can be as high as 500 or 1000:1. Sometimes I like to trade with a style that has high confidence over short small moves, so leverage can be important.
- (I know there are options, but I haven’t had a desire to get involved with them due to the mathematical complexity and I do not like trading individual companies, and I can trade a lot of commodities and indicies via forex brokers. But I like the idea of identifying possibilities for large R:R setups, so I relate to options traders in that respect.)
In mid December 2017, I discovered crypto trading and dove in in earnest.
I am not dropping Forex or Indicies or Commodities but I have had less time for them as I have been getting up to speed on cryptos.
Algorithmic Trading: a Big part of the Future for Many or Most of Us, Might as Well be Our Present
Something like 70% of all trading is now done by computer programs, also known as algorithms. Why do I like algos?
- It takes the emotion out of it. Want to be consistent? What if your mood affects your trading (it has for me in the past), and what if your mood changes from day to day or month to month? Do you use your gut to make trades? What if your gut changes, or you forget how to interpret your gut?
- Systematic trading addresses most of the previous questions. But the nice thing about algos is they can run around the clock while you’re doing other things.
- Algos can be backtested, and give some degree of predictability. I like the idea of being a star discretionary trader, and I work at it as I can, but I also like the idea of having a somewhat empirical approach to testing methodologies.
- Come up with a strategy? Test it on the market! Tune it for the market.
- Come up with a portfolio of algos. As some algos start to fail, re-tune them for the changing markets, or toss them out and replace them with new algos.
Trading Styles
- Elliott Wave is my favorite tool for discretionary trading. I would like to find a collective of EW traders who work on medium and tiny timeframes, who can time market shifts on multiple orders at once to find large R:R gains. Does this suit you? Let me know and maybe we can work towards building this sort of community.
- Supporting cast for EW: fib retracement, fib extension, support and resistance lines and zones.
- Volume: sometimes a volume buildup indicate a pending market shift, especially in the newer crypto markets.
- What I’m open to learning to add to my arsenal: Ichi moku, and anything else that’s valuable. If something is working for you I’d love to hear it.
Tools
- I feel traders need better tools and better kinds of training.
- There are a ton of courses and training programs, but not many tools that keep people on track. (StrategyQuant may be one for algo-trading that I have not tried. MTPredictor may be a good one for EW traders but I haven’t tried it yet.)
- Something like 90-95% of retail forex traders lose money and I think this is sad — I want to create tools to help turn that number around if I can. Types of tools that may help include:
- risk management (don’t risk too much, or you are almost mathematically guaranteeing you will lose most of your balance)
- historical analysis (what techniques are working, what isn’t?)
Communities
I am in a few communities with varying degrees of intensity and frequency:
- Professional algorithmic trading firm
- Lively community of crypto traders, with some paid signals and analysis available
- Collections of friends who trade
Signal and Analysis Services
- I have subscribed to a few paid Elliott Wave analysts for forex, crypto, and currently subscribe to a couple.
Snapshot: April 2018
I have some demo algos running, and I am trying to figure out how many algos I need to go live. I feel thin on my algo portfolio and want to have perhaps 5-10 across 50 or so markets. I feel weak on robustness analysis and want to grow in that, so I have a better model for how algos fail and how likely it is and when it is likely to occur.
Cryptos are an exciting new space, reminiscent of the dot Com boom in 2001. A lot of those dot coms crashed and burned spectacularly, but some crashed only to go on to be Amazon, Ebay, Apple, etc. Are there fledgling cryptos today that will go on to be behemoths in 5 to 10 years? I think there’s a decent chance.
Here is a snapshot of my not very well researched feelings on fundamentals and technicals, for the purpose of starting discussion:
Optimistic on fundamentals:
Most optimistic:
- EOS – The current #1 and #3 blockchains by transaction volume are Steem and Bitshares, and their creator Dan Larimer is creating EOS. I am wondering if a lot of innovative applications and app platforms will be built on EOS in the future, all boosting the value of EOS
- OMG
Somewhat optimistic:
- NEO / GAS
- ETH – I wonder if the move to PoS may help it out
- XLM
Mixed:
- TRX – not sure what to make of all the hype and haven’t researched it very much. But perhaps it will do very well.
- ADA – not sure I like the academic vibe — I want to see real-world value.
- XEM, KMD
- Stratis, Lisk – I’d like to see healthy critical mass form around this developer community, and ability to compete with the top platforms (EOS, NEO)
- XRP – don’t like it, since it runs contrary to the most compelling aspects of cryptocurrency as a vehicle to entrench monetary freedom for humanity. It’s not decentralized, and is vulnerable to inflation. It’s not needed to use a lot of Ripple (the company’s) services, and many who purchase XRP don’t realize this. With that said, the Ripple team may be doing very well at integrating a lot of financial institutions with their products, which may eventually legitimately bode well for the value of XRP.
Optimistic long-term: Advertising Coins
BAT, Adex, etc. seem like great ideas to me but I’d like to understand their business fundamentals and fair valuation.
Optimistic long-term: A Few Big Content Creation Coins
- Steem already exists and seems to have done well as a stable and growing platform as best as I can tell.
- TRX, Thorn
- Ones I’m not sure about: Poet, LBC
Optimistic: One big or a few small coins for everyday transactions
- LTC
- DASH
- MCO
- PAY
Credit cards and debit cards — we need them to buy everyday items — which cryptos will provide them? If LTC gains traction, perhaps it could conquer this space quickly.
Pessimistic long-term: All but a Couple of Currency Coins
I’m somewhat pessimistic on non-leading currency coins as I think the world may only need a couple, such as BTC and LTC:
- BCH – I am amused by the antics of Roger Ver but don’t think it bodes well for BCH.
- BTG
- Whatever other transaction network that promises tens of thousands of transactions per second and offers no compelling or unique features beyond being a currency.
Maybe BTC’s (and/or LTC) internal politics will become problematic and it will stagnate due to transaction fees or times (though those seem somewhat better now). If BTC transaction fees get high again like they were in Dec 2017, I think that could kill it, but I’m not sure that will happen.
If one store of value coin like BTC starts to fall out of favor in favor of another one, I suspect there could be rapid shifts. It’s easier for everyone to shift from Bitcoin to Bitcoin Gold than for the world to shift from Gold to Palladium, as a reserve store of value, for example.
Pessimistic long-term: Storage Coins
- Sia
- Storj
- Filecoin
- (IPFS)
I think these sound like a good idea and may hold some for the short to medium term, but when the hype settles down, I am not sure there will be huge value in these, with storage being so cheap.
I am not sure how much of a market there will be for scattering people’s data across a bunch of strangers’ computers. (But if it works well, maybe it is the future.)
Somewhat related: database coins (Bluzelle) — I want to learn more about the potential of these.
Regulatory Risk: Privacy Coins
XMR may be my favorite privacy coin due to its close relationship with LTC.
XVG may have hurt its potential as an investment vehicle for institutional investors by linking itself with the pornography industry.
Others: ZEC, PIVX etc.
I am concerned that politicians may some day get around to saying “we have to stop money laundering, because it lets bad people do bad things,” and outlaw privacy coins, which could hurt all of these.
Optimistic: Large exchange coins
Binance seems to be doing nearly everything right as far as I can tell, and everyone I know seems to use them. That would seem to bode well for their token, as long as trade volume keeps increasing and they avoid catastrophic loss of confidence. I’m not as bullish on any other exchanges but maybe others will excel as well.
Pessimistic: Small exchange coins
There are a ton of exchanges with thin order books. I am not sure these will catch on or survive, even if they have seemingly cool features.
Cautiously Very Optimistic: The Clif High Tokens
Clif High is an iconoclast who scrapes the web with a bot and some AI to identify trends. He believes PPT and VERI will be very big, among others. (You can buy his reports or watch free youtube recaps of his reports by jsnip4.) Everyone knows his AI isn’t a perfect crystal ball, but I find his approach interesting, and I have some hope for these two in particular. VERI isn’t on any big exchanges yet — I am wondering if it could explode once it is picked up.
I am also keeping an eye on competitors in this space.
Optimistic: Lending tokens
Borrowing money is a big part of life, and if crypto eats this space, it could be big.
- SALT
- etc.
Optimistic: One Identity Token to Rule Them All?
- CVC
I’m not sure how such a token would have value, but I already tried Civic and it is slick and with the troubles of Facebook, Twitter, and Google, the world may be ready for a new approach to single sign-on. I’m not sure the world needs more than one (or two), so which one will it be?
Others I’m optimistic on:
- TBAR – potential competitor to AWS / Azure? Could be huge.
- SUB
- QTUM
- IOTA
- Ark
- Waves
- XEM
- ETC – for the near future at least, based on technical analysis
- PLR
- PPP
- SXUT, SXDT
- QASH
Others I watch and may have traded:
- DGB
- PLR
- MED
- ETN
- VTC
- IOST
- ICX
- EVE
- GAT – At first glance, I don’t see how this doesn’t take over the loyalty/coupon world. The only question to me is which crypto(s) will succeed?
- NEBL
- GTO
Coins I Sometimes Day Trade:
Markets I can trade at high leverage (100:1) and therefore watch more closely for day-trading / swing trading / short term trading opportunities:
- ADA/BTC (the rest are either /BTC or /USD)
- BTC
- BCH
- DASH
- EOS
- ETH
- IOTA
- NEO
- OMG
- XMR
- XRP
- (and EDO ETP SAN ZEC though I watch those less.)
If you’re looking for high leverage brokers, send me a message and I can let you know the ones I have used and my thoughts on them and my affiliate link if you want to help me out (if you don’t have my contact info already, email me at ja+public at thirsk.ca).