Crypto trading basics: interview with expert

Crypto trading is attracting a high volume of interest, so we’ve asked an expert to tell us about the basics and the market specifics.

Mikhail has been trading cryptocurrency since 2017, he is the author of the kJIaccuk Trading Telegram channel.

This interview opens a series of articles by our expert.

– How did you start crypto trading?

I am a lawyer by profession, and have been an online poker player. Started to trade cryptocurrency back in December 2017, when Bitcoin reached its peak at $20,000 and then a decline began. According to most financial media at that time, it was just a small correction before further growth up to $50,000 and higher.

Crypto trading basics: interview with expert

I believed in this and bought the first parts of Bitcoin for $18,000. I also actively traded altcoins and was sure that would double my deposit soon.

Altcoins are the alternative cryptocurrencies launched after the success of Bitcoin. Generally, they project themselves as better substitutes to Bitcoin. The first altcoins appeared in 2011, now there are hundreds of different types.

My first experience was not successful – I’ve lost large part of my deposit while trading altcoins on a falling trend. After this I understood that it was necessary to study the general theory of trading, including its more complex part – the Elliott Wave analysis.

– What is necessary to know before starting crypto trading?

Cryptocurrency trading is just one type of trading, but with its own specifics due to the lack of regulation. All manipulations that are banned in traditional markets are widespread and go unpunished. It’s like the Wild West, where you can become very rich in a short time, and then lose everything. Therefore, it is necessary to have general trading knowledge and be able to put them into practice in an unregulated market.

– What were your biggest successes and failures?

If we talk about altcoins trading, my most successful transaction was on Ripple (a token representing cryptocurrency, commodities, or other units of value such as frequent flier miles or mobile minutes). In December 2017, I bought it for $0.75, sold for $1.70, and earned about $2,000 in a week. But already in February 2018, I’ve lost all this money during the Ethereum Classic hard fork.

Hard fork is a radical change to the protocol that makes previously invalid blocks/transactions valid (or vice-versa). It occurs when a cryptocurrency’s existing code is changed, resulting in both an old and new version. This requires all nodes or users to upgrade to the latest version of the protocol software.

My balance decreased by 0.2 BTC in those days. It was the first major failure that made me reconsider my attitude to trading altcoins and try other options. So I turned to margin trading, where you can trade with a small part of your deposit (3-5%), but also with smaller profit or loss.

– Please tell us more about altcoins and generally about the variety of cryptocurrencies.

There is Bitcoin and there are all other altcoins, which I consider to be an extremely difficult trading asset due to their excessive manipulativeness. Over the past year and a half, all altcoins from the top 50 CoinMarketCap (except BNB) have been in a steadily declining trend comparing to Bitcoin. Therefore, if you are a beginner, it is better to buy and keep Bitcoin, which has established a growing trend since January 2019.

CoinMarketCap (Cryptocurrency Market Capitalizations) is a service providing a useful metric to know the real value of all currently existing cryptocurrencies.

– How to start buying, selling and cashing out cryptocurrency? What are the best exchanges?

The best exchange is the one that does not charge a commission :). Unfortunately, there are none of such kind. I’m using crypto cash out services in my city that have been working for a long time; on average, they charge 2-4% per operation. It’s easy to find them – just google “crypto cash out” in your city, select only those that have good reviews and have been working for a long time. So far, I have not encountered any problems with this.

As for online crypto exchanges: I can single out Binance (regular trading with almost all cryptocurrencies), Bitmex (only margin trading) and a crypto exchange service in Skrill and NETELLER wallets (these are not exchanges in the truest sense of the word, but are also reliable platforms with clear interface).

The most convenient way to buy crypto is to purchase Tether USDT (a cryptocurrency which was originally designed to always be worth $1), for which you can buy any cryptocurrency on the exchange. By the way, my first purchase was exactly Tether, for which I then bought Bitcoin.

– What advice can you give to beginners?

For beginners who want to invest in crypto, I would advise to buy Bitcoin for a long period and keep it until the long-term trend changes to a falling one. Here’s a simple example: if in April 2019, on a growing trend, we bought 1 Bitcoin for $4,000, now we would have $10,000.

Speaking of trading (a periodic, frequent purchase and sale of cryptocurrencies), this is a complex process that requires special knowledge and experience in applying this knowledge in practice. Not everyone succeeds the first time. Statistics show that 90% of traders lose most of their deposit during the first months. Therefore, of course, it is better not to trade immediately with the whole crypto amount, but to allocate 5-10% and start with this, while studying the theory of trading.

– Are there any patterns in cryptocurrency growth/fall?

Personally I’m using Elliott Wave principle in trading. I believe that market movements happen according to correlating growth and fall waves (cycles). All Bitcoin price movements during a certain period of time can be divided into 5 waves of growth and 3 waves of fall which are mathematically interrelated via Fibonacci numbers.

The Elliott wave principle is a form of technical analysis. According to it, every trend consists of several repeating parts (waves). Below you can see a five wave growing trend (1, 2, 3, 4, 5) and a three wave correction trend pattern (A, B, C).

The Fibonacci sequence is the series of numbers, where the next number is the sum of the two numbers before it. This sequence can be found everywhere: in mathematics, architecture, other sciences and in the nature. For example, the number of flower petals often matches the Fibonacci numbers, especially 3, 5 and 8.

– Do crypto traders need an additional protection of their computers, or installing a special software?

I didn’t install any special software. I think it’s enough to follow usual security rules and have antivirus software installed. It is worthwhile to buy some crypto-wallet, for example Ledger Nano, to hold the main part of Bitcoin and other cryptocurrencies.

– What do you think about Gram, the cryptocurrency that is going to be launched on the TON (Telegram Open Network) platform?

I’m not quite familiar with the project, and not going to buy Gram in the near future. I’m not a specialist in ICO projects (“Initial Coin Offering”, a type of funding using cryptocurrencies). It’s more interesting for me to identify a long-term trend after the coin’s introduction to the market. If we’ll see a growing trend, it would be logical to buy and keep some tokens until the change of trend.

– What future awaits cryptocurrency market, in your opinion?

It’s a big question. Cryptocurrency and blockchain are a new phenomenon in the world economy. First of all, they are instruments for business and social development, as the Internet has been before. Regarding risks related to holding an interest in cryptocurrency, you may find similarities with the “dot-com bubble” (a historic speculative bubble and period of excessive speculation that occurred roughly from 1994 to 2000, during extreme growth in the use and adoption of the Internet). It seems to me that traders have not yet witnessed the real fall. I’d like to see the Bitcoin price below $1,000 and hence a bankruptcy of most altcoins, like it happened with dot-coms. But when it would happen is yet to be seen. Currently we have a growing long-term trend for Bitcoin and there are reasonable chances to see its price at $20,000 or more again.

– Thank you so much! Hope that you will continue to share useful knowledge with our readers.

Sure, I will be glad to help all those interested in crypto trading.

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