Navigating Crypto trading challenges and resolutions

Transcript (Auto translated can have spelling mistakes)

so when we are talking about this stock the other option is crypto which you also does the crypto trading uh so what differentiate uh the stock from the crypto because I designed a cryptocurrency called el ladder that is uh living in the cardo blockchain and the utility of this particular token is to uh store the data in uh non-resistive Manner and I mean uh some some sort of the data has to be non additive so on this process uh I have built a token and it's been listed in two to three exchanges so when we compare to the stock trading and the crypto exchanges the difference over here is that the crypto apart from the stock it's 24 into 7 and it is uh um it is crossborder I mean it's not like there is nobody is um I mean if you want to buy Bitcoin from wherever you are you can buy from One exchange or another exchange or some other friend can buy and send to your wallet or if you want to buy some uh other cryptocurrency you can buy and you can sell it cross B basically like you know it's killing all kind of um constitutional um uh you know constitutional blockages over the financial transactions between the countries so in in this particular manner how do you see does the uh trading options which can be appliable in the stock also can be applicable in the crypto trading as well um how do you see because crypto is 24 into 7 yeah it it is a little bit different there's a there's a few fundamental difference or important differences between stocks and crypto from a Traders perspective um the first one is the obvious one it's 24/7 it's always trading so in stocks we have the stock market where all of the trading happens it's in one place on one you know one set of one one set of computers uh so all of the trading happens there in crypto the trading is happening everywhere like you said in stocks the Stock Market opens at the in the morning and it closes in the evening and overnight it's not open well there's some overnight trading on some exchanges but generally there's an open and there's a close in crypto happens all the time 247 so in crypto there's a like a notional open and close it's the time of day where everyone agrees this is the day open and this is the day close but then immediately the next day starts so as soon as the close happens the open happens so you can still see a daily chart you can also see a one hour chart or 30 minute chart or one week chart it doesn't matter you can still see those charts m if you can see the charts of the asset you can develop systems and strategies that work for that asset the difference with crypto is if you get the um the signal at the close of the day you immediately have to place the the buy because it's already trading yeah in stocks at the close of the day you get the signal the next morning you place the trade you have time in crypto it's immediate mhm so then we have to look at how do the markets move do the same strategies in stocks also work in crypto or do we have to be different um and the crypto Market is much more volatile than stocks typically uh the bull markets are much faster the bull bear Cycles are more condensed compared to so stocks so the the rules that work in stocks they might they can make money in crypto but generally you have to adjust them and fine-tune them specifically for the crypto Market because the behavior of the market is a little bit different having said that Trend following Works in stocks Trend Following also works in crypto mean reversion Works in stocks mean reversion also works in crypto so the generic strategies can be the same but the spe specific rules that you apply the parameter values you use you know do you use a 200 day moving average or a 50-day moving average or a 10day moving average that might be different between the two markets and that's something that you have to test you know this is why I like systematic trading because we can get the data we can put our rules over the data and test it historically and see how would that have performed so what we find is that the rules that work in crypto are a little bit different to the rules that work in stock but similar strategies right we're still Trend following or we're still doing mean reversion MH yeah when we talking about crypto there are terms that is not associated with the stocks is been appearing there like you know for example liquidity pool yield Farms how far you can uh get yield from some talken in a particular time and these kind of things instead of trading sometime maybe proving liquidity could be more better or sometime it can be you can lose all your money like you know the sand bankman freed is been done for with the FDX toen he run away with I mean he is a kind of build a glitch that uh I mean he had some thousands of tokens and he sold one of the token for a billion so his total asset become uh he is for so I mean he showcased his asset is like a, billion to the investors and got the money and build the things around that and you know in reality that money is not existing there so the how do you identify this kind of activity like you know means I mean FTX is a kind of thing which is been actually backed um us election as well like you know the the this is the uh this is the way it is been went on how do we identify is is is there any way you found it is identifiable or is there a way you look into this kind of stuff the way look the way I think about it is the crypto Market is still new relatively new it's been around for a few years now a a few years now but compared to stocks it's still very new and so it's a little bit like the wild west you know you see the old western films Cowboys it's like crazy times right and so crazy things can happen like you know thefts like um scams fraud uh like rug pools like you know crazy things can happen whereas in stocks the markets are more regulated they're more mature less crazy stuff happens still happens but less you you still have stock Brokers go bankrupt every now and then doesn't again doesn't happen that often but it can happen in crypto you just want to acknowledge that it is still a immature market so there's still the risks that come with being an immature market and so you've got to think about counterparty risk you've got to think about catastrophic risk you've got to think about regulatory risk a little bit more so for example take regulatory risk the regulations around crypto are still evolving would I put all of my money into crypto no absolutely that would be stupid yeah for example US market is actually wi listing some of the um cryptocurrencies for example Bitcoin and things like that like you know Federal Reserve is are trying to move into yeah so that positive regulatory moves but also in a in a new market there can be negative regulatory moves as well and so you know we need to basically allocate our Capital to acknowledge that there is more risk in one market than there is in another there's also more risk in um one token than maybe in one stock M okay maybe not Bitcoin but small cap like small um uh small cap tokens yeah absolutely because most of them are worthless most them have no value no utility or even if they claim this got some utility they got no no customer base it's just a hope and a dream that maybe one day it will mean it will make something so the price is very volatile because the value is uncertain MH yeah because the peoples who are holding uh maybe very less number like you know compared to so the market volatility is much more in the crypto token which is new to the market is yeah absolutely so what we've got to do is make sure that as a percentage of our total investing Capital what we put into any one token is not very much because if that token go to zero mhm we don't want to lose a big chunk of our account so my position sizing in crypto as a percentage of my entire trading accounts is very very small much smaller smaller than in stocks because I know that there's more uh ticker specific catastrophic risk in crypto so I I always think about the risk first because risk is about survival you know it doesn't matter how much I make this year if I blow up next year I've got no money but if I survive first I never blow up then I can constantly grow my [Music] wealth so you how do you help a person who want to uh enter into the market for example somebody let's say x person is came to you with 100 USD and why what percentage of how do you help him like you know will you tell him to put 90% of the money into the stock market and 10 percentage into the crypto and uh in in this 90 percentage uh uh 100 uh 80% will go to x uh stock and uh 5 percentage will go to Y stock and 2 percentage will go to is stock and same will go to the cryptocurrency as well how do you how do you help a person who is approaching you to um with some money to invest into the stock market as well as the crypto how do you help him yeah my my Approach is to teach the trader or the investor how to make those decisions for yourself and the way these are capital allocation decisions right and the way we allocate capital is we have strategies in each different market and those strategies make a certain of return have a certain amount of volatility have a certain amount of draw down potential and if we look across stocks in crypto and we look at all of the strategies we've got in each market we can create a capital allocation that meets our objectives my objective is probably different to your objective because we're different people we're different ages we have different family situations we have different job situations so the first thing to do is understand your objectives you know how much money do you have what is your draw down tolerance how much activity do you want in your account what's your return objectives once you understand them then you start to tr to build a portfolio of strategies and and uh allocate Capital between them to best meet your objectives so to break that down you need several different or many different systems and then you combine those systems into a capital allocation model and adjust the weightings to meet your objectives if we do the same exercise we would end up with a different percentage for stocks and crypto and for each strategy and stocks and for each strategy in crypto because we have different objectives so my job is not to tell someone 10% here 90% here and within that 90% 2020 that's not my job my job is to educate someone so that they know how to make the decision forsel to best me their objectives so in that scenario how many people you have helped so far I've had I have several different programs in my stock mentoring program I've taken about 500 people through that program over several years I have uh around 80 uh people live in that mentoring program right now um on the crypto side several hundred have been through the the program the crypto course is newer and I've had other courses in the past that have had you know many hundreds of people come through through those courses as well what I teach all the courses I teach have evolved over time um but look over over the last several years I would say you know U several thousand Traders have seen my stuff you know worked on my strategies learned from that and um and use that to improve their trading