In The Crypto Narratives Podcast which took place on May 30, 2024, Huf hosted CryptoNexus to discuss the dynamics of news trading, risk management strategies, maintaining emotional discipline in the volatile world of cryptocurrency trading, and more! Read our notes below to learn more.
Background
Huf (Guest) – Founder of Pear Protocol
CryptoNexus (Guest) – a full-time crypto trader
Navigating News Events: Insights from CryptoNexus
- Huf says that CryptoNexus is known on crypto Twitter for his consistent trading, simple strategy, and reliance on intuition, complemented by thoughtful risk management and emotional awareness. He presents this as a valuable perspective for trading in the crypto markets.
- CryptoNexus shares his experience, noting that he initially traded on Robinhood during the 2020 lockdown, focusing on highly volatile stocks due to limited capital. He later transitioned to trading cryptocurrencies on Robinhood in April 2021, just as the market peaked.
- Huf asks CryptoNexus about his approach to trading news events, like the recent shift in ETF approval odds for Ethereum.
- CryptoNexus says that he saw the news of the ETF approval odds change from 25% to 75% and quickly bought Ethereum, benefiting from the price increase. He mentions using BWE News for fast updates, despite past issues with misinformation.
- CryptoNexus discusses the challenges of news trading in a market that has evolved with more participants and more sophisticated techniques. He has shifted from news trading to more scalping and longer-term trades due to sizing constraints and market changes.
- Huf points out that traders must evolve their strategies as markets change and become more competitive, highlighting the ongoing adaptation required in trading.
- CryptoNexus describes his execution strategy in news trading, primarily using market orders to enter trades quickly and sometimes placing limit orders above the current ask to cap potential slippage.
- CryptoNexus says that he is now focused on news trading, where he aims to quickly capitalize on market-moving news by being among the first to respond, using significant leverage to maximize gains or minimize losses based on immediate market reactions.
Efficient Trading Strategies and Minimalist Setups
- Huf mentions that as a trader’s account size increases, considerations like slippage become more important, and they explore how traders decide which tokens to trade, especially with smaller capital.
- CryptoNexus says that he doesn’t maintain a long list of tokens but knows which ones have enough liquidity for effective trading. He bases his trades on liquidity and news, adjusting his approach based on the expected market movements.
- Huf asks about the number of tickers CryptoNexus monitors during trading, given there’s no ongoing news. CryptoNexus says that he trades using only his iPad and occasionally his phone to monitor different tickers, highlighting a minimalist and flexible trading setup.
- CryptoNexus shares that he trades from his bed, starting his day by scanning Twitter and charts for trading opportunities, without a formal desk setup.
- Huf asks where else CryptoNexus gathers market information or sentiments.
- CryptoNexus mentions using group chats and social media, stating that these sources help him subconsciously build a broader market picture.
- CryptoNexus discusses risk management and position sizing, especially for accounts around $10,000. He shares his strategy of using leverage not to increase trade size but to enhance capital efficiency and reduce counterparty risk, highlighting cautious trading to protect against significant losses.
Realistic Trading Perspectives and Flexible Lifestyles
- Huf says that accepting losses is part of trading and that traders can recover from such losses by moving on, rather than increasing risk. He encourages sharing trade setups and changes in trading bias on Twitter to reflect reality rather than selective successes.
- Huf discusses the current market, noting the potential approval of an ETF and the fluctuating prices of Ethereum and Bitcoin, which influence trading strategies and perspectives.
- CryptoNexus remarks that he does not focus on long-term price targets or detailed technical analysis, such as Fibonacci retracement levels, because his strength lies in short-term, in-the-moment trading strategies like scalping.
- CryptoNexus says that while he was initially a believer in crypto technology, his fervent belief has faded, influenced by the underperformance of crypto during bear markets and its ongoing search for a solid use case.
- CryptoNexus shares that he does not maintain a regular exercise or journaling routine, but instead embraces a flexible and somewhat unhealthy lifestyle shaped by his trading activities. He uses Twitter as a form of community journaling, where he can share experiences and receive feedback from others.
Navigating the Trading Journey
- Huf highlights the benefits of sharing trading strategies and setups publicly, noting that receiving feedback, especially critical feedback, helps recognize emotional biases in the market.
- CryptoNexus adds that publicly journaling trades increase traders’ cautiousness, discouraging them from entering questionable trades and fostering discipline.
- Huf says that the trades people share on social media represent only a fraction of what they consider, highlighting the importance of a thorough filtering process in trading decisions.
- CryptoNexus advises aspiring traders to be curious about the market and themselves, to learn from others’ strategies and stresses the importance of self-belief in the trading profession.
- Huf supports this by underlining the crucial role of self-belief and discipline in trading success, suggesting these qualities are essential for sustaining a trading career.
- CryptoNexus shares a personal trading story from November 2022, detailing how timely information and responsive strategies led to successful trades during the FTX crisis, illustrating the value of adaptability and a consistent trading edge.
- Huf says that it is crucial to develop one’s own trading system, as relying on others for trade setups can complicate entry and exit strategies.
- CryptoNexus shares that his worst trade involved shorting $LUNA during its collapse, a decision influenced by overconfidence from previous successful trades. He highlights the importance of not getting overly attached to positions and the danger of trying to anticipate market movements.
- Huf notes the common experience among traders of holding losing positions due to sunk cost bias, highlighting the lessons learned from such experiences.
- CryptoNexus reflects on the psychological challenges of trading, including the difficulty of cutting losses after dedicating significant time to monitoring a trade.
- Huf advocates for prioritizing health and well-being over obsessively managing trades, noting the personal benefit of sometimes choosing sleep over potential financial gain.
- CryptoNexus stresses the importance of accepting that market moves will occur without one’s participation and the necessity of making disciplined entries and exits instead of hoping for specific outcomes.
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Show Information
- Medium: Apple Podcast (Audio)
- Show: The Crypto Narratives Podcast
- Show Title: #30: CryptoNexus
- Show Date: May 30, 2024