What is Trade.config?
The Trade.config series goes inside the minds of traders to learn their strategies, preferred tools, habits and mindsets for success – to download their “configuration file”.
Each Trade.config post is an interview with a top trader. Our goal is to give all traders the benefit of each others’ experiences. After all, there isn’t enough time in the day (and money in the account) to make every mistake yourself.
No part of this piece is financial or investment advice, and all opinions shared within belong solely to the interviewee and do not necessarily reflect the opinions of Cryptowatch or any associated entities. Full disclaimer here.
Trader Name: lowstrife
Trading Style: Low time frame scalping Assets Traded: 90% Bitcoin, some Ethereum or the hot alt Time Trading: Since 2013 Monitor Size: Three 27” screens, plus laptop Nearly Broke: 4 months of living expenses Date Recorded: December 15th, 2019 Follow me on: Twitter
More on lowstrife’s monitor setup:
- One is chat rooms
- One is focus task – video games, spreadsheet, longer timeframes
- One is Cryptowatch, Bitcoinwisdom, and Sigtrades (similar to this)
How did you get started in trading?
I remember back in 2013 I followed Bitcoin casually on Reddit and other forums. That October, when the original Silk Road was taken down, Bitcoin flash crashed anywhere from 25-40% on every exchange in one single move. I was in college at the time, and I remember studying in the library when I noticed the price moving – I stopped what I was doing for two hours just to watch the market go crazy. This was before I started trading or even buying Bitcoin, so pure fascination kept me glued to the market. That was a defining moment in my history with Bitcoin and as a trader.
How do you analyze the market?
Emotion, intuition – there aren’t that many concrete things that I explicitly look for. There are certain situations and setups I prefer on the longer timeframes, but for shorter timeframe stuff I’m looking at volume, support, and resistance. That’s it. Seat of your pants.
What strategy/strategies do you pursue in the market?
I usually do short scalp trades. During the bubble this was quite good. Now, in the year of quantum-sideways and Barts, it’s not so good, so I’ve been doing a lot more swing trading on longer timeframes.
Which assets do you regularly trade? Are there any assets you will never trade?
About 90% of my trades are Bitcoin, with about 5% Ethereum and 5% “insert hot coin”. Bitcoin is my bread and butter, at the end of the day. I like Bitcoin because of the liquidity and sustained volatility. I also understand it better than other coins because I watch the market for Bitcoin so much more. You won’t get the wild supply dumps that you get in smaller coins, as well.
I also find that other altcoins track what Ethereum does anyway, so other than particular events like the recent MATIC dump, I just trade Ethereum to get exposure to altcoins. Why would I want to trade a random coin with much less liquidity than Ethereum, when both are likely to move in very similar patterns?
Who or what taught you the most to aid in your success?
I’ve known BTCVIX and Flibbr for a long time, and I initially learned a lot just by listening to them. I met them in the TradingView chat. The TradingView chat was the place from the bubble of 2013 through 2016-2017, when many of my friends left that chat. It was actually BTCVIX who convinced me to join Twitter and start posting there.
To some extent, the various trollboxes from BTCE to Poloniex and now BitMEX are emulating TradingView back in the day. However, sometimes people are a bit more anonymous in these trollboxes for whatever reason, so many of the conversations in those trollboxes may not turn into friendships or connections outside of that platform.
The majority of what I’ve learned is through experience and countless other people on social media that I’ve come across.
You’ve been involved in the dialogue around crypto for a long time. What are the origins of Whalepool and Whaleclub, and how do they operate?
There are public groups and private groups. Anyone can see for themselves what’s in the public groups. The private groups are glorified collections of friends that have known each other for years – they are not hives of people manipulating the market, it’s not like that. These are people who have built relationships over the years on the web and sometimes in person as well. Eventually, it’s almost inevitable that someone will take the helm and make a Telegram or Discord for the group. That’s at least what happened for me, since I met many people before any of these chat groups were a thing.
Whalepool and Whaleclub are public groups at heart, that are moderated and spam-controlled to keep them clean.
What tools do you use to trade?
There are a couple things I rely on. One is an open source tool called SigTrades which parses all the main exchanges to show only high value trades. I have it configured to show spot trades over a quarter million dollars and futures trades over two million dollars. It will hide all the small trades and only show you the big whales executing live orders.
I love Bitcoinwisdom and Cryptowatch, and I keep both up on a monitor mostly for redundancy in case the feed for one goes down. I use TradingView a bit, but I don’t use many indicators on it – only Bollinger Bands. Market statistics on open interest and funding rates are also important for me, and I usually get those for each exchange delivered every hour from a bunch of Telegram and Discord bots. Just recently we’ve seen someone building a 20,000 BTC long position on Bitfinex – and even though I do not trade there, it’s very helpful to know about positions like this. So those market stats are key.
The most recent tool I took an interest in is called Trading Lite. It’s a chart that displays a historical order book—so if I place a bid for 1,000 bitcoin at $5,000, the chart will show a horizontal line at $5k for as long as I kept that order there. I find it very useful for identifying walls deep in the order book and seeing how they may have impacted price over time.
What’s the hardest lesson you learned through trading?
Probably how to handle losing, and how to be honest with myself.
You are going to lose – nobody is right 90% of the time. I do not recommend paper trading for this reason: beyond just learning the interface of an exchange, paper trading misses the anxiety and pain of risk and loss that will really teach you how to trade.
The honesty point is subtle – it’s not hard to admit to yourself that you lost money on a trade, it’s the thousand little excuses you give for why you failed to follow your plan, missed a critical piece of information, or skipped a volatile trading session. Those add up over time. You have to be honest with yourself about your personal actions – are you not trading the action because you’re tired and unfocused, or because you’re afraid of losing?
I think trading is similar to sales in this way, because you get immediate feedback from the market or the customer about your actions. It can be hard to swallow that feedback, but it’s a necessary part of performing at both of those things.
What habits help you improve your trading?
This question is difficult because I know what works for me, but that does not always translate well to other people. I moderated TradingView for three years, and over that time I banned a lot of people, which caused me to end up in a lot of conversations with traders. With many of the people I banned, once we got past the ban message we started talking crypto, so I gathered a lot of insights into how other people work. There’s a billion ways to skin a cat.
Anyway, a few things that work for me:
- Reviewing my trading history. I don’t keep a strict log, but sometimes I will pull down my trading history and run statistics on it to see how I’m doing.
- Constant review of the charts. I keep daily or weekly charts of about 15 different pairs up in my browser, just so I can quickly flip through and get a sense for how the market is moving. I look at Litecoin, Ethereum/Bitcoin, CME Futures, GBTC (over-the-counter Bitcoin fund), Bitfinex, a couple indices, and some merge charts of smaller altcoins so I can see how those are all moving on a single chart. Usually Bitcoin Cash and SV, Binance Coin, Ripple, FTX. I go through these charts at least once a day, but sometimes much more.
- Watching Tweetdeck. Especially when the market is moving fast, Tweetdeck pushes new updates to me in real-time, so I like watching that feed for news and commentary.
- Canceling Orders. Given that I scalp, I’ve been burned a few times by leaving orders up overnight and having market conditions change to the point where I should have cancelled the order. After I woke up a few times to having these orders inadvertently filled, I learned quickly to cancel all my orders when I step away from the computer for an extended period of time.
Over the years, I slowly developed a sense for how to act when the market moves quickly. In a fast-moving market, it’s easy to become overwhelmed, lock up, and mismanage trades or lose the ability to process information as it comes in. Getting better at handling wild volatility is an exercise in triage. Understanding what you need to do at any moment just takes time to learn; it’s just pure experience.
How do you stay relaxed and calm when you’re trading during fast markets?
This definitely falls into the category of “whatever works for you” –personality types dictate responses to the market and vary wildly. Some traders need less energy and have to calm themselves down, while others look externally for that energy from the market, like myself. So I don’t necessarily do anything to stay relaxed, I just get in a sort of manic mood, like a flow state, when big things are going down.
What do most traders not understand?
The market is out to fuck you. In every market, from crypto to oil to foreign exchange, there are very high-level players who know the market and make it hard for everyone else to capture profit.
Also, you don’t always have to trade. Right now, my scalping strategies are a waste of time. I’m virtually in vacation mode because the flow is low. A lot of people look at the markets with the question “do I buy or do I sell?” However, you must consider the third option: do nothing. More often than not, especially on low time frames, this is the better decision. Especially when you’re trying to make rent or some other expenses, it can be hard to make the decision not to trade.
What is the most common mistake you see traders making?
High leverage. The fees and liquidations just eat you up. If you’re trading spot on long timeframes, the most common mistake I see is being early and antsy. I do this even today. Sometimes I’ll take 5% of my planned position before I’m truly confident in the move, and then average my way in from there. That is a common recipe for disaster if it’s not already in your plan to average in. Depending on the side, I think it’s motivated by timidity or greed – either you’re averaging into a trade too slowly (timid) or too soon (greed), or getting out too soon / too late.
What was the best trade you ever made?
Can I include lucky trades in this? Or do you want intentional ones?
I’ll do both. I was lucky enough to catch a flash crash in the middle of the night once – I flipped the position for double when I woke up in the morning. My default decision for when I fat finger or get accidentally filled like this is to just get out immediately. Trying to ride these ones out has burned me too many times.
As for my best intentional trade, I went almost all in at around $6,000 in February 2018, at the big dump right after the bubble. That turned out nicely. A few sleepless nights and a couple gray hairs earned, but it worked out in the end.
What was the worst trade you ever made?
Back in 2014, when I was just starting to trade, I thought I would buy the dip of the bear market. I ended up averaging in while a whale dumped thousands of bitcoins on the market, and panic sold my position basically at the bottom. I don’t remember how much I lost on that one, but it was an expensive lesson about averaging in.
Do you think we’ll see another alt-season?
The way I look at altcoins is that they’re the penny stocks of crypto. They trade similarly to what my understanding is of the penny stock markets. Not much information, low liquidity, big moves.
As far as an alt season goes, I recently listened to a podcast with Zhu Su where he talked about his belief that the last alt season was caused by a lot of retail investors just pumping new money into random coins. So to see another alt season like we did in 2018, we need a ton of retail money flowing in – however, with the existence of crypto being common knowledge nowadays, he doesn’t believe we will see that level of interest again. I would broadly agree with that.
Keeping up with lowstrife
Follow lowstrife on Twitter @lowstrife. Here’s his computer setup again.