What attracted you to trading?

Initially, it was just a prediction game to pass the time through demo trading. I started thinking more seriously about it as I put two and two together and realized it could scale as income if I could just figure out how to “predict” the market. I later discovered this was the wrong way to think about it.

What’s the right way to think about it?

Instead of trying to predict the future from our perpetually limited understanding of the present, we have to change our line of questioning. Rather than “what will happen next?”, ask yourself “is this (price) cheap, expensive or fair?” None of us knows what will happen next. But if we are consistently able to purchase risk for less than it is worth and sell it at a fair or even expensive price, we don’t have to. A very simplistic example would be to stop trying to predict the next coinflip and instead ask whether you are getting good odds to bet on it. We know the coinflip is 50/50, so we would only bet on the outcome if we were laid odds greater than 1:1 to do so. Our job is to price risk better than the competition. Once we have found a way to do so, we just have to manage our bet sizing (our bankroll) to ensure that we can always continue betting. Can’t win if you can’t play.

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“STOP TRYING TO PREDICT THE NEXT COINFLIP AND INSTEAD ASK WHETHER YOU ARE GETTING GOOD ODDS TO BET ON IT.”

— IDRAWCHARTS

How long have you been trading and what markets have you traded over your career?

I’ve been trading live for just over 8 years now. I started in FX, then found my footing in equities and futures before coming to crypto. I was able to make it my full-time job 3.5 years ago.

Have you traded all those markets in the same way or has the way you trade had to evolve?

My strategy has evolved significantly over the years, and I’ve been able to implement multiple distinct approaches. Remember, we’re simply creating rulesets for placing bets, not attempting to predict anything. Having multiple rulesets allows for more flexibility as market conditions change and evolve. Every strategy will occasionally experience periods of time during which they simply cannot be applied. Adding multiple distinct strategies to my repertoire has allowed me a higher level of overall consistency. My primary tools nowadays include “value investing” (if there is such a thing in crypto), marketmaking, basis trading and momentum hitch-hiking, with a few other strategies either in development or made redundant.  

How long did it take you to become profitable? Were there any milestones on the way?

It took about two years before I stopped losing money, but it’s hard to say whether I had an edge for the next year or so after that. My biggest milestone was probably closing a swing position on $SHOP - it was the first time I planned, executed and won a significant thesis-driven position in a way that I knew was effective; the first time I knew I had “earned” the win.

Do you have a daily routine?

Honestly no, and I wouldn’t recommend my (lack of) daily routine. I’m terrible at maintaining one. Generally, I try to be up before 10 am, eat at some point and get to the gym when the market is calm enough. Beyond that, I’m very poorly disciplined in that area.

What's the worst thing about trading?

Specifically, in crypto, the 24/7 market makes “clocking out” very very difficult. This can apply mentally in other markets as well, but it’s exacerbated in crypto. Especially for those of us who both live and work at home, it’s very easy to let markets absorb every other aspect of your life, which is neither mentally healthy nor helpful long-term to your trading.

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“IT’S VERY EASY TO LET MARKETS ABSORB EVERY OTHER ASPECT OF YOUR LIFE, WHICH IS NEITHER MENTALLY HEALTHY NOR HELPFUL LONG-TERM TO YOUR TRADING.”

— IDRAWCHARTS

What is your most memorable trade?

I have a few, but the first one was getting liquidated in the forex market after leaving my desk without a stop in place. I don’t even remember what the pair or trade was, but I’ve never forgotten the feeling of being wiped out by a single loss that I could easily have avoided.

Have you gone on to make a rule about setting stops when away from your desk?

Nowadays my risk management is not entirely reliant on stop-loss orders, but yes. Every position or order I place is accounted for either with a stop or some other form of risk mitigation as an integral part of putting on the trade.

What’s the best trading advice you’ve been given?

That trading is not about prediction. Our job is to become the casino and win over time, not act like the gamblers who try and predict which color or number on the roulette wheel will give a payout. Trying to get rich quickly only results in getting poor slowly.

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TRADING:

What's the most important quality in a trader and why?

The ability to lose regularly, often and at high cost, without allowing the losses to cloud your thinking. Anyone could click the buttons; our job is to think properly about when and how to click. A trader is only as consistent as his method of thinking, and consistency is what leads to sustained success.

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“A TRADER IS ONLY AS CONSISTENT AS HIS METHOD OF THINKING, AND CONSISTENCY IS WHAT LEADS TO SUSTAINED SUCCESS.”

— IDRAWCHARTS

Did this clarity of thinking and consistency come easily to you?

Not exactly. I think I’m naturally inclined to have this come somewhat easier to me than most as I am not a particularly emotional person, but it is a learned skill that has become habitual.

What's something you've learned in the last 6 months that has made you a better trader?

Any counterparty choosing to fill your orders believes that they are extracting value from you. Often, they will be correct. Counterparties who *must* fill your orders have no such opinions; they are forced to give up value for expediency. The second sort of counterparty will always pay you a premium to assume risk that they are no longer equipped to handle.

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So you’re looking for liquidity zones or trapped traders?

Those approaches can certainly be implemented, but I’ve found this to be more applicable in marketmaking and other high-volume, low margin strategies. For example, an order placed at the top of the book is likely to be an attractive price for counterparties who may know more than you. But an order placed a bit deeper in the book is much more likely to be filled by a counterparty who does not have the luxury of selecting advantageous prices.

Why do you think you have success trading?

Tenacity, mostly. I've spent the last 8 years of my life refusing to quit or be outperformed. The only other option is to continually improve until reaching perfection; a pleasantly invigorating, and impossible, task. I believe this is one of the most difficult jobs in the world to excel at, and the only alternative to excellence is failure.

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What's the mistake you find hardest to avoid when trading? Any tips to avoid it?

Refusal to cut a loss. While rarely true of an actual trade these days, I still find myself dedicating time or energy to an idea, model or system after it's proven inferior. Knowing when to let a trade or effort fail in order to minimize cost is psychologically difficult. Deciding on an invalidation point for accepting a loss or failure before beginning and then sticking to it is key.

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If you could give someone starting trading tomorrow one piece of advice what would it be and why?

Don't. If you're considering it, don't. It's incredibly difficult at all levels and will take years to begin to pay off; you will likely fail. If you insist on beginning anyways, you just might have what it takes.

Fill in the blanks

• Most traders would be better off trading less often and with more conviction.

• What separates the pros from the rest is versatility. Sometimes this means a different approach, sometimes it means not trading.

• A good trader should never stop learning, or they will fall behind.

• The biggest misconception about trading is that money is easy.

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