38 Trader XO
Aug 29, 2022
TraderXO is a full-time multi-asset class discretionary trader and a macroeconomics hobbyist. He incorporates a mixture of day, swing and positional trading strategies whilst keeping a simplistic approach with an emphasis on playing probabilities with effective risk management.
What attracted you to trading?
I remember the 2008-2009 market crash and its effects on the local and wider community whilst studying for my Computer Science degree.
I recall watching the chaos on the news about traders and firms shell-shocked by events. After graduating, I began a career in Investment Banking in 2013 as a software developer helping build out various front and back-office trading systems.
During my time here, I had the opportunity to attend various training courses around global financial markets and trading in general. I began to consider playing around with my own money.
In 2016 I bought my first Bitcoin primarily as an investor, and later in 2017 started trading altcoins. From that point onwards, trading became a passion, and it consumed my life, and I've never looked back since.
How long have you been trading, and what markets have you traded?
I first bought Bitcoin in 2016, and I started trading in 2017. It's been around six years but was only consistently profitable over the last four years. Now I enjoy trading multi-asset classes and have a real passion for macroeconomics and trading global markets in general.
Did you start trading BTC pairs?
Yeah. Initially, I never used to look at the dollar denomination. I used to look at the Satoshi denomination. How many more Bitcoin can I get if I buy NEO? That was the fascination back then in 2017/2018.
I think Bitcoin is fantastic, and I thoroughly enjoy trading it. Do I think it will go to $1,000,000 in the long term? I'm not convinced.
Do I think it will go back to all-time highs in the next four or five years? Highly probable. Do I want to trade that volatility? Yes, it's arguably the best volatile asset out there in terms of liquidity and price.
Tell us about your journey to becoming a profitable trader.
I started actively trading in 2017, essentially market buying spot and had a fantastic year. All I knew back then was to buy the dip and hold.
It wasn't until 2018 that I discovered how to short the market. I was new to short trading and made all the usual mistakes, longing the top and trying to short the bottom because that's just the nature of human emotions. I guess many traders struggle to control their emotional bias when starting out.
I oversized, risked far too much on my positions, and entered trades impulsively without any real plan; all the classic new trading mistakes without formal education.
The defining moment for me was understanding and applying risk management and thinking in probabilities. Price action is great, and the ability to read PA is important, but becoming a successful trader is improbable without risk management.
I oversized, risked far too much on my positions, and entered trades impulsively without any real plan
Have you ever blown up an account?
Yes! I think anybody who says they haven't blown an account is chatting shit, even if it's just a small account.
I've blown out accounts several times on a series of awful trading during 2018 before applying actual risk management concepts to my own system. Thankfully it wasn't my entire holdings; I was somewhat sensible enough to understand the dangers of Margin/Futures trading to not go all in with the money I had at the time.
I've got some Bitcoins sat in the BitMex insurance funds, that's for sure. It's all part of the learning process, and I'm grateful for it. It's helped me become the trader I am today.
I think anybody who says they haven't blown an account is chatting shit, even if it's just a small account.
Tell us about your most memorable trade.
Oh, that would be ZCL in late 2017. It had a major event known as the BTCP fork in early 2018 Q1. Those were good days for me. I didn't hold it for the fork, but that was one of my biggest trades and managed to 15x my entire portfolio. I went all in with a smallish account back then.
How did your first-ever trading plan look compared to your one today?
I created my first trading plan towards the end of 2018 for the year 2019. All that has changed over the years is my ability to understand the microstructure of price truly. The core concepts of my trading manual remain.
I'm constantly refining my edge; what is price telling me, and where I'm wrong? The significant improvements in my game have come about from the actual management of trades, not the trading setups.
Back in 2019, a classic example would be if I was in a swing trade, I'd probably round trip it more often back then than I do simply because my style was not flexible/fluid enough.
The significant improvements in my game have come about from the actual management of trades, not the trading setups.
How vital is journaling in your process?
It's the core of everything I do, and it's led to me being highly profitable. Before my trading manual, if someone had asked me what trading strategies I deploy, I wouldn't have been able to provide a clear answer.
I reached a point where I completely stopped trading until I had completed my trading manual. Two months later, I had a 40-page trading manual and 30 pages of printed trading examples of price action structures and setups.
After that, I logged every trade management decision I took - that is when I began to understand myself as a trader. The fun part is now evaluating my trading on a monthly, quarterly and yearly basis.
So, my trading came alive in 2019, primarily thanks to sitting down, not trading, but writing down my trading plan, my thesis and clarifying the trades I'm going to take.
Two months later, I had a 40-page trading manual and 30 pages of printed trading examples of price action structures and setups.
What does a typical day look like for you?
Back in the day, I'd be spending 15-16 hours a day looking at price and trading 5-minute charts, paper trading any range on a 5-minute or 1H chart. Nowadays, it's easier for me as I know exactly where I want to get in. It affords me a lot more time to relax.
One of my inspirations was Will Hunting (WMD4X). I think he won a trading competition in 2018-2019, where he took 60 trades over six months. Something like that.
Now, I simply scan the news, my Twitter feed and look at the charts. Are there any events that I need to be aware of? I generally do my planning on the weekends.
What do you like to do in your free time?
I'm a macro enthusiast; studying the global and financial markets from a macroeconomic perspective has become a real passion of mine. My other passion is sports and working out at the gym. Health and mindset, I believe, are critical when you're immersed in a stressful career that is trading. 12-16 hours of sitting in a chair, learning to trade wreaks havoc on the body. Trust me; I've been there.
What are your goals as a trader?
I think as a trader, every time we achieve a goal, we always set ourselves new levels and new targets to hit. Over the next 6 to 12 months, I want to refine my edge in the markets; it's what this game is about, really. I'm working so that I can really have conviction in my setups – I already have high convictions in my own ability.
I think trading is beautiful. It can take several years to get to where everything clicks, and then it becomes cruise control. It becomes repetitive; it's a matter of patience.
I think as a trader, every time we achieve a goal, we always set ourselves new levels and new targets to hit.
Where can you improve?
Tuning into market conditions. I'm primarily a swing/positional trader - show me a trend, and I'm very confident, but now I believe you must adapt to different environments. We've all been through 2018-2019 and low volatility periods - you're not going to get many trades on a weekly or daily chart.
You've got to drop down onto the 1H or 4H chart and find entries on the 15M. I'm now transitioning from a swing trader to a lower-timeframe trader. For me, a 5-minute, 4H or weekly range are all the same.
Is macro uncertainty pushing you into lower timeframe positions?
It's about adaptability to different market conditions or environments. You must be flexible enough to respond to what the market presents. We could see a lack of volatility in the markets—a real grind of PA, range-bound accumulation and perhaps the end of distribution.
Having experienced what I did in 2018-2019, where you buy an altcoin, you think it's going to be the next 100X or 10X or 5X, but it's not. It's just a 10% move. When it fades back down again, it's frustrating because you're trying to make money after being down bad. You're just chasing trades or just holding on to shit that really isn't there, when, in hindsight, you could have just traded the range back and forth several times. Once it breaks out of the range with some moving average confluence, you know you are ready for a bigger trend on a higher time frame.
Ultimately understanding volatility is key; global liquidity drives global markets and crypto.
Ultimately understanding volatility is key; global liquidity drives global markets and crypto.
With all the drama in the market of late, what's your view on regulation?
Regulation would be beneficial for this space, if I'm honest with you. Coming from a fintech background, I can see how regulation protects (to the best of its ability) from catastrophes.
Look at all these DeFi projects with insane TVLs. Nobody, only a few funds, in my opinion, really understood the concept of Value at Risk (VaR) in its truest sense. The majority are overexposed with no hedging strategy. Many funds bought into the narrative that DeFi is here to stay and that it's being built on top of the current financial system. It's not. The only people using DeFi are those within the crypto space.
What about the best trading advice you've been given?
The best advice I've ever been given was by Trader SZ. "Know exactly where you're wrong." You don't have to take a full 1R loss. You can cut the trade early and always get back in.
That was the changing point in my game when I started applying that to my trading along with Tom Dante's Evolving R concept. Recognising risk/danger early can save you time and time again.
How do you approach cutting early, is it systematic or discretionary?
It's all about gauging strength or weakness in the market and then acting on that. If I see price reclaim and hold a level that it shouldn't, I will cut the trade because I know at that point, even though my stop hasn't been hit, that I should be concerned.
Are you ever reluctant to cut a trade early as there may be a long wait for the next one?
No, no. You have to think about the bigger picture. Everything has to be about context. I have a three-strike rule, like in baseball. I have three stabs at a trade in terms of my entry, and if I can't nail it on the third time, then something must be wrong with my overall thesis. I take a step back and reassess what I'm doing wrong.
If that happens, I've not taken three losses. I've probably taken three partial losses because I'm trying to get a feel for the market I've entered. If I don't like how price is behaving, I might just cut and observe.
Do you think there is merit in a set-and-forget strategy? Set entry, target and stop and walk away?
I think that's just bullshit, in my honest opinion. I tried it in 2018-2019, and I round-tripped far too often. Everything that I teach goes against that philosophy, it's about the constant evaluation of the trade whilst you're in it, again leaning towards the concepts of Evolving R.
What drives you to keep trading?
I think it's the thrill of waking up, switching on the charts, and the mission is to grow your account. You're competing against the markets; all that matters is you and your competition, which is the market. At the end of the day only one thing matters, is that number on your PnL going up!
At the end of the day only one thing matters, is that number on your PnL going up!
What does making it look like to you?
Making it for me is not monetary-based. The aspiration is to be the best at what you do, and then you've probably made it.
In this game, you have to be humble. You have to remain humble, but you must be hungry to continue learning and improve your ability to perform well. It's you against yourself.
The ultimate challenge to myself is to one day systematically trade, say, a $20,000 account to $10 million with every single trade journaled and logged so that I can say, 'yep, I did that in a systematic way.' But it's all about trading in the right conditions or at least being fluid to what the market presents.
What would you say is the most important quality in a trader?
Patience and risk management. Be respectful towards money, the markets and be patient.
Many mistakes I made were due to impulsiveness. Impulsive trading and not having a plan, not having predefined levels mapped out and not having predefined setups mapped out. You see the volatility, and you enter. You don't define your risk or reward. You don't even determine where you're wrong; you just hit the button because you think 'we're going to make some money.
Do you think social media inflates expectations?
It does. Especially with the hindsight posters, everybody is quick to share the PNLs, and some big traders are sharing million-dollar PNLs. I get why they do it, and there's nothing wrong with chasing clout. We've all done it and enjoy sharing our successes, but I think it's also misleading.
If I was trading $10,000, my first goal would be to get to $11,000, then get to $12,000, then $15,000, then $20,000. Once I've doubled my money, I can pull out 25% of my capital. I've now got $15,000 to play with.
The objective is then to get to $20,000. Work in small increments towards your target. Forget what everybody else is doing; it's you against yourself and you against the markets. That's all that matters. It's all about your trading plan and your trading decisions.
If you're leaning over the shoulders of others to look at what they're doing in terms of trading, and you don't have any conviction in your own setups, or you're easily influenced, you're not ready to trade.
What's something you've learned in the last six months that you'd say has made you a better trader?
It's actually very simple - don't trade against the trend. Understand the bigger context and then trade in the direction of price. Play the probability of being right instead of trying to pick tops and bottoms or counter-trend trading. Patience is king.
What's the mistake you find hardest to avoid when trading?
I am very guilty of marketing into positions. I really don't fuck about. If my conviction is high, I'll often market in some of my position and the remainder as limits.
Funnily enough, my best trades are from limit orders, or my best entries are from limit orders, which is a testament to patience. Generally, now I think in probabilities, so I don't care too much if I'm a few cents off or a few dollars off a position.
I am very guilty of marketing into positions. I really don't fuck about.
If you could give someone starting to trade tomorrow one piece of advice, what would it be?
In all honesty, one piece of advice would be to start with $1,000 or some amount you can afford to lose. Prove to yourself that you can at least double that amount with a complete log of all your trades and understand why you're taking specific trades. It's all about systemisation from which you can derive a trading journal or a trading manual.
When your process proves that you can systematically achieve your first objective, do that, then do it again repeatedly for several months. Once you can prove to yourself that you've got a system in place that's profitable, then you're probably ready to start increasing the size and load up more.
Most traders would be better off trading less initially.
What separates the pros from the rest is being systematic in their trading including risk management.
A good trader should never dwell on a missed opportunity or chase after an opportunity that has passed.
The biggest misconception about trading is it leads to financial freedom because it doesn't. It can lead to financial ruin.