Nick Patel, also known as @cointradernik, is a cryptocurrency trader, investor, writer and consultant. He has been active in cryptocurrency markets since 2013. Since then, Nick has developed a large following on Twitter, where he posts market information along with charts and commentary. He also writes coin reports and shares his views on the market at the Altcoin Trader’s Blog.
Binance Academy spoke with Nick about trading, investing, his general strategies for different markets, and his lifestyle as a cryptocurrency trader and investor.
Binance Academy: How did you start trading cryptocurrencies?
Nick Patel: Before I knew about cryptocurrencies, I came across the Dogecoin subreddit in December 2013 and eventually started reading in depth about the cryptocurrency on Twitter in February 2014. I started trading the same month after signing up for MintPal.
Academy: Tell us about your early trading experience. Were there any failed deals?
Nick: My worst deal was one of the first. I remember signing up for MintPal in February of 2014 and buying Mazacoin because I saw it go up a lot for several days in a row. As a result, I lost two-thirds of my initial capital on this one trade.
Academy: How long did you trade before you started making a steady profit?
Nick: It took about 4 months. I started making consistent profits mainly due to luck at the beginning of 2014, which then allowed me to learn, adapt and refine my strategies over the next part of the year. In other markets it took me a little over a year
Academy: Do you still trade in other markets?
Nik: Yes, I trade in all markets. In addition to cryptocurrencies, I trade metals and indices.
Academy: What's the best deal you've ever made?
Nick: On a percentage basis, I bought Neutron for about 130 satoshi and sold it for about 6,800 satoshi, making 50x my original position size.
Academy: Now that we've covered some of the highs and lows, what do you think makes the difference between a good deal and a bad deal?
Nick: A good deal is one where you've followed your rules exactly. A bad deal is one where your rules got out of control and you made an emotional decision regardless of the outcome.
Academy: Many successful investors would probably agree with this answer. A good or bad deal is not determined by the outcome - a good deal can still be unprofitable, and a bad deal can still be very profitable. The key is to develop a good strategy and stick to it for the long term.
So, now that we've survived the multi-year Bitcoin bear market, what lessons have you learned from it?
Nick: When everyone (including me) was only interested in BTC prices for altcoins, we had to look at USD prices. That's where the bubble was in January 2018. Moving forward, I began to consider both prices and their historical context in my decision-making process.
Academy: It's interesting how crowd psychology in social media can create and reinforce prejudice. Speaking of community, which traders do you look up to the most?
Nick: Probably when it comes to my own analysis, the most meaningful trader for me is Tom Dante, especially in terms of journaling to find small improvements in my own trading.
Academy: Searching for improvements in your strategy is a never-ending process that is vital for any investor. What do you think your element is and how did you find it? What advice can you give to aspiring traders trying to find their edge in the market?
Nick: My preference is for cyclical positions. When I find undervalued projects with good fundamentals and a low price and hold them throughout their market cycle. I recommend keeping a detailed journal to learn to notice your weaknesses and strengths.
Academy: Probably most successful traders keep a journal of their trades. It is very important to track performance (especially in the beginning) to reinforce strengths and identify weaknesses. Do you use multiple strategies or are you looking for specific trading setups?
Nick: I have several basic strategies based on technical indicators for intra-weekly or intra-month trades (less than a week or month). For long-term positions, I carefully study the fundamentals and then buy assets at historically low prices to hold them through the market cycle.
Academy: What's the longest period you've held a coin?
Nick: Over a year.
Academy: Sometimes it can seem like an eternity. Entering long-term positions and at the same time managing risk in such a volatile market is quite difficult. Which metric do you find most useful for evaluating the profitability of a coin or token?
Nick: The Token Issue Structure. Inflation is the only consistent metric that has been shown to drive either big profits or the death of a token.
Academy: Do you include on-chain metrics in your strategy?
Nick: I like to look at on-chain transaction volume to distinguish it from speculative (exchange) volume. I also take a detailed look at the list of the richest token holders.
Academy: Do you prefer technical analysis or fundamental?
Nick: For long-term positions, I start with fundamentals that I find attractive and then make decisions based on technical indicators. For intra-week spot trades, I focus exclusively on technical setups. I execute leveraged agreements using only technical data.
Academy: Let's move on to some of the more practical aspects of trading, as these are also important elements to consider, but which can be undervalued. What does your typical working day look like and how do you maintain a sustainable lifestyle while staring at a computer screen?
Nick: I usually do an asset market assessment on Sunday so I know what's in store for me this week. I then write it down in detail and adjust my charts, setting alerts on important price levels with notes on exactly what I'm looking for in those areas. I then run my trades and monitor them periodically.
Since the vast majority of my deals take more than a week, I spend most of my day working on my blog, freelancing, reading, exercising, etc. I'm not a fan of active day trading, and that's why I'm not in front of screens all day. Since I work from home and have notification systems in place, I don't have to spend time constantly studying charts. I wasn't a fan of that lifestyle, so I decided not to trade all the time.
Academy: What are the most important trading tools for you?
Nick: I don't need a lot of devices. I have a laptop, an extra monitor, a tablet, TradingView and multiple brokers depending on the asset being traded. Nothing more is needed.
Academy: It would be a shame to let you go without a price prediction. Where do you see Bitcoin at the end of 2020?
Nick: $26,000.
Thanks to Nick for giving us the opportunity to study his strategy. If you want to learn more about trading, check out the series of articles: "Technical Analysis for Beginners", "Guide to Margin Trading" or "The Complete Guide to Trading Binance Futures".
Let's recap some of the key points we learned from Nick:
Set a few ground rules and stick to them - avoid trading on emotions. If your rules are out of line and you start making emotional decisions, your results are more likely to reflect that.
Record your trades carefully and constantly look for improvements in your strategies.
Sometimes you might want to stop and think about whether community biases are affecting your deals.
Don't complicate things. A good strategy with a simple setup can bring good profits.
