Nick Patel, also known as @cointradernik, is a professional trader, investor, writer and advisor in the cryptocurrency space. Since 2013, he has been interested in digital currencies and trades on cryptocurrency markets. Since then, Nick has amassed a large following on Twitter, where he posts his forecasts and charts with commentary. He also writes coin reports and shares his views on the market on his blog called: An Altcoin Trader’s Blog.
A representative from Binance Academy spoke with Nick about trading, investing, market strategies, and the life of a cryptocurrency trader and investor.
Binance Academy: How did you start trading cryptocurrency?
Nick Patel: Before I knew anything about cryptocurrencies, I came across the Dogecoin subreddit in December 2013, and then started reading in depth about cryptocurrencies on Twitter in February 2014. That same month I registered on MintPal and started trading there.
Academy: Tell us about your first trading experience. Have you had unsuccessful trades?
Nick: My worst trade was one of my first ones. I remember signing up for MintPal in February 2014 and buying Mazacoin as it had risen significantly in recent days. As a result, I lost two-thirds of my initial capital.
Academy: How long did you trade before you made a stable profit?
Nick: About four months. This was mainly due to my luck in early 2014. Over the course of the rest of the year, I learned, adapted, and refined my strategies. Outside of the cryptocurrency market, it took me a little over a year.
Academy: Do you still trade markets other than crypto?
Nick: Yes, I trade all markets. In addition to cryptocurrencies, I also like to trade metals and stock indices.
Academy: Best deal you ever made?
Nick: I bought Neutron for about 130 satoshis and sold it for about 6800 satoshis, making a profit of about 50 times my original position size.
Academy: Now that we've discussed the positives and negatives, what do you think is the difference between a good deal and a bad deal?
Nick: A good deal is one in which you strictly followed your rules. If you neglect them and make decisions based on emotions, then this is a bad deal. Regardless of the result.
Academy: Many successful investors would likely agree with this answer. The result does not always determine the quality of the deal. A losing trade can be good, but a very profitable trade can be bad. The key is to develop a good strategy and implement it over the long term.
Having lived through the multi-year Bitcoin bear market, what conclusions have you drawn?
Nick: While everyone (including me) was solely concerned with altcoin prices relative to BTC, one had to look at their value in USD during the January 2018 bubble. After that, I began to consider both prices and their historical context in my decision-making process.
Academy: It's always interesting to see how crowd psychology on social media can create and reinforce biases. While we're on the topic of community, which traders do you listen to the most?
Nick: When it comes to my own strategy, probably the most significant trader to me is Tom Dante, especially in the way he keeps a log of his trades to improve his trading results.
Academy: Finding improvements to your strategy is a never-ending but vital process for any investor. What do you think your strength is and how did you come to it? What advice do you have for new traders who are trying to find their place in the market?
Nick: My strength is in cyclical positions; I find undervalued projects with good fundamentals and a low token price, and hold their assets for a specific market cycle. For beginners, I recommend keeping a detailed journal to learn how to identify your weaknesses and strengths.
Academy: Chances are that most successful traders keep a journal of their trades. It's important to track your results (especially early on) to build on your strengths and identify your weaknesses. Do you trade using multiple strategies or select specific trading positions?
Nick: I have a few basic strategies based on technical principles for weekly or monthly trades. For long-term positions, I closely analyze a project from a fundamental perspective and then buy assets at historical lows and hold them through a specific market cycle.
Academy: What is your longest period of holding an asset?
Nick: More than a year.
Academy: In the context of cryptocurrencies, this may seem like an eternity. It is difficult to take long-term positions while managing risk in such a rapidly changing market. What metric do you find most useful for assessing the profitability of a coin or token?
Nick: Emission structure. Inflation is the only consistent metric that has proven to contribute to either a big return or the death of a token.
Academy: Do you include on-chain metrics in your strategy?
Nick: I prefer to take a personal look at the transaction volume on the network to distinguish real volume from speculative (exchange-based) volume. I also study the list of the largest holders in detail.
Academy: Do you prefer technical analysis or fundamental analysis?
Nick: In long-term positions, I start with the fundamentals that I think are most necessary, and then make decisions based on the technical component. For weekly spot trades, I rely solely on technical analysis. For leveraged trades, I also use purely technical analysis.
Academy: Let's move on to some of the more practical aspects of trading. Since they are also important, they should be taken into account and should not be underestimated. What does your typical work day look like? How do you maintain a healthy lifestyle when you have to constantly monitor information on the screen?
Nick: I usually do my assessment of the asset market on Sunday to get an idea of what I'm interested in next week. I then write it all down in my journal and mark up my charts, setting signals at important price levels with notes on what exactly I want to achieve in those areas. I then place my trades and monitor them periodically.
Since the vast majority of my deals take over a week to complete, I spend the bulk of my day working on the blog, freelancing, reading, exercising, etc. I am not a fan of active day trading and for this reason I am not in front of a screen all day long. Since I work from home and have alarm systems installed, I don't have to spend time constantly studying schedules. I was never a fan of this lifestyle, so I decided to give up day trading.
Academy: What trading tools do you consider the most important?
Nick: All I need is a laptop, an additional monitor, a tablet, TradingView and several brokers for different assets. That's enough for me.
Academy: We can't help but ask you about price forecasts. How much do you think Bitcoin will be worth at the end of 2020?
Nick: $26,000.
Thanks to Nick for being able to share his strategies with us. You can learn more about trading in our articles: Technical Analysis for Beginners, Margin Trading Guide, and Advanced Guide to Trading on Binance Futures.
Let's recap some of the key points we learned from Nick:
Set a number of ground rules for yourself and stick to them, avoiding trading on emotions. If you move away from your mindset and start making emotional decisions, it will most likely affect your results.
Keep careful records of your trades and constantly try to improve your strategies.
Sometimes it is worth taking a break and assessing the possible impact of community sentiment on your trading.
Do not overdo it. A good strategy and simple indicator settings may be the best solution.
