With its Webimarathon, Binance (BNB) wants to educate the population on the use of cryptocurrencies and blockchain. Binance being an exchange it is therefore normal that the platform also informs the public about its functionalities and about trading. But what does it take to be a productive trader? It is in order to provide an answer to this question that the exchange of the yellow and black dragon invited Stéphane Ifrah, CEO of NapoleonX and Frederic Bonelli, CEO of Cryptocurrencies. Also here you will find some answers to get your diploma certified by Binance and BCDiploma.
Trading is a difficult discipline. How to have a trader mentality? Can we expect to make money from cryptocurrency trading?
Frédéric Bonelli : Some live exclusively from cryptocurrency trading, so yes of course we can achieve big gains but also big losses. There is nothing magic about trading, on the contrary, it is an activity that requires total self-sacrifice. You have to constantly control yourself by ignoring your emotions and cognitive biases. While at first glance this may seem simple to many of us, the reality is quite different. Trading is a very long journey that requires constant vigilance. The fact that unlike the stock market, the crypto market is open 24/7 amplifies this need.
Moreover, the fact that most important movements take place when Asia is standing, often forces us to live out of step with our French colleagues. Between 3 am and 5 am, people are in fact more often in bed than on their computers.
Stephane Ifrah : I totally agree with Frédéric. Trading is a real initiatory journey that takes place not over a few months, but over several years.. With time it becomes easier to fight against yourself, but above all we remain human. It is also very tiring mentally because being against yourself is rarely pleasant.
Trading is an uneven competition where newbies come face to face with experienced traders often with additional funds and data.
If we manage to hold out for a few years, then we may finally be profitable in our strategies. Of course it may be that an individual succeeds from the start in making big profits on a stroke of luck, but often due to lack of learning he will develop bad habits and lose everything.
Personally, I started trading when I was at BNP. Trading seemed like a fun activity to me and that’s how I got started. My lack of experience means thatn between the russian financial crisis of 1998, the internet bubble and the war in iraq … i lost a lot of capital.
I then realized that I needed to train myself and books are a great way.
After experimenting with various techniques I found mine: develop trading robots.
However, be careful to keep the following in mind: even an excellent trader rarely wins more than 40% of his trades.
In this regard, what books do you recommend for training?
Frederic Bonelli : First there is the Binance Academy which everyone should be obligated to read. Otherwise in book I recommend Unknown Market Wizards: The best traders you’ve never heard from Jack D. Schwager.
Stephane Ifrah : I recommend exactly the same and generally the same as the Market Wizards series. These are books recounting the experiences of former traders and they are easy to read. It is quite rare for good traders to express themselves so much to take advantage of it! On the other hand, you have to speak the language of Shakespeare …
Do you use tools such as take profit or stop loss?
Stéphane Ifrah: So I’m a bad example because I do not use it, by the way, this is a fairly frequent topic with NapoleonX users. I have nothing against these tools, but we prefer to use some sort of sliding window over each period. When we arrive at a new period, we re-evaluate it and I cut my positions whether they are losing or winning. I thus avoid being psychologically attached to it.
When trading cryptos you have to be very careful where you place your losses as the lack of volatility can easily trigger them. However, when I do scalping I use these tools, but being more focused on trend follow, this is quite rare.
Frederic Bonelli: Beyond tools we must also take into account the amount with which we trade. Trading with $ 1,000 and $ 100,000 will not involve the same decisions. Personally, I am not focused on these tools either, as I am constantly in front of my screen. But like Stéphane in case of scalping I also use them. Concerning myself, I’m more focused on the swing where I take into account the fundamental indicators projects as well as macro tools.
Could you define the terms you just used?
Stéphane Ifrah: It is true that the trading world is filled with complex words, in order to make it difficult to access. Do scalping, means that we shave and therefore that we go chain many transactions over a short period of time. In general, technical analysis figures are used to generate gains. It’s a pretty intense and dynamic rhythm where I find it quite easy to have fun.
Frederic Bonelli: The swing on the contrary, consists of keep a position for a long enough period, generally more than 24 hours. There are two main types of strategies:
- systematic, which consists of using an algorithm or a robot to make a decision
- discretionary, which is based on parameters specific to the trader.
Technical analysis, on the other hand, attempts to use patterns that Japanese candlesticks (the lines on our screen) draw to predict the market. It is obviously not an exact science, so the confidence that one puts in these figures depends on each individual.
You can also use fundamental analysis, which means taking into account the business behind cryptocurrencies. On promising projects like Elrond (this is not investment advice) I take very much into account the news of these.
What are the ways to make money from trading?
Frederic Bonelli: Beyond trading spot which represents the simple purchase and sale of assets, we can also makearbitration or margin. Thearbitration consists of tpart of the price differences of the same asset on several exchanges to generate a profit. The margin allows toUse levers to increase your stake, whether on the rise (long) or down (shorts). In this case, a third party, usually the exchange, will provide additional cash to the user to increase their position.
How do we manage its entry and exit points and its money management?
Stéphane Ifrah: As we said before, trading is a constant discipline, so entry and exit points are no exception. A good trader does not come in all the time, but only when a position is as favorable as possible.. Whether I go long or short, I have to analyze the different signals I have set for myself and then determine how much of my capital I will use. Depending on the risks, I will adjust this amount involved, which will allow me to have good money management. So if I start by bringing in 25% of my capital to test the temperature, nothing prevents me from adding an additional 10% if I get other favorable signals. If, on the contrary, the signals become unfavorable, the risks will have been limited. Once we have built our entrance, we will have to deconstruct it, we talk about the exit. The great difficulty here is to ignore emotion such as greed which can cause us to deviate from our initial strategy.
Frederic Bonelli: At the exit, cryptos are a completely separate market. We can indeed fix ourselves as goal of accumulating dollars because it is the largest fiat currency on the planet. In this case only the price in dollars will have an impact on our trades when we exit. Conversely, the maximalists who are certain that Bitcoin, Ethereum, BNB or others are the future will watch the price in that currency. These two approaches certainly have the same goal: to earn money, but the end is absolutely not the same. The fact that the volumes are different is also to be taken into account.
A strategy that beginners rarely apply is that of Cost Averaging Dollars (DCA), or smooth out its positions. By taking in my capital gradually, if my assets go down, I am not only calmer because my position can be corrected, but being able to buy lower reduces my average purchase cost. It is also a great way to avoid Fear Of Missing Out (FOMO) and Fear, uncertainty and doubt (FUD) which are respectively blindly following a rising course and panicking over negative information, whether real or manufactured from scratch.
Regarding the inputs and outputs, it remains effective to consult the order book. This is a powerful tool for spotting abnormal transactions (large buy / sell). Then for the exit we can try to exit as close as possible to the maximum of an asset, which often turns out very dangerous because very difficult to predict. Or we can gradually come out of the objectives we have set, which is less stressful, because more pragmatic.
Thank you for all those informations ! A last word to conclude?
Stéphane Ifrah: As you can see, trading is quite a long job and this webinar obviously only scratches the surface of this huge iceberg. This length is due not only to a jargon to memorize, but also to learning about one’s emotions and the tricks and tools specific to trading.
To save time and reduce the workload, trading robots, whether they are those we are developing at NapoleonX or at the competition, are a great tool. They allow neophytes to have fewer parameters to take into account. There are 2 types of trading robot:
- those using a strategy that we have even put in place. The user thus has full control of his tool but must have knowledge of trading
- those using a strategy implemented for others. You just have to make a few simple adjustments, then launch it and let it work.
In all cases, these 2 types of robots will work via an API on the exchange to which you plug it. For security reasons, never give them the rights to withdraw your cryptos.
Frederic Bonelli: As you might expect, trading is not my main activity although I do manage a fund. Cryptocurrencies takes me a lot of time especially in view of the V2 that awaits us. It doesn’t matter whether you are entering classic or crypto trading, you should always clearly define your goals. This principle does not apply only to trading and in my opinion and whatever the field, the work is the most important. Read, think, and experience for yourself. If you want to learn specifically about the crypto universe, I wrote a book about it, The crypto MBA. I’ll let you take a look.
And the last word goes to Frédéric Bonelli and Stéphane Ifrah who agree on one point: trading is above all a life experience where the experience acquired does not stop only at the financial aspect. And if you want to go further, we have a Trading Tribune that will guide you step by step!
Engineering student in IOT, Translator, Community and Bounty Manager, I have been sailing the turbulent oceans of Blockchain since 2017.
Aware that the Blockchain will change our future, I too am participating in the revolution. Find me on Bitcointalk, LinkedIn and Twitter to discuss or suggest articles.