TO BEGIN WITH, TELL US A BIT ABOUT YOUR EXPERIENCE WITH TRADING AND SPECIFICALLY WHEN AND WHY YOU GOT INTO CRYPTO
I started to get interested in trading stocks at the beginning of 2017 and then later shifted to Crypto because I was fascinated by the movement and the new developing opportunities in the space.
I started studying the different types of trading styles early on to try and get an understanding of how the markets work.
I tried out different analysis methods but quickly fell in love with Technical analysis (TA), because it saved me a lot of time when It came to trading.
I could just focus on the charts and not on company reports, bank statements, expectations, etc. I also found out, that all information that moves the price of a stock or a crypto coin, is already known and priced in by the market at any given time, and if new information comes out, “the market” will immediately give it a value and I can see it on the chart seconds later.
I spent so much time trying to study different companies and what price I thought was a fair price for a stock, but I learned that my opinion did not matter. What matters is, what everybody else thought the price should be and therefore I started focusing on the price (People’s perception of value) instead of the information that gives the value since then, my trading and reading of the charts have been much better.
I have to say, there is absolutely nothing wrong with doing fundamental analysis (FA), Is just not for me. I also do FA on projects I first start to learn about, but I never make my buy or sell decision on it, when It comes to trading.
You can use FA to find out “what to buy”, and the TA, to find out “when to buy”
BASED ON A COMPARATIVE PERSPECTIVE WHY ARE YOU BULLISH ON CRYPTO RATHER THAN THE TRADITIONAL FINANCIAL MARKETS WHEN BOTH ARE SEEING A DOWNTURN?
I’m really bullish on Crypto because I see a shift in society and mentality around the world. Because of the direction the world is headed, people are starting to OPT out of society and start questioning the way the systems and “experimental” monetary policy works.
In this information age which we live in, where information travels faster than the speed of light, we are starting to get more enlightened and learn faster and thereby also now see, that things are not always as we are being told by the governments.
The “crypto space” is still young and from a trading/investing side of it, it's still by most people seen as a very high-risk asset class, to put your money in, so when other asset classes go down, crypto goes down with it as well (for now).
Crypto has not seen or been through a real financial crisis yet but was born from the previous one. I think after this recession we are in now, Crypto will strive more since people will adopt it more, to try and control and protect their own money from inflation, monetary policies that only benefit a select few, government control, etc.
Investing in e.g. Bitcoin is an asymmetrical bet for me both in form and investing side of it, but also from a philosophical perspective.
As you can probably hear, I’m not a big fan of the current system we have, where we just print money out of thin air, that is not backed by anything, fractional reserve banking, policies, and rules that mostly favor the few.
AS A TOP TRADER YOU UNDERSTAND THAT EMOTIONAL TRADING IS A COMPLETE "NO-GO", SO HOW DO YOU SEPARATE THE WAY YOU SEE AND BELIEVE THE CURRENT STATE OF THE MARKET IS, AND WHAT THE TRUTH REALLY IS?
When I teach other traders the skills of trading I actually focus a lot on the “trading psychology part” because that is the hardest part to master. Normally I say, “You can be a really good technical analyst, but a shitty trader”. A good technical analyst who is also a good trader has to be an expert in the psychology part of trading as well.
There is no “Cheat code” to completely remove the emotions from the market, even if I myself get emotional from time to time. The difference is that I've learned to be disciplined enough so I do not react to my emotions, and thus reduce a lot of bad decision-making while trading.
But I can tell you that the only way to really learn it, is the long and hard way by actually trading because If you trade long enough, the market will test you and shape you. And then it’s just up to you to learn from it and stay in the game long enough to start becoming a successful trader.
A good tip is to learn to "look away" from the charts. It will help to remove a lot of the ups and down on the emotional roller-coaster ride, most traders take. “Out of sight, out of mind”. When you've placed your trade, you should add 2 alerts. Alert no. 1 should be on your “Profit target” and alert no. 2 should be on your Stop Loss (SL). When that's done, you should look away until one of those alerts goes off, and just let the market work for you. If you can not do that, then it means you do not trust your setup/edge or have fully accepted the possibility of a loss and then you should not be in the trade in the first place.
YOU'VE BEEN VERY VOCAL ABOUT THE UPCOMING CENTRAL BANKING DIGITAL CURRENCIES, THE SO-CALLED CBDC'S. WHAT IS YOUR UNDERSTANDING OF IT, AND HOW DO YOU SEE "IT PLAY" IN SOCIETY IN THE FUTURE?
It’s actually a really deep question, with many answers. But to keep it simple, then CBDC is to me a way and a tool for the governments and central banks to get even more information and control over the rest of us.
I see CBDCs as a “weapon of mass destruction” on the people's freedom and rights.
I honestly don’t think people understand how CBDC can be used to monitor and control us. 99,9% of the people around me don’t know what a CBDC is and from a development point of view, they are really close to being ready, so I think most people will be shocked over the next 2-3 years.
I also know most people don’t care, and probably not even thinking about the consequences of CBDC, but they will one day when they learn of its downsides. Without freedom, then what are we besides slaves of the government. They already take half of our money in tax and take even more in other forms of taxes, fees, and now also high inflation.
A lot of people got really surprised and repulsed when they hear about how China monitors and controls its people via apps and its SCS system (Social Credit Score). Imagine if the EU goes down the same path as China with their Credit score system or the US where you also are rated by points, even though most people don’t know about it.
Some of the scary things they can do with CBDC are:
•Decide what we can spend our money on.
•Put an expiration date on our money, to force us to use it.
•Block our money, and thereby “Block our lives “
•Remove our funds, if they think we are not behaving right.
•Tax us or fine us directly.
•Control where we go and travel
•Have a total tracking pattern on where we are, what we buy, who we are with etc. Maybe most people don’t care, but
I like to think I still have some freedom and rights as a human, so even though I don’t have anything to hide, I still don’t want to feel I’m being monitored or controlled by a small selected group. I honestly don’t see what a CBDC is good for, but I’m open to hearing other people’s arguments, as long as it does not have anything to do with CBDCs being a positive tool for more surveillance or control.
IF YOU OR ANYONE ELSE WHO BELIEVES CRYPTO, AND DECENTRALIZED FINANCE IS THE FUTURE, HOW WILL PAYMENTS AND MAINTAINING A NORMAL LIFESTYLE BE SUSTAINED WHEN WE HAVEN'T REACHED MASS ADAPTION YET?
I still think we are early and we still need to shift people's perception of what Crypto and decentralized finance are and how they can be used. It will come, but first, we start where it is most needed and therefore, we also saw an early adoption in some of these places where people don’t have access to bank accounts, are being overcharged by greedy companies for sending money, or don’t have an official state currency that works.
Imagine we lived in those countries where we see hyperinflation and your saved money loses all its value or you are trying to send money to your family but getting charged 30%. Those people will be among the first to adopt because they have bigger problems than us and no other choice, and slowly we will also adapt.
But I also think It is naive to think the governments and central banks will allow “Full” DeFi in its purest form to strive. They will fight it because if DeFi succeeds, they lose control over the one thing they can control people with and that is Money (Besides fear and weapons).
I think there will be some DeFi projects that will have massive success, but they will not get mainstream adoption in the western world, since the governments would not allow it, and If they allow do it, then I don’t believe these DeFi projects are fully Decentralized since the government would require some form of centralization.
Just to clarify, I’m a huge fan of the DeFi space and only hope It will strive and give people a chance to take control of their own money, but there is a big difference between being Decentralized and actually fully decentralized.
DO YOU (PERSONALLY) SEE A POWER PLAY BETWEEN THE ESTABLISHED FINANCIAL MARKETS AND CRYPTO, OR CAN BOTH "SIDES" WORK TOGETHER TO CREATE A MORE OPEN AND DEMOCRATIZED FINANCIAL WORLD?
I think both will co-exist alongside each other. Most Crypto projects will in time be controlled by a set of specific rules that the governments/regulators set or they will not be allowed to strive. But there will also be some project where we have these hardcore coders and visionaries that wants to shake up things and change the way things works now. Satoshi Nakamoto is a good example.
Crypto will be accepted by regulators and governments as long as we play by their rules, and that is also what we see. Exchanges are forced to comply with local regulations otherwise they are not allowed to operate, companies are required to KYC, you cannot start a business without a license and they can just change the rules and make things illegal if we don’t play along. We have seen it multiple times, just take Tornado cash as the most recent example.
But in the end, I’m super bullish on this space and think crypto and blockchain will create a lot of new exciting projects and opportunities now and in the future. I’m really looking forward to seeing how companies like Penning among many others will establish themselves in the future.
Simon Nielsen is the founder of BETTERTRADES, a trading coaching platform with a core focus on technical analysis. To learn more, visit www.bettertrades.dk or reach out to him directly.