What is trade? Why are so many people trading cryptocurrencies now? Is it like gambling? To answer these questions and more, we spoke to Trading Different CEO Iván Paz.
Â Cointelegraph in Spanish: What are your thoughts on cryptocurrencies today? Are cryptocurrencies being used more widely now or is it just a bubble?
Ivan Paz: There is greater usage of cryptocurrencies on both an institutional and personal level. Businesses and institutions are increasingly adopting cryptos to use them as a means of payment, leverage their traceability and transparency technologies, and also to make long-term investments.
However, keep in mind that more than 90% of crypto projects lack credibility. They have all the hallmarks of scams or Ponzi schemes roaming the internet and social media in search of easy prey.
Unfortunately, the vast majority of new adventurers in the crypto world do not take the time to search and study every project. They are easily swayed by any YouTuber claiming profits.
Many of the experts are comparing this crypto reality to the “dot-com” financial bubble of 2000, which is correct, the vast majority of projects will disappear. But very few are aware that this is a cycle that will not end, as thousands more emerge over time. It’s so easy to create a website and token that impromptu projects don’t stop appearing.
This has become the dot com bubble, but with no expiration date. That is why it is very important to thoroughly study each project when investing, especially to understand the “money cycle”, that is, if there are profits, where do these profits come from. There we will see if there is intrinsic value or a ponzi dependent on the income of more people.
Taking all this into account, it is necessary for us to evaluate the major cryptos such as Bitcoin and Ethereum, their large trading volumes and demand are not accidental.
On the other hand, the crypto community needs to work to establish project evaluation methods and metrics and make them known so that every new person who wants to invest can use them to avoid scams and make a smart investment. This is where the most reputable media such as Cointelegraph play a very important role.
Cointelegraph in Spanish: How did you get into the world of cryptocurrencies?
Ivan Paz: I started in the crypto world in 2015 and made my first investments in bitcoin and mining. I remember how difficult it was back then to find someone in my town who had more personal advice. With patience and diligence I finally found very good information on the internet. Today we have a bigger advantage, there is more information about it, in all languages and a good support in the communities. Then, during my first bull run in 2017, I started trading and studying the markets.
Cointelegraph in Spanish How would you define what trading is?
Ivan Paz: My start in trading was a mirage, as happens to most. I started trading a bull run, a market that just keeps going up. It’s as simple as buying any crypto, not placing a stop loss and waiting for the price to rise to take profits. Even a monkey in front of a computer is profitable in the end.
The problem is when this up cycle ends and you are left buying at all-time highs. The market starts to shrink, all scams disappear and even the most legitimate projects drop by 70%. And that’s exactly what happened in 2018.
In that moment I understood what trading is, I understood the market cycles and most importantly I understood that in order to be able to trade I had to prepare and learn a lot. I didn’t want to go through another bull run and stand with all the assets in hand without taking any profits. Another thing I understood is that when we start most of us usually think of this profession as something easy and fast, but it is exactly the opposite.
Trading is a profession that allows us to properly assess the market, take advantage of its volatility and generate profits by making judicious use of risk and capital management. The mention of risk management already tells us that there is a possibility of loss, losses will always be there, so we need to learn how and how much to lose.
Today everyone trades, but not everyone is a trader. These advertisements that we usually see on the streets or on the “designer by day, trader by night” networks are a farce, a deception that only favors bartering. As I said before, trading is a profession that involves the same process as any other profession: study, practice and experience.
Cointelegraph in Spanish: Why are so many people trading cryptocurrencies now?
Ivan Paz: Precisely because of this recklessness of exchanges and influencers to promote trading as something easy and for everyone. People have needs and fall into such recommendations where they are offered a supposedly economical solution with little effort. The reality is that trading is not for everyone, it takes time, effort, a lot of study and it is also stressful. But once this phase of adjustment is passed, the benefits of it begin to be appreciated. It becomes a profession with personalized time management, it can be done from anywhere in the world and we do not depend on anyone but our skills as traders.
Cointelegraph in Spanish: Is Trading Like Gambling?
Cointelegraph in Spanish: On the market you can trade or bet. The bet is with ignorance, no clear strategy, no risk or capital management. When trading, attention is paid to a specific strategy that includes clear premises and a properly measured backtest.
Cointelegraph in Spanish What do you think of technical price analysis?
Ivan Paz: Technical analysis is one of the big lies of trading. These are techniques that are more than 200 years old. They used to be fulfilled when the buying and selling of assets depended on human action.
Technical analysis is the path that all traders start and it is necessary to go through it to learn the history of trading and the patterns used in the past.
But with the advancement of technology everything changed, there are no more stockbrokers going from one bucket shop to another, as Jesse Livermore recounted. Today there is the speed of the internet and the extreme speed of radio frequency. The traditional and crypto markets are run by high frequency bots, they are mathematical algorithms that exploit market failures for profit. Over 70% of the market volume is traded by these bots. In fact, in traditional markets, there are strict controls and penalties for some practices of these bots. But the crypto market is not regulated. Can you imagine what these bots can do? Because of this, the market is very volatile and also moves 24 hours a day, 365 days a year. In short, high-frequency bots can manipulate the price of cryptocurrencies with great ease.
The key here is to understand who is handling the largest market volume and what resources are being used. For this reason, at Trading Different we devote ourselves to studying high-traffic bots and developing our trading tools and strategies based on them.
Cointelegraph in Spanish: What makes trading different and how do they differ from other educational platforms?
Ivan Paz: Trading Different is a community of traders from all over the world who use their own tools to trade and take advantage of high-frequency bot manipulation. It is a community that has its own trading philosophy: “the liquidity of the market”. And the current conditions of the markets and the technologies used are understood.
With a lot of work I invented Liquidity Pools, our most important tool. In the beginning it was just a mathematical calculation that I did in an Excel spreadsheet. In studying the behavior of the high I often saw a repeating pattern on the high Market that coincided with the liquidation of the leveraged on exchanges. Exactly this liquidation agreed with my mathematical calculations and allowed me to gain a certain advantage in the market. For months I performed this calculation on a spreadsheet while plotting the patterns on a trade view chart and tracking every possible trade traded and its outcome.
After very good results, I finally assembled a team of developers to program the tool and our own platform.
“Liquidity Pools” are price zones that indicate through a mathematical algorithm where all traders entering the market with leverage could lose. They show where the price would most likely go, forced by high-frequency bots. These high-frequency bots exploit market failures, force the price in one direction, and use stop-loss zones and liquidation points to close out their high-volume winning positions to be able to
In addition to the liquidity pools, we have developed other no less important tools, such as the High Frequency Chart and the Trendiff trend indicator.
Based on all these tools, we have developed different trading strategies to take advantage of every moment of the market, each with its own backtest and appropriate metrics.
Of course, since these are new tools in the world of trading, we take care of teaching how they should be used.
Disclaimer: The information and/or opinions expressed in this article do not necessarily reflect the views or editorial line of Cointelegraph. The information contained herein should not be construed as financial advice or investment recommendation. All investment and trading movements involve risk and it is the responsibility of each person to conduct their proper research before making any investment decision.