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Split Capital has been trading crypto since 2017.
What attracted you to trading?
I have always been interested in markets and the fact that the participants are very sharp. I was just punting money on Robinhood back in 2015. It wasn't so much trading, but more investment minded.
How did you get into trading?
I kind of got into trading by accident. I worked at a semiconductor company, and my boss's boss was one of the smartest guys I knew at the time, he sold me on the potential of blockchain tech. I was sceptical and had always thought crypto was a scam. I got into it a little bit more and more over time and made a bunch of fake money in 2017, lost all of that fake money, and then I was pretty tilted and told myself, “I'm just gonna make my money back and do the thing.”
Six, or seven years later, I'm still here.
Did that interest only cover crypto, or have you traded other assets?
I pay attention to other markets. I don't trade them. There's not much of an edge for me. Crypto has the highest velocity. I can move my money around a lot faster in crypto than I can with traditional markets. That's something I like to be able to do.
Crypto has the highest velocity. I can move my money around a lot faster in crypto.
How does having an ideological interest in crypto impact your trading?
For me, there has to be some sort of ideological appeal over time. If this were oil or energy, I'd probably start to get bored. Granted, those aren't boring markets, but they're more boring markets than crypto.
There has to be some sort of ideological part. I think for the guy who's just punting money and trading crypto trying to get rich quick; it’s kind of a waste of time. If you're just trying to make money, it gets quite boring. Money's not that interesting as a motivator for me. I guess I differ from most other people in that regard.
If this were oil or energy, I'd probably start to get bored.
How long did it take you to become profitable?
I made some fake money, just like everyone else in 2017. I had a thousand dollars, turned it into about $80,000 and then lost almost all of it.
I can't even say today that I'm a profitable trader. It's hard. Almost my entire existence in crypto has been during zero interest rate policy. Then the past eight months, nine months has been the only time that that hasn't been the case.
I've still done okay. I haven't lost money, which feels pretty good all things considered. Can I consistently say that I'm profitable? It's hard. Am I genuinely a profitable trader? I think I am, but do I know that a hundred per cent? Will I continue to be a profitable trader? If I can’t answer those two questions, I have no business being a trader.
That's the hard part. Anyone who's being honest with themselves has to answer those questions.
People always ask ‘can you outperform Bitcoin or ETH.’ Realistically, can you outperform it in the future? It's really, really tough to outperform ETH, and that’s the next humbling moment. That's why I opt for a higher time preference because I think I have an edge in other areas.
It's really, really tough to outperform ETH, and that’s the next humbling moment.
Who did you look up to when you started trading?
I would say I learned mostly from Flood. We would just chat for hours on end. A good friend and an excellent mentor. Aside from him, the person I would say I learned the most from Su Zhu. Su spent a ton of time teaching me stuff, and I'm always grateful for that. I think he's the best trader I've ever met in my life. No question, no exception. He was the one who taught me how to think about markets in a very, very different way.
I think Su Zhu is the best trader I've ever met in my life. No question, no exception.
Tell us about your most memorable trade
There are two periods of time that stand out. The first one was around March 2019. I had just back into the mix of trading after a five-month break.
I was looking at open interest, which was back in 2019 when 99% of people didn't understand what open interest meant. I remember back in 2018, Flood told me to go read the contracts at BitMEX, really understand what it says, and you'll make more money than everyone else.
For three months, I didn't lose a single trade. I took a hundred trades in that time. Didn't lose a single one. That was just an insane run for me. Obviously, I started to get a bit of ego from that, and it was a learning experience to get my feet back on the ground. It was a memorable time.
The other one was in March 2020. I did very well on the COVID dump. I hedged all the way down and flipped at 4.8. I was one of the only people who bought June futures cause they were trading 30, 40% backward.
Most people didn't know this then. But because the spot index was a thousand dollars higher than BitMEX, you could just run a 100x long. And it wouldn't matter because you're not gonna get liquidated. So I just kept running 100x long and pretty much minting BTC.
Say the price is 3.8 on BitMEX and Coinbase is at 5k. It’s impossible for you to get liquidated. You're basically getting paid to bring the market closer together. It’s crazy to think about, but the March BitMaEX contract is telling you to go 100x long because you need to bring the swap price close to the index price.
I made a good amount of money on that. And then the trade I nailed was in the following weeks, where I went 4x margin long from 6,000 to 9,500 with my entire net worth. After that, we went straight into DeFi Summer. It was just an insane six or seven months.
What did that period teach you about the market?
I think the lesson and takeaway in all of this, is that there's always another opportunity. There's always another chance. This market has the dumbest, most emotional people possible. And I'm one of them. There will always be these kinds of opportunities to make a lot of money if you're just patient.
This market has the dumbest, most emotional people possible. And I'm one of them.
What’s the best piece of trading advice you’ve been given?
It's not so much a technical, single piece of advice, but rather what Flood and Su helped to learn is to see a problem in a different way. The ability to challenge your beliefs, your approach, or your technique.
Recently we saw the market move because of the CZ ‘Red Notice’. I used to just get caught up in the narrative and be afraid. But to an initiated person, that's a money-making opportunity. They don't think, ‘oh, this is scary. What do we do?’ It's more, “How do I make the most I can out of this situation?”. Every single time, it's just another situation, either you can spend your time chatting about the problem, or you can figure some shit out.
Every news event, it's just another situation, either you can spend your time chatting about the problem, or you can figure some shit out.
Is making the most of any given situation a philosophy you take to all things in life?
Absolutely. I'm Muslim, and a big thing for us is to say, “All praise is due to God” The idea behind this is that you don't know what's good or bad for you in the moment. What I thought was catastrophically bad for me, which was the BitMEX implosion, ended up being one of the best things in my life.
At that moment I felt like an idiot and thought, ‘what am I doing in this space’? Why did I get into this? The whole thing just died. This is just game over. Then five, or six months later, I look back and realise that, wow, it was actually the starting point of everything. I think you never know,
What I thought was catastrophically bad for me, which was the BitMEX implosion, ended up being one of the best things in my life.
What’s the most important quality in a trader?
We're primates, trading primate markets. Even if we're all sophisticated, we're still trading against the emotional trader. I think the main ones just kind of come down to humility. I think if you don't have humility as a trader, you're gonna lose at some point, and pretty catastrophically.
I’m not referring to humility regarding your own ability; it's humility about what you're able to achieve. It’s like the grace of the wave as it comes into shore. If you’re a surfer, even if you're the best surfer on earth, that wave will demolish you if you don't know what you're doing or if you think you're bigger than the wave. It's humility in understanding where you are in the spectrum of things.
We're primates, trading primate markets.
So it’s about taking what the market gives you at a given time?
Exactly that. I lost money on Arbitrum recently. How much of that was reinforcing the trade versus me being patient with what the market is giving me?
The people who make the most amount of money are cockroaches. They don't die; they don't hit home runs. They're just patient. They're going to be around, and they're going to make money, and they’re going to survive.
You make infinite money from surviving. It's unattractive, but it works. What's the fastest way to lose money? Increasing the number of trades you take. If you go to the casino, every single time you place a bet, you’re increasing your odds of losing that money.
The people who make the most amount of money are cockroaches. They don't die; they don't hit home runs.
Is that why you’ve adopted a higher timeframe view?
Right. The best way to play is to know what you’re after and what you've made the investment in. This gives you the best chance of success. If you don’t know what a coin does, who’s involved in it or anything about it, you're really opening your own yourself up to a lot of external forces.
What’s the worst thing about trading?
I think it's being conned into believing that you're actually making money when in reality, you don't know. That's the scariest part. You think you’re profitable, but you’re not willing to look around the room and notice that everyone else made money, and instead think you’re good at what you do.Then at some point, way down the line, not realizing that you're actually bad at what you do.
There’s a movie called Floored about how when electronic trading came out, all the Chicago floor traders, got flushed out. They weren’t actually good at trading. They were good at trading in a certain environment. So the first thing you always ask yourself is, did you deserve to make this money? And it's okay if you didn't. Luck is a big part of life. The problem is deluding yourself into thinking that you can consistently make money. That’s the hard part.
Can I make money tomorrow? That's the fundamental question, that's what we're after. And it’s very difficult to answer. Unless you're in tune with markets, you don't realize how fast the water is boiling in the pot. You don't realize that you're getting cooked in the meanwhile, and you're just losing and chipping away at your money, and you're living an extravagant lifestyle thinking that you can redo 2021 or 2022. It's not that easy.
You think you’re profitable, but you’re not willing to look around the room and notice that everyone else made money, and instead think you’re good at what you do.
Does this approach make you very risk-averse?
I'm a cockroach. I'll stick around. That’s my edge. Understanding that I don't have an edge in risk. I don't have the stomach to take 5x or 10x leverage or borrow large sums of money. Maybe it's to my detriment, but, I think I’m probably more risk-taking than most people.
Once the money starts getting more and more interesting, it gets harder to maintain your risk appetite. When you're in college, and you make or lose a couple of thousand bucks, it's fine. You can make that in a month from working, but you can't easily make back or, or win back a million dollars, so you naturally become more protective. That's part of the fun of being younger and risking it all, because you can burn, and it's fine, and you learn through that process. But yeah. At the end of the day, I'm a fiduciary now.
How is trading with other people’s money different?
I look out for what my investors want. And I can't go and punt it all on whatever, not that I even want to. I love having a real job because it makes me better. When I have other people's money, I feel responsible for doing as best as I can. When it's just my own money, I don’t care as much and feel less motivated to trade.
When I have other people's money, I feel responsible for doing as best as I can.
What’s the mistake you still find hard to avoid when trading?
I think just FOMO is the biggest one. It’s hard to kick FOMO. Really, really difficult. In crypto, momentum is everything, and so FOMO becomes very hard to control.
Being someone who is not a natural, degen punter, I don't get on the initial move. So I always feel more FOMO. You have to ask yourself, is this legitimate? Or am I forcing this, and am I just being greedy? I remember something Ari Paul told me back in 2018, I think, or 2019. If you make 2% a month, every month, your investors will love you.
Younger traders will think that’s nonsense, but if you make 2% a month, you're literally golden and set to be one of the greatest investors of all time. Realistically, how many times a month do we take trades that we know are not great EV, not great positioning, not great anything, and we still take them. If you make 2% a month, you're literally minting money.
If you make 2% a month, you're literally golden and set to be one of the greatest investors of all time.