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@Crypto_hades is a quant trader, building algorithmic trading systems. He’s been a crypto OG since 2011
What attracted you to trading?
When I started playing around with crypto in 2011 and up to 2014, it was way harder to on-ramp with FIAT, and I was underage without a credit/debit card, so to accumulate some BTC, I started mining and then trading them on MtGox. Generating profits/income in a fully digital and scalable way with very little costs always fascinated me as a digital and crypto native, so trading was always appealing, even though I worked other jobs in my early 20s.
What markets have you traded over your career?
I did some spot trading in 2013 but only really started trading with leverage in early 2017 when I discovered BitMEX. It was a wild run before ultimately switching to almost fully automated after 2019. I’ve been focused 99.9% on crypto, tried some Oil and Forex trading over the years but always found crypto feels more natural to me.
How long did it take you to become profitable?
In typical Dunning-Kruger fashion, 2017 was a fantastic trading year for me; my first big turning point was trading fork events, like BCH in August 2017 or BTC Diamond in November. I would long a few days to a week before the fork and then short very aggressively at about the exact time of the fork, only to close and reverse a bit later. I’d do the same on all correlated symbols. This strategy alone let me to 20x my capital in only a few trades.
When the bear market came, I played it conservatively for 9 months and then blew half my stack in two dumb trades. It made me realise that my discretionary trading was way too affected by my mental state and other external factors and that I ultimately couldn’t control the outcome as much as I thought I did, which kickstarted my interest in algotrading. When I got the algos going, it took me about 1.5 years full time to start turning a decent profit.
“MY DISCRETIONARY TRADING WAS WAY TOO AFFECTED BY MY MENTAL STATE”
What does a typical day look like for you?
I usually check emails, important messages and my positions first thing in the morning, then I eat something and start reviewing the bot’s performance and logs from the previous night. After that, most of my day is spent working on code: sometimes it’s integrating a new exchange or updating to a new API version, sometimes it’s improving some logic or adding new functionality, sometimes it’s creating a new feature and playing around with it, plotting it, seeing how it correlates to others, and training some models. I also usually have at least 1 call/meeting per day. I try to speak with as many like-minded people as possible; there’s always something to learn and some great friends to make out there!
What's the worst thing about trading and why?
When it comes to algotrading, the worst thing is that you can’t really talk about it with 99% of people because you’ll bore them to death, and you definitely can’t talk about it with the remaining 1% because they’ll go after your alpha if they can, or tell it to somebody else if they can’t. You can only talk about it very vaguely with people who are at the same point in their journey as you, and when you do, you can’t understand each other because this industry is so secretive that everybody ends up calling the same three things 497 different names.
“YOU CAN’T REALLY TALK ABOUT IT WITH 99% OF PEOPLE BECAUSE YOU’LL BORE THEM TO DEATH, AND YOU DEFINITELY CAN’T TALK ABOUT IT WITH THE REMAINING 1% BECAUSE THEY’LL GO AFTER YOUR ALPHA”
Would you share with us your most memorable trade?
My best trade ever in terms of setup was probably Core, a Defi project for which I was probably in the first five people to buy, and I sold it pretty close to the (at the time) top. Too bad I played it with a small-ish size because it was a 50x.
What’s the best trading advice you’ve been given?
Do nothing for 99% of the time, and when there’s free money on the ground, just pick it up.
Think of your portfolio like it’s someone else’s money. Try to take small, controlled, repeatable decisions that should work in your favour for a specific reason. Once you understand all the variables involved, common sense is your friend.
What's something you've learned in the last six months that has made you a better trader?
As much as this industry is a pile of math, servers, and abstract concepts, it’s still run by people who make deals like in any other industry, and the right DM to the right person can change your life as much as seeing the future. Network, network, network, most alpha is not in the charts.
What's the most important quality in a trader and why?
In a discretionary trader, discipline. In an algotrader, I think practicality. For both of them, common sense. When you make bots, it’s very easy to get lost playing with models, data, performance, and fancy papers. You forget that this is a business and that you should operate it like any other company. Your “core product” might not be the fancy model you like to work on, it might be a dumb arb on an obscure venue with a garbage API, but you gotta make it work!
Why do you think you have success trading?
First of all, I had the luck to meet many great people on Twitter at the right time, from which I learned an invaluable amount. Secondly, I’m a very competitive person, I love challenges, I don’t mind losing, and I’ve always been entrepreneurial. And third, I was willing to invest years into this even if I didn’t get even 1$ back. I had savings from 2017, and worst-case scenario, I’d have recycled those skills to get a job as a programmer, which is another advantage of algotrading over discretionary.
What drives you to keep trading?
Knowing that I’ve only used a small % of the potential of everything I built so far motivates me a lot. Let’s say I spend six months studying and six months building out a new system, and now I’m live testing it and adjusting the details; I just can’t wait to finish and deploy it to many more pairs and scale it up. Whenever I make a new one, it’s like having a new Ferrari with 100 miles on it; I can’t wait to go out on a track and floor it properly. And there’s always a new system!
“IT’S LIKE HAVING A NEW FERRARI WITH 100 MILES ON IT; I CAN’T WAIT TO GO OUT ON A TRACK AND FLOOR IT PROPERLY.”
What does ‘making it’ look like to you?
Really ‘making it’ in my broader opinion, means being in a financial situation where you can afford to be financially irresponsible for a prolonged amount of time because the consequences are negligible. My personal, more realistic version of ‘making it’ that I aim for is reinvesting, diversifying and accumulating trading profits in such a way that I could stop doing this, and I wouldn’t have to get another job elsewhere to maintain the same lifestyle, adjusted for inflation, for the rest on my life. I know, not easy to predict in those wild times.
What's the mistake you find hardest to avoid when trading? Any tips to avoid it?
Keeping my emotions in check. For example, dynamically changing my time horizons, opening a trade with the intent of holding it for a week, sizing accordingly, feeling confident, and then changing my mind the next day when looking at an LTF chart.
Letting big wins or losses affect me for some days, increasing my risk appetite. Letting negative uPnL and volatility stress me out. Getting fixated on a specific pair for a while instead of getting creative and looking for the best opportunities on the venue.
To fix all that, I delegated as much as possible to my bots, and reduced my discretionary sizing to have impactful results in my life in terms of $, but not too bad % drawdowns when things go south, usually meaning around 0.1x to 0.3x leverage. Another useful rule: if you are feeling emotions while trading, no matter if happy or sad, stop. Long term sustainable trading should feel like watching grass grow.
In my day to day quant work, I’d say working on too many projects at once. It’s so hard to ignore it, there are too many good/fascinating ideas and money floating around, and I keep finding more and more! My fix to this was trying to collaborate with other people more, sharing ideas and workload.
If you could give someone starting trading tomorrow one piece of advice, what would it be and why?
Get your hands dirty. Your first goal shouldn’t be 2x’ing your initial 1000$; it should be understanding a whole new (very competitive) industry you know nothing about. Take 50$ and go gamble on leveraged perps, take 50$ and try some Defi protocol, buy an NFT, and while you do all that, ask yourself as many questions as possible. Why should I be making money doing this? Who’s losing money on the other end of the trade, and why should he? Does he know something I don’t? How does this financial instrument work, and why was it created? What purpose does it serve to the public and its creators? What’s the revenue model of every project/company I see in the crypto space?
“YOUR FIRST GOAL SHOULDN’T BE 2X’ING YOUR INITIAL 1000$; IT SHOULD BE UNDERSTANDING A WHOLE NEW INDUSTRY YOU KNOW NOTHING ABOUT. ”