Podcast #3. Michiel Mulders “Top Trading Strategies That Traders Use To Maximize Profits”
For the 3rd episode of Binaryx audio-podcast interviews we’ve invited Michiel Mulders to talk about the top trading strategies that traders use to maximize profits. Michiel is a blockchain developer who runs a content agency focused on crypto and blockchain, marketing/social media, lifestyle, and endurance sports. Besides writing articles, he loves drinking a Belgian beer – or two!
Alex: Hi, everyone. It’s the third episode of Binaryx audio podcasts interviews. And today, we have invited Michiel Mulders to talk about top trading strategies the traders used to maximize profit. Mike is a professional journalist and blockchain developer. Hi, Mike. Thank you very much that you accepted my invite.
Alex: Can you tell our readers a little more about yourself and your crypto-journalist experience?
Michiel: Yes, sure. I started writing for crypto in 2017 when the ICO hype started. And back then, I worked as a blockchain developer in Belgium. I was in consultancy with a few projects like Hyperledger and Stellar. After that, I joined Lisk in Berlin. And then I have briefly worked at Lunie, which is the staking non-custodial wallet for Cosmos. After that, I pursued my content agency now, which helped crypto startups mostly to write about crypto trading. That’s how I’ve got here.
Alex: Amazing! It’s a very cool story. What about your writing? We want to talk today about the top strategies for the traders’ use, and all trading as a very stressful industry. Maybe you could advise us, is it possible to trade without stress or losses with your nerves effectively?
Michiel: So, the article I’ve created about crypto trading strategies intended to help beginners and more experienced traders to control emotions and the stress level as well. They can dive into the first aspect that I mentioned is about managing emotions. The first one is like you should be able to control your feelings but is one of the most challenging aspects of trading to master. And in my opinion, it’s directly related to the profits you make. For example, the most widespread emotion is fear because fear can spark incorrect decisions. You would open trade, and instead of the trades going up, they go down. If you tend to like “let this fear creeping,” and you close a trade and maybe, later on, you find out the trade was the right decision, but you have to give it a bit more space. So that’s a fantastic example of how fear could short your trade and also could short your crypto profits. There are also many other emotions (for example, conviction or excitement). It’s like when people have a very dogmatic view of a project. They neglect any criticism, and I’ve seen this in the past with Ripple. A lot of people on Twitter were die-hard believers in the project. It’s easy to spot it from a distance. When you have this emotion of conviction, it’s much harder to detect it. One of the tips I give is to try to do some journaling. For example, to write down why you open a trade and what emotions you feel. There’s one of the fundamental reasons behind opening the specific trade. And that’s my way to detect a feeling of conviction, which is often very hard to spot. It’s like a Minesweeper game. But if it helps you, it helps you. And the last thing that I like to cover is greed. Greed is like when the market is in a tremendous bull market (for example, 2017 stuff), and nothing can go wrong. You open trade and expect to make a profit a few days later or even a few hours later. But this greed can cause you to open more significant trades that involve more risk and sparks more fear. Maybe you wouldn’t pay attention to set limits or other proper safety measures to limit risk. Greed is dangerous because it allows you to take more risks, and it can turn the fire back on you, and it can eat up your profits. So when you want to start trading, it is good to know a bit about different emotions involved and how you can spot them and how to effectively control them to become a better trader in the end.
Alex: So interesting. Maybe, there is some emotion trading plan or emotion diary that helps you to control and analyze your emotion through the trading day or month?
Michiel: Yes. There may be online tools I’m not aware of. But I can imagine them as tools that can help to write your emotions in a structured way.
Alex: You talked about the fear and overconfidence also in the parallel. Maybe there are some specific kinds of strategies or some particular limits that we can use, or traders can use to minimize their losses and stress? Perhaps there is some unique strategy for this purpose?
Michiel: Sure. The plan is one of the key aspects to control your emotions and stress. A project can evolve many things, so as you’re a beginner in trading, you can determine, for example, which trading indicators you want to use and which new sources you wish to incorporate to educate yourself. So that the plan helps to create a more consistent approach to trading, and it also allows you to set boundaries and targets. For example, you open a trade, and you can set a Take Profit and Stop Loss. You can set Stop Loss at 4% below your trade, and you can set Take Profit at 6 or 8% above your opening price. And by putting those limits, you allow your trade to just automatically open and close based on the price.
So, it’s a great way of controlling your emotions because you don’t have to be monitoring your phone or your laptop all the time to see the price. You’ll know that the trade will be automatically closed when the price drops below this 4% mark. It’s like one significant aspect of getting a piece of mind. Moreover, setting those boundaries helps a lot with controlling your emotions.
Alex: So, that’s how the trading plan can help us. What about trading while I’m traveling or while I’m just on my business trip? What if I only gain money with trading and could I have the possibility to travel somewhere just twice per year or 3 times per year and also could trade and don’t lose money?
Michiel: It sounds a bit silly, but if you take it seriously and you spend a considerable amount of time analyzing markets or trying to spot trends, you can succeed with traveling and trading. It’s a bit of a digital nomad lifestyle where your primary source of income probably is trading. However, I would still suggest having some reliable source of income. But yeah, I would say if you want to start trading with the small budget (maybe 4-5 thousand dollars) and see if you can win more trades than you lose, that’s already a great start. That’s like the beginning of success. If you can consistently make winning trades, that’s the beginning of a growing capital. So that’s a great start, yes.
Alex: OK. Thank you. I wanted to ask you also about the trading strategies for beginners. Maybe there is some specific strategy for newbies or like a percent-bases strategy that I heard from you before. Could you tell us a little more about this strategy or any other?
Michiel: So, I would mention arbitrage trading. It’s like a strategy where you try to leverage the price between different exchanges, and you can try to make small profits. But that’s like a more advanced strategy already. A good one for beginners is a strategy based on the 80/20 principle where 80% of your investment is stable like an interest per year, and the remaining 20% goes into a high-risk trade (for example, opening a long or a short position on Bitcoin). The benefit of the strategy is like 80% of capital will be generating passive income. It’s perfect for beginners who are not so confident about their trading skills.
So, 80% of investment helps to passively earn money, irrespective of the other 20% risks. Even though Bitcoin goes entirely north and you lose the entire investment, it will be overlapped by the passive interest you’ve gained from your 80% investment. So, it’s great for beginner traders because they can limit their losses.
Alex: Sure. What about the traders who are not the beginners and have a little more experience, and right now, they’re ready for a little riskier, but more profitable strategies. Could you describe some of them?
Michiel: Yes. The percentage-based strategy is suitable for more experienced traders, but beginners can also use it. So, the main takeaway is that it’s tough to be on top. You have to try to sell as high as possible, but it’s not always possible. And therefore, the percentage-based selling strategy gives you more of the practical approach to selling your assets gradually as the market moves up. For example, you set a target price at which you think the market will hit, and you want to sell 50% of your total assets at this point. So, you can already lock some of your profits. And what you want to do is to gradually sell smaller and smaller pieces of your total investment as a market moves up. I entered the silver markets, and the price went from almost $12 to $28. So, I decided I want to sell 50% of my stake at $20, which is already an $8 increase on the original price. After that, I decided that I will sell 10% more for every dollar of the cost. So this gives you a more controlled approach to selling, and it also again takes away the fear of missing out like a better opportunity. Some people during the Bitcoin bull run were waiting for a better price. It hit for $20K, and they were still waiting to sell. Then the price started dropping, and they were still waiting. And in the end, some people didn’t sell at all. So, the strategy helps you to like reliably and, in a controlled way, sell the parts of your stake and look at the profits. It doesn’t matter that you earn 50% or 60%. You should be happy that this is a good return on your investments for sure. So, that’s about it.
Alex: Talking about investments, maybe there are some particular stop targets or trading limits? For example, if I’m going to sleep and I still want to get some profit or perhaps I’m just a beginner trader, and I don’t have such reasonable control of emotions, and I want to stop being impulsive. Can I create some automated Stop Losses or Take Profits?
Michiel: Yes, Stop Losses and Take Profits are two things that every trader should know to control their trades better. For example, you open a trade and want to set a Stop Loss, which limits your losses basically at 2-3% below your trade. After that, you can set a Take Profit at three or more percent above your trade. But there is also a little bit of strategy behind this, which is the risk level. If you set a Stop Loss at 3% below your trade and 3% of the Take Profit above, you’re gambling 1:1 because there are 3% on both sides. You can also optimize the odds of your trades by changing the percentage of Stop Loss and Take Profit. But, don’t forget about giving your trade more space looking at the volatility.
Alex: I’ve also heard that except for the Stop Losses, there is a good idea of diversification of your funds.
Further, I heard that it helps to spread the risk on many different trades. For example, I can try not only with the Bitcoin exchange I can use different ones at the same time to lower the risks. That’s why I wanted to ask you. When we talk about the stop losses and Take Profits, you also describe the specific strategy before. It means the diversification of your funds. As understood, diversification is a handy and vital thing while you’re trading because it helps you to spread the risk on many different trades or exchanges. Is there any particular strategy that exists?
Michiel: The strategy I’ve mentioned before is a good one and very safe. Another one you can use to get maximum diversification is using some index. So, you can create your index, which means you make a basket of many different crypto projects. You allocate 10% of your total stake to each project. Suppose you have $1000—you buy-in $100 for ten other projects. And then, you can use rebalancing strategies (e.g., weekly). For example, if the Bitcoin price goes up 20%, it will be much higher in your portfolio compared to the other ones. So, you want to rebalance it to become once again 10%. You sell a bit of the Bitcoin and buy a bit extra stake in the profits stats. After that, the percentage is equal. It’s a very old and very safe strategy to reach maximum diversification for your portfolio. I recommend sticking to at least the top 100 coins by a market cap rate. It’ll be even better if you’re using the top 40 coins. It depends on which products you believe in, but I would say stick with projects with quite a high volume.
Alex: But when we talk about crypto trading, are there any unique crypto market cycles (for example, seasonal cycles or cycles with the bull and bear run. Maybe you can describe them a little?
Michiel: Market cycles exist everywhere so that you can find them on any scale. During the ICO run, it was interesting to see that it was a clear bull run, which is part of the cycle. A market cycle always goes from different emotions like hope or optimism or even panic. It twists and goes up or down. The cycle can happen at a period of 10 years or even shorter. We went through the cycle. We went through the cycle during the 2017 ICO when we reached euphoria. We ultimately went down again to Bitcoin’s $23,000 rate. And now, it is up to $11000 or $12000 due to the DeFi bull run. So as you can see, this market cycle can even happen in the shorter periods of 3 to 4 years. And traders need to understand what is part of the cycle for making a long-term plan. For example, you can’t open a long-term trade now. There’s a lot of risks, and your long-term trade will not succeed.
Alex: On this point, I guess we could surprise our readers and our listeners with Google sheets trading calculator, which we prepare for them. Could you tell us a little more about this Google sheets calculator that we created? Like it’s good to think not only about the trading plan but also about the emotions calendar.
Michiel: So, the Excel sheet we’ve created can help you to determine the percentage-based selling strategies. You can input the target price, and then the sheet will help you with calculating all the different stop levels. It’s just a small tool, but it saves you some time. Having this tool in your toolkit, you’ll always use it.
Alex: Amazing. I think it would be beneficial for our readers. Please try this critical thing that would help you to maximize your profit with a small effort. Michiel, I wanted to ask you also about the technologies. What do you think, the blockchain technology and the Bitcoin and altcoins… Where are all of them going? What should be in the future? Maybe some new inventions or projects or technologies that would appear in the future.
Michiel: I think on the way to creating a lot of new financial instruments which is already happening in DeFi. But not all of them are very beautiful yet. First of all, adoption is like a critical problem of the DeFi movement. It’s quite complex to understand liquidity pools and liquidity mining. It’s not easy for a regular person who doesn’t have that much financial knowledge also. But, there will be some useful inventions in the DeFi world. For example, blockchain and the whole DeFi movement have to mature and implement some web browsers to do all things on the Web. People could quickly and easily adopt Blockchain technology.
Alex: I agree it’s a good idea to use a browser for Blockchain. I guess it would help beginners clarify what they need to do and dig a little more and all of this. Let’s move to the last question. You just had some experience in journalism. So, what are your favorite cryptocurrency news websites that you read? Maybe you can name some of the favorite ones?
Michiel: So, I have a couple of them that I like to follow. Firstly, I want to read some technical stuff on Decrypt.co. They have excellent summarized articles and a good journalistic style, but also nice graphics. For more trading specific knowledge, I use websites that are focused on stock markets. For example, Admiral Markets is an excellent website with thousands of articles and tutorials on Forex trading. But the benefit is the articles about techniques that can be applied to crypto trading as well. Further, I also like Investopedia for a more fundamental understanding of financial topics. This website has a lot of explaining articles and even more detailed guides on trading.
Alex: Thank you so much for the fantastic interview you gave to our readers and listeners. I heard today a lot of useful information and your amazing tricks on how to maximize their profits. I wanted to thank you again and to advise our users to follow you on LinkedIn and read your blog. It’s a fantastic source of useful articles with an amazing style. Dear readers, don’t forget to download our Google sheets unique calculator that will help you maximize your profits. You can also join our community in Telegram. See you soon and have a great day!
Michiel: Thank you.