In today's interview, one of the most famous Czech traders, Ludvík Turek, gave us his view on stimulus packages, GameStop stocks, or bitcoin cycles. You will also learn his opinion on the entry of "big boys", such as Elon Musk, into cryptocurrencies.
Mr. Turek, welcome to our second AMA session. We did the first one in the cryptocurrency bear market, but now we have a bull market and the crypto is on the rise "a lot".
But let's start with printing money or better with "stimulus packages". Biden also prints helicopter money as Trump did, so it will probably be fun on the markets again, don't you think?
The world has been involved in printing money and interventions from central banks since 2008, when "those smart bankers" were faced with the decision to risk the collapse of the whole system or simply admit that they had eaten up, stolen, and it "suddenly somehow" collapsed. At that moment, they risked that millions of people in the world would lose their money, there would be huge unemployment, and the situation would turn into unrest (and people would take a pitchfork at those clever bankers), or they would just be stuck with non-existent money. And so the printing started.
Until now, I would still understand it, avert the biggest mess and save the world from the apocalypse in a year or two, and then let it be washed out gradually and in a controlled way, everyone will understand. And then keep spilling it there, but only to the extent that people don't starve. Unemployment would rise to 20-30%, people would have to think about changes in industries in an emergency, there would be new and new ideas and inventions to get people out of trouble and economic depression, it would take 3-5 years like any bear market in history. The debt of each country would increase, but it could be gradually controlled and repaid, because it would not be trillions, as now. After the bear market, development and huge growth would come again, people would realize that everything is not free, they would appreciate work, real estate would be available to ordinary people as well, and the world would be fine for a long time today. But, the biggest robbers and billionaires wouldn't have billions more... And so it went "big" until the end of 2018, when Powell said, "Look, this is out of control and we're going to tame it."
So they began to withdraw liquidity (less printing) in December 2018, and within a month the market was flushed so that the situation began to threaten a crash like the one in 1987 or 1929. Trump spoke in January, saying that Powell was an incompetent person and that the whole world is printing, devaluing currencies, and the US is asking for bankruptcy. And that they will simply pour it on the ultimo with the Minister of Finance and the so-called plunge protection team, and let people buy shares because a similar opportunity will not be repeated. Result? Powell stepped back, and they began to pour and print x times as many as Yellen did. And not at all because of some logic or economic cycle, we can long forget these concepts.
This was the case until March 2020, when the situation was similar to November 2008 - due to the Covid-19. There were only two paths - either nonsense printing will continue, or 1929 will be a walk through the rose garden against what follows. The sluice gates were lifted, printing began most in history. What the central banks have shown since March 2020 is more money in the system than before in the whole period since the crisis in 2008! And so it goes on today and more and more. Each central bank, led by the Fed's Powell and Von Lyen at the ECB, will say at each meeting, "we will print and we will print even more until the Covid disappears."
Both Trump and Biden built their campaign on this, along with the vaccine. The main money is received and earned by corporations, billionaires, and multinational companies. Since March 2020, most billionaires in the United States have increased their assets by tens of percent, the same is the case everywhere in the world. Many medium and small businesses are literally on the verge of collapse, most billionaires get rich.
This is the general situation of today. For the stock exchange and trading, on the other hand, it is a great period, just as it was 2009 because, at the time when meaningless money is printed, a lot of money goes to the market, everything is and WILL be in the bull market, which is good and totally easy to earn money. And it doesn't matter if we're talking about stocks or cryptocurrencies. When you look at each chart, just wait a few days for a correction and buy to target the all-time high and part of the trend. Whether you look at Bitcoin (from $ 10,000 to $ 62,000 the same scenario on the daily chart), Ethereum, Apple, Netflix, or other markets, the printing will always help markets going up.
Of course, if we are talking about stocks, since March 2020, all online businesses have skyrocketed the most, whatever it was about Covid, electric cars, on the contrary, travel agents, airlines, or hotels tend to stagnate or grow slowly. Basically, as long as it is printed, the money will go to the markets, and thanks to that and only because of that, it will grow into the sky. The end of the press OR something unpredictable that we have not yet experienced can cause markets to wash out. But I don't know what would have to happen when since 2008 there have been several events that would send markets to a corkscrew without the endless printing of money. It's always the same scenario. The more markets fall, the more central bank interventions intensify and impossible amounts of absurd sums of non-existent papers to avert and hint of a bear market, whether in stocks or real estate.
Did you watch the trading battle of GameStop? Reddit bloggers against Wall Street bandits? Is there anything that we can learn from this case? Maybe that the rich guys aren't almighty?
Since I trade US shares very actively, I have, of course, registered GME shares and traded countless times on the intraday. In US stocks, you have a stock that flies 100%, 200% a day - and you can make money on that every day. Often you don't even decide if it's biotechnology stocks, Covid-19 tests, a drone maker, an electric truck maker, or a video game shop. You just see that a stock is significantly higher or lower than yesterday - at that moment it is a hot candidate for trading today or tomorrow.
In general, however, I am not of the opinion that retail has a chance against "mega robbers" with unlimited money and open access to the FED for any amount. Yes, he may do well once or twice, but then the Wall Street guys will take care of the "new rules." See, for example, how the "Reddit boys" tried to hit the silver market a few days after GME. Intraday rocket, the finals, however, in the next few hours a very rough flush - and death for the retail. You have to take it that the biggest hedge funds are often different branches of the biggest banks and biggest brokers, they are behind market-making, they are high-frequency traders who today control 60–80% of all markets and transactions on the stock exchange. The regulators are just their henchmen, this game is simply not made for retail.
Yes, individuals can sometimes ride with "robbers" and earn a pack, but in the long run and we can think about what we want. Many times we have all noticed that when someone rides like this with big ones and earns impossibly big money on it for individuals, it ends in courts, regulations, bans so that it does not happen again. A nice recent example - a group of UK traders made hundreds of millions of dollars in the fall of oil when oil went to zero last year. As a result, Goldman has sued them for manipulation, and they are being sued in the United States, where they are in real life in prison for years. The fact that Goldman, Deutsche, JPMorgan, and all of them do this quite commonly is not resolved. If there is no leftover, they will select a small trader from the bank as much as possible, make him an irresponsible manipulator, get a few years in prison, the bank will be fined a million USD (which earns on the stock market per minute)… and move on. Sad truth but that's how it works.
I'll put it this way - if you want to make money on the stock market, go with the big ones and don't solve what they are. Do you think that someone will ever depose Bloomberg? That suddenly these "chosen ones" say, I don't like it anymore, you have everything here, I'm going to Walmart work as a cashier? So it's similar with hedge funds, where the owners are often very influential, powerful people with very long fingers. But make no mistake, I'm the biggest bear in the world, the whole world has gone completely crazy with migration, racism, gender or ordinary electric cars ale, but as a trader, I take everything the way it is and when you can make money, great - happy to join. If someone wants to buy a crypto cat, and yet it's a total flight, then if my blue cat costs $ 10 and someone gives me $ 1,000 for it, come on, I'll sell it to you right away!
Personally, I think that electric cars, for example, are one crazy stupidity, which does not discourage me at all from buying and selling TESLA shares. Musk and his outpourings on Bitcoin and Dogecoin - he can also make great money on that. At the same time, Musk is not a jerk, he buys a backpack, and then gives the tweet "I bought Doge for millions of USD for a son". The Doge shoots up, Musk sells everything in growth, collects millions of USD, and the Doge falls tens of percent down in a few days. Of course, Elon is no longer in that. He won't be there until he burns it up on Twitter again. This is how it is played. :)
From the historical graphs, it's possible that bitcoin moves in cycles. The basic two theories are two. The first points to four-year cycles, which may be directly related to the halving of remuneration to Bitcoin miners - this is about once every 4 years and their remuneration will always be halved, and thus the addition of new coins. The most famous pioneer of the four-year cycle is the so-called Stock-to-Flow model from a trader known as PlanB. The second popular theory is the one about lengthening cycles, which is held by analyst Benjamin Cowen - according to him, the peak should come between the years 2022-23. Do you think that we can really witness at least one or two more such cycles, in which there are an easily distinguishable growth dish and a subsequent deep several-year correction? What theory do you prefer?
My opinion is that both theories look very nice and maybe one of them works. There are different cycles in the markets, different theories. For example, in shares, the purchase is valid in November, the sale in May. Since 1900, if someone started researching year after year, compared to long-term holdings of shares, the result is astronomically better when held just this half-year. Or another popular rule - always buy stocks in December. Take a deliberate look at every December from 2000 and you will find that 90% of December is a month of growth. There are presidential cycles that we can explain by throwing new brooms well. Similar months or even weather (for cereals, commodity energy) can be found as cycles for all markets. Bitcoin is a relatively very immature, young market compared to something that has been around for decades and hundreds of years.
Cryptocurrencies have always been very volatile, in those few years we have seen hundreds and thousands of percent growth and then huge lavages in the tens of percent. Some see it as cycles, some see different fundamentals, sentiment, there are a lot of analysts and scientists who make different theories about both Bitcoin and other cryptocurrencies. Some of them have a prediction, some do not, but one thing is certain - most scientists and analysts are not traders, and if so, with a short experience at most since 2017, when there was Bitcoin mania. It is good to believe in your theory, which, if it is also confirmed by sentiment and money is governed by it, can undoubtedly be made on it. As I have been on the stock market for over 20 years, I have already seen different opinions, theories, phantasmagories, and techniques in all possible markets.
Some are quite well known and respected, some seem to be total nonsense for most people. I also know people who make money on the stock market, for example on the basis of astrology, various waves or classical fundamentals. You have thousands of people who say that Cardano is the future. The same Ethereum and some swear at each other. For me personally, it is a complete mess, if one or the other, when the market maintains support, I am interested in both ADA and ETH to buy, when they are on resists, I take profits, and I do not deal with their business model. I believe in cryptocurrencies, I have fully bought them for investments, I currently believe in NFT, I have both cryptocurrencies and shares. Now WKEY in one day made 200% plus after saying the connection with NFT. But what I don't have is time to study individual projects, and then invest in them based on their fundamentals. I do this at stocks, where I trust a lot of sectors and industries, I take it as fun in many small coins in crypto, and the amount I put in them and I give corresponds to that.
Yes, if someone is in the field, knows the development of projects directly, understands the whole business model, can get millions and billions from investors, so of course, he has a huge advantage and can earn enough. The same is true of shares, where the CFO of an international corporation obviously knows how the company is doing, what it will announce, and from this, it can be deduced what their shares will do after the results are announced. However, is IBM's CFO a billionaire, and does he really need to risk any insider trading? Trading is not his business.
As well as Vitalik with ETH or other geniuses behind new crypto projects. It is not their business to monitor price developments and speculate on them. We traders are here for that, where I am not interested in what is proof of stake - only if it is on the chart and there is a trend. For short-term, hourly trades, I'm interested in the first five cryptocurrencies, and 95% of all trades are on BTC and ETH, and of course both longs and shorts, and I'm absolutely not interested in whether BTC goes to $ 2,000 or $ 2 million. It goes from support to resist and from resist to support. I follow the classic price action, liquidity, volume profile, and everyone can see every day that I can estimate BTC and ETH with good accuracy, where I make zones to buy and sell in the morning and the markets go from zone to zone every day. Many people make a lot of money from my daily views, and in general no one solves "predictions of development" based on this or that theory.
The "big boys" began to come to the crypto. Tesla with Elon Musk, Microstrategy and Michael Saylor, Jack Dorsey with Square and others that are not even written about. Will this "institutional money" from the next Bitcoin cycle make it bigger than it would be without it? There is also talk of a so-called "supercycle", where Bitcoin could be traded for as little as $ 400-500,000.
This is certainly positive for the crypto, when the "big boys" publicly admit it in this way, then more and more will come who see the future in the crypto. And it's not just the corporations that buy Bitcoin, but also the stock exchanges that are introducing various crypto futures, crypto indices, crypto CFDs, and this is gradually helping crypt awareness. Full of well-known funds and analysts who have rejected crypto for years, they suddenly start telling their clients to "consider investing in cryptocurrencies." In addition to the NFT, where big money is also starting to flow, large companies are also starting to join, focusing mainly on game production. I know that you have thousands of HODLers who are one million percent convinced that BTC is the future and that Bitcoin will go to hundreds of thousands, millions, etc. Such predictions were there at the end of 2017.
Of course, everyone wants to hear a prediction and identify with it, because they have bought it and want to get the price of the crypto as high as possible. We all want that, but the result will be decided by those you do not want to meet because you would be sick of them. :)
Maybe BTC will go to the moon, maybe not, maybe the whole famous Bitcoin will be rolled over in another currency, maybe already known, maybe a complete novelty, backed by other "big robbers" and it will be marred by maybe cash being full of viruses, dying people, so let's stop using it. Plastic cards will be nonsense, everything will be on the phone and even the last pensioner in Uganda will be able to pay for water by smartphone. One thing is certain in my opinion - crypto is here and will be, it is the future and in a few years it will be a part of all of us.
From our last interview, readers already know that you are mainly involved in intraday trading in futures, forex and cryptocurrencies, as well as swing trading in shares and options. Nevertheless, as an experienced trader, I would like to ask if you can advise readers on any strategy on how to adjust the exit from the cryptocurrency position so that they at least have something from the bull run. As with any market, it is quite probable that nothing will grow permanently and sooner or later a bear will knock on our door. And as they say among traders: "The worst profits a trader can make are unrealized ones"!
Hard to answer when I do not know the basic parameters of the purchase of each investor. There is also a difference between altcoin priced at 50 cents and Bitcoin or ETH, which do not normally fluctuate 10 % or 20 % per day and hundreds of percent per month. But in general, you want to spend a lot of time understanding price action. The big boys go to collect liquidity, which is simply stop losses of retail investors. Where retail thinks it's great to buy, the market is close to the fall and start of a short run, and vice versa, where retail thinks it's great to sell, it's about to go shopping. An example could be any very long candle with large volumes of trades that should attract attention. This is how every bull market often ends, or at least a sharp correction comes soon, and on the contrary, a long negative candle after x days and weeks of decline with a large volume is the end of the decline and is a real turn up. Basic knowledge of higher highs, higher lows, flags, pennants and rectangles will also help determine the continuation and end of the trend.
The most important thing is to take profits, tighten trailing stops - if you are very narrow-minded, you will not give the market enough chance to take profits and start new long positions. You may be out with a profit, but you won't see a megatrend (if any). What is meant by taking profit? You take a position, you have a stop loss somewhere, and as soon as the market reaches the new highest prices in history, you take part of the position out, you make a profit. You tighten the stop loss to the entry price and it is no longer possible to be in loss in the traded cryptocurrency. You watch the market do what you do and tighten up the higher low below the swing low. Once the market goes to a mega long position up, you look down at the chart on the volume of trades and turn part out. If the market starts to correct, it will make an ordinary flag, long on it and again to collect part of the profit in the new highest prices. And this way you can buy and sell several times in a year or two and make a lot of money on the trend.
Or you do it like 95% of all people who bought Ripple for a few cents, then bought it for a dollar, for two, for three they bought it for a bag because as it kept going up, it seemed like it could never fall. And as it began to fall, it was bought again, falling again and buying again… and in 2019 it was all about blasting, all the savings gone and every week to the church to pray that it would go up again. Bitcoin worked out after a 90% correction, Ripple I don't know what will happen, a lot of people see their fights with the courts, and that's why the price has been washed away, but you always have to take some trials and negativity with caution.
This is commonly done in stocks, there are reports of a problem, courts, lawyers, damages, troubles, retail is scared and sells, big boys continue to fund negative news and buy. As always, follow the trend, manage money and your emotions and don't deal with some bullshit around. Take a look at the Bitcoin chart in 2017 and get inspired by what happened on the chart.
Thanks for the answers and good luck in trading and personal life.