How to Trade Bitcoin and Crypto with Luke Martin
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In the first episode of The What Bitcoin Did Podcast, I chat with Luke Martin aka @venturecoinist, one of the leading Twitter Crypto traders about his approach to trading and strategy. Luke talks in detail about how he trades, thoughts on forks and ICOs and what he does outside of Crypto to keep his mind fresh.
Luke dropped out of school to focus on trading full time and now operates a private group where he teaches others to trade.
In the show we discuss the following:
05:26 How Luke got into crypto trading
06:57 When Luke was first introduced to crypto
08:44 Why Luke chose to dox himself
10:24 Luke's rise in the crypto Twitter space
11:31 Who Luke recommends you should follow in crypto Twitter
12:39 Luke's trading strategy
16:25 Luke's initial advice to new traders
21:35 How Luke mentally handles a bad trade
22:22 Luke's view on day trading
24:00 Luke's thoughts on forks
28:01 Luke's opinion on the impact of CME futures on the price of Bitcoin
30:41 Where Luke thinks institutional money will be invested
32:17 Luke's thoughts on BitConnect, Tether, risk and security
37:14 Luke's views on ICOs
43:52 Thought's view on Ripple
44:59 Sectors and coins which Luke is interested
46:24 Luke talks about his business and his thoughts on private groups
50:10 Luke talks about the structure of his day and how crypto has changed his life
53:21 Luke's thoughts on the future of crypto and his own journey
55:10 Luke's recommended resources
56:35 Closing thoughts
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Peter McCormack: Hey man. Thank you for having me here in your home to do this. I've obviously been stalking you on Twitter for a couple of months and gradually speaking to you, and what really stood out for me when I followed you on Twitter was these big long explanations you were doing, like 18 tweets in a row to explain some kind of forex theory which I didn't understand, but it became obvious that you were standing out in the Twitter space compared to others by having some kind of background in trading or forex. If you can just start by giving me some kind of background to how you got into all of this.
Luke Martin: Yeah definitely. First of all thanks for having me on. When I got into all this I was working for a fortune derivative company in San Francisco. Our CEO was doing some less than ethical things and that office shut down. I was trying to search how I was going to make money and I wanted to go back to grad school. I ended up moving out to California, started a Master's in Applied Finance Programs and also started a Twitter account. I was getting into trading cryptos and mining some cryptos as well and really quickly it kind of took off. i was sharing my charts and looking at what other people were doing and I saw a niche, in that there was a lot of people posting charts and posting memes. Not a lot of people were taking it seriously or trying to take a professional route and explaining market dynamics and how everything actually worked. So that kind of took off really quickly. I was also managing my money and my brothers money and a few friends money and that took off as well. And two months later here we are.
Peter McCormack: So what was your first exposure to crypto and bitcoin? How did you get introduced to it?
Luke Martin: First exposure was me and a couple of friends wanting to invest in Bitcoin or Ethereum. We didn't want to buy it because the prices were so high. So we started mining. We tried to mine on our laptops and my laptop almost caught on fire. So we all committed a couple of thousand dollars, built a few Ethereum mining rigs and it really took off from that.
Peter McCormack: And then in terms of trading crypto - when did this really start? Tell us about the whole dropping out of college for it, because I think that can be interesting for other people.
Luke Martin: So I really wanted to be an analyst or front office at some trading desk or something in investment management. My previous job was more kind of a sales role or dealing with client inbound. I wasn't actually able to critically think or give my analysis of the markets. I just wasn't able to do that. So when I was working at that job, to make extra money on the side I started writing articles, market analysis and stuff like that. So when I got to college I was trying to follow the same path, what can I do right now to gain experience and to really just start doing the job that I want to do before I have it. I started sharing that stuff on Twitter, trying to explain my views, sharing my charts. Really quickly I think it made people some money. I think a lot of people just want me to make them money. My actual goal is to try to teach you the process as well. I think that value lasts a lot longer. But the combination of those two things, like you said, the threads where it actually explains things and then also people making some money really quick. I watched the Twitter blow up. I realised the potential of my personal brand or creating a brand and focusing on this and working in the cryptocurrency space for the long-term. I realised this is the chance of a lifetime. And it was like, why go to college? You know this is the job that I want to do. Now I get to work in markets. Now I get to critically think and share my ideas and speculate. And it's like this is why I'm here. I might as well go for it.
Peter McCormack: And you choose to dox yourself. You know you're out there as Luke Martin. You know a lot of people got their names with some kind of person from a film or history. I understand why, we talked about the security reasons, I'm like you I'm out there as who I am. I have my name but you chose to do the same, and you were out there as one of the leading investors. Why is that?
Luke Martin: It was funny, I was having a chat with my friend Ian Ballina who I networked and met in San Francisco and I was asking him how his experience had been. He was one of the only guys who had his actual face out there - a lot of guys that maybe have been following me for a long time remember this - my picture used to be of Warren Buffett drinking a Coke. And I was anonymous you know for the same reasons, security and all that. And I was talking to Ian and my main concern with coming out wasn't security reasons. While that does play a big role I've had to take some pretty significant steps to make sure I'm safe. My big concern was that I'm so young and people were going to be kind of concerned in taking me seriously in that I actually had merit or actually knew what I was talking about. So he kind of convinced me that it was the right move. I think if you're going to be buying any of my services or even if you're not taking my analysis seriously, I don't really want you paying or Looking at a picture of Warren Buffett drinking a Coke. I'd rather you actually put a face with the name, understand who I am and understand my background and stuff like that. So it kind of just aligns with the values of being very transparent. You know I'd like to do my business with a lot of integrity. I think it's good for business. And it's open it's opened up a lot of doors to give me some unique opportunities.
Luke Martin: And in the Twitter space, very recently, over the last few weeks you have suddenly become right in the middle of all the other key traders, not only discussing trading but all the banter and the piss taking between you guys. When was the tipping point for you when you realised that this was really happening?
Luke Martin: Yeah it's hard to say. Maybe when I started getting recognised, not in person yet, but when people actually shout me out, people that I respect in the space, and guys that I really were looking to for insight and advice like Ari Paul, and a couple of the other leading thinkers or traders. A couple of guys on there that I work with Zeus and Rand, when a couple of them were actually recognising my work and saying, you know this guy has a very sound process or sound TA, that was huge for me to finally get recognised. It's pretty humbling, and from there I think it solidified my space and it gave me a little bit of confidence too to keep going.
Peter McCormack: That's pretty cool. I often get asked who should I be following on Twitter and I just have a list of people, like if you were going to say to people they had to follow maybe five people on Twitter who would you say are the really decent ones that know what they are talking about?
Luke Martin: That's tough. There's so many people that provide different things, but just five, just a couple shills out there to throw - Ari Paul I think he has great institutional insight. Chris Burniske, I think he has the leading valuation theory right now in valuing these cryptocurrencies. I think Zissou, I'm not sure if I'm pronouncing that correctly, he's very spot on with fundamental analysis. He has a good understanding what's going on and understands the bigger picture. Crypto Rand is a guy that I work with on a few different projects and I also respect him for his TA ability. Last one, Crypto Bully is another guy that he's just kind of been a really solid resource for me to bounce different ideas off of and he also lightens the mood.
Peter McCormack: Yeah he does. OK so you've talked a lot to me previously about the business and such, and we'll cover that a bit but in terms of trading and in terms of trading strategy, do you have a broad strategy or do you have a per coin strategy? How do you approach this?
Luke Martin: Yes I approach it from a more macro perspective than a lot of other traders or crypto speculators use. I think a lot of people spend time in a micro sense dissecting it and looking at a coin's roadmap and trying to understand what's going on with that specific coin. I like to step back and it's probably because I came from a forex background, I try and understand the macro bigger picture and what's driving the market and relative valuations. So I look at where Bitcoin is and I always draw this channel, if you follow me on Twitter or you see this log channel this thing I've had all of 2017
Peter McCormack: Is that the one which broke out recently?
Luke Martin: It did break out but it came back and it was retained. So I use this Bitcoin channel to determine how Bitcoin is priced. Is it near the top of the channel, is it expensive, is it strong? Is it near the bottom of the channel? is it weak? Should I be moving into Bitcoin? And I use that as the timing mechanism for everything. So if it's at the top of the channel I look historically what's been the right move. Maybe moving into alts, taking some profits into fiat and letting Bitcoin correct and letting those alts breath. So I use Bitcoin as the real timing mechanism and try to look from a much bigger perspective. And then when the time arises then I start moving into alts.
Peter McCormack: Right, but with Bitcoin do you tend to hold more, or always hold a bitcoin position, or would you ever come completely out of Bitcoin?
Luke Martin: I would never come completely out of Bitcoin, just because it's like stocks and I'm not sure who said this, maybe it was Rob Arnott, who is really a quant kind of God. He talks about the positive skew in stocks and that if you're not invested in stocks for three or five days out of the full calendar year you know you miss out on - I don't know the exact percentag, it's a large percentage of the gains. Just because stocks are always going to go up, you want to be holding an asset that's in a bullish trend because if you're out of the market you're going to miss those days with the massive gains. And if you miss only a few of those it really limits your position. Just because the business I'm in I'm always holding Bitcoin on Bitmex and some other sites. I also do speculate or hedge by going short on Bitcoin sometimes as well.
Peter McCormack: Are there any other coins that you hold long term as well that you consider are key? I know before that you've talked about, and a lot of people talk about, if you are going long on any other coin you are going short on Bitcoin. That confuses a lot of people to begin with. But are there any other coins you think you should be holding long-term?
Luke Martin: Yeah it's really tough. I think just from a risk perspective, so if you think about all these coins, I'm not sure what percentage of them are going to be around in the future. I'm sure that a large percentage of them probably won't be. So I'm holding some of the larger cap coins for the long-term, just because they have the best chance of being around. I'm fairly confident that Bitcoin will be around and Ethereum, Litecoin and coins like that will be around. Holding onto a coin, some of these lower cap, I'm not sure if they last. I'm not sure what happens in this network, in this asset class whether some of the coins just drift away. So some of the larger caps, Ethereum I hold just to invest in ICOs, that has since dropped off - not investing any in any ICO's right now and Litecoin, I would also consider holding long-term except I'm not right now. I really just keep a core Bitcoin holding and then depending on where Bitcoin is in the channel, again, that's when I move into alts.
Peter McCormack: This is some of the advice I think a lot of people need early on and like we were talking before we started recording about the number of people coming into the space. Coinbase, they took 100,000 new customers in a day. So we know how many people are coming in and probably like me, having buddies phoning you and Facebook messaging you and saying how do I get involved and what do I do and what I should buy. If a new person comes into the space, what are the first few things you advise them to do?
Luke Martin: This is maybe something or a piece of advice that a lot of people probably don't want to hear. And I actually plan on sharing this on Twitter and a few other networks pretty soon, but most people probably shouldn't be actively trading as much as they are or even trading at all. Some people should probably just invest in Bitcoin, make that their core holding of their portfolio, invest in Bitcoin and move a lot slower than maybe what you're seeing on Twitter or what you're seeing in these telegram rooms. Don't chase the coin of the day or the coin of the week. Take a step back and instead of trying to determine if alts are going to go up today or tomorrow or next week, zoom out on the chart see when alts have peaked. Was it in June? Was it in September? Where were alts doing that well? What was Bitcoin doing? Try to understand the bigger perspective, move a little bit slower and try not to get all caught up in the excitement of it.
Peter McCormack: You know as much as me, it's addictive, once people start they do start trading. So I've told people the same, but if they are going to start trading, what are some of the key early mistakes that you made or the key things that they should be focused on if they are going to trade? what are the mistakes that people make early on?
Luke Martin: I think two of the easiest kind of rules you can implement are position sizing and determining exits before you ever enter a trade. So those are two things that I make sound rules and and I have a very objective system. My systematic whole process is all rules based, but those are two rules and there are some things that I'll change that are variable. Those are two things that never change for me. So determining your position sizing whether that's 2 percent of your portfolio per trade or it's a 5 percent or 10 percent, which would be a very large position for me. Using that to manage risk and also having those exits picked up. So what happens to a lot of people, and this is kind of become a meme or a joke in the communities when you invest in alts, suppose you invested in June or September, if you look at any of the alt charts till now they have just been going straight down and a lot of people that get into those trades end up bag holders, this is what we call them. If they determined an exit before they got in there they could have limited their loss to maybe five or 10 percent and then you can step back and reconsider. What is the market doing now? What's the environment now and where can I get back into this investment?
Peter McCormack: Are you holding any bags?
Luke Martin: I am not holding any bags!
Peter McCormack: Okay so that's really helpful. Are there any big mistakes you've made early on that have really changed the way you trade?
Luke Martin: Yeah overtrading. Overtrading is the biggest one coming from FX, It was really the technical analysis. A lot of the stuff is the same in everything, the price and volume is always going to be the same. But the way that these assets work and the correlations and the different forces that are driving these coins in the narratives that are driving these coins prices are a lot different. I was used to a more normal price action - things move up, things move down. In this space, you're constantly watching coins break out for a 500 percent gain and then retrace and kind of sit docile for months, so understanding the timing with these things and what is actually driving different price movements was the biggest thing. And when you get into the space you're not going to understand that. You look at Bittrex, you look at all the flashing lights and you just pick coins blindly. So taking a step back and actually developing a strategy for timing and moving into alts was the biggest thing that helped with that overtrading.
Peter McCormack: And obviously there are a lot of coins you can follow, do you have a limit to the number you follow? How do you choose because you can't map all 1,000 on CoinMarkerCap, so how are you picking and choosing?
Luke Martin: So kind of building off that macro perspective and just coming from a traditional finance world, I view these things in sectors. Whether or not there's set sectors like we have in stocks there's not specific eight or an agreed upon eight sectors, but I'll follow coins that interest me the most and things that I understand so finance and gaming and gambling coins and privacy coins. I try to pick coins that have utility now and that the value isn't all in the discounted future utilities. I think privacy coins have a lot of utility right now. Stores of value and payment systems have a lot of utility right now so I try to follow those coins. I understand their utility. Things like Aventus and Power Ledger. Some of these coins in the future might have great utility and they might change the world. Right now I don't understand how they can hold these valuations if the utility is so far down the road. So I narrow down into sectors.
Peter McCormack: And when the trade goes bad, because it does, we've all done it, we have ones we've looked at and you know we shit ourselves because it's gone just the wrong way. How do you handle that mentally?
Luke Martin: Hopefully determining a stop will stop that from happening but if it does happen and you're stuck holding a bag you just lost 50 percent on, my best tip is something that I learned both through doing and both through watching hundreds of clients that I used to work with in the FX and derivative space. What works is, don't try to trade to get back to break even. So if you lose 50 percent don't wager more on the next trade just to try to get back. Stick to your system, stick to the good habits.
Peter McCormack: The gamblers error!
Luke Martin: Yeah exactly! Let that play out as opposed to doubling down on the trade you just lost.
Peter McCormack: And do you have any views on day trading?
Luke Martin: Yeah I day trade, I trade every single day. I also know that that's probably not feasible or possible for everyone with a full time job, so I work with a really wide range of people. What I would advise and what I want people to think about is what makes the most sense for them if they're only able to commit a few hours a day. You know when you get off work it might not make the most sense for you to jump on your computer and try to get 10 trades in. Don't force it. I day trade because I can do this stuff all day long but some people, if you don't have a background in this stuff, if active trading just doesn't suit your strength, maybe maybe slow down and take positional trading.
Peter McCormack: So we've had quite a crazy month in crypto, ever since we were aware the Bitcoin cash fork was going to come. Ignoring all the arguments previously that have come out about big blocks v small blocks. Do you have an opinion on that?
Luke Martin: No I don't have an opinion. It's funny there's a real tribalism around these coins and I understand that there's tribalism or a sense of choosing a side in a lot of things that we do in culture, but I really don't and I think it's because I'm new to this space so I don't have some of the same mentalities or understand where some of these guys come from. I read up on it and I understand the different arguments for both sides. I really try to eliminate that and trade what the market gives me. I don't mind if Bitcoin Cash is going up and Bitcoin is going down. I'm fine playing that trade and vice versa.
Peter McCormack: You posted up about that yesterday right?
Luke Martin: Yeah exactly.
Peter McCormack: What did you make of the fork and all the action around them? Do you think we'll get anymore, or do you think we have some clear space?
Luke Martin: I think next year we're gonna see a lot more forks so that's what a couple of the guys I've been following that are usually spot on have been saying as well. I think we might see less ICO's. I think we're going to see more forks.
Peter McCormack: So forks are the new ICO?
Luke Martin: 2018 is going to be the year of the fork. So yeah a lot of volatility until we start to understand, as a group, as an asset class what to expect here. This is still a pretty big experiment we're all watching play out.
Peter McCormack: And I know you mentioned Bitcoin Cash or BCash, though they don't like to be called that, but I personally have noticed this inverse relationship because one of the things I do, which I tell people not to do, I margin trade CFDs on the movements between BCash and Bitcoin because they are totally inverse. Do you think that's going to continue and why do you think that's happening?
Luke Martin: I do the same. I trade that as well and regardless of the camp you're in. I actually speak with a lot of guys who aren't in the same boat as I am and they really hate Bitcoin Cash or BCash, they might be happy I'm calling it BCash. I'm going to trade that relationship and even if you don't trade it, use it so there's more than just a correlation there. I think there's some causation as well and when the Bitcoin Cash team is selling their Bitcoin holdings or when there is this increased FUD and people don't know what Bitcoin represents, I take it as when I see talking heads and Bitcoin core developers and big guys in the space, whether they're brushing it off and saying Bitcoin Cash doesn't have a place, the fact that they're even talking about it and giving it the time of day shows that there's definitely some concern. So yeah I trade that relationship as well. I think it's driving a lot more than just correlation. I think there's causation there as well.
Peter McCormack: What do you think of the manipulation of the market or the views on manipulation in the market, because of a lot of people are saying the two biggest pumps on BCash, the one last weekend and the one this weekend, most of the volume's coming out of Korea. It appears to be a base which is potentially near the people who have got interest in it and the volumes seem to spike at a time when these people are trading.
Luke Martin: Yeah it's tough. A lot of people call it the Wild West and that's exactly what it is. We're seeing a brand new space. A problem with this space still even as it grows and as more people are joining in and some of these coins you know relatively are liquid. So Bitcoin is more liquid than something like MUE or NAV. There's still just a lack of liquidity so when there's a big spike in volume or stuff like that, when big players are moving in and out of these coins there's going to be big move m ent in the coins, there's just not enough liquidity to absorb those big buys and sells. Whether it's manipulation or whether it's normal price activity. I'm just going to see what the market is doing and i'm going to trade it. I try not to pay too much attention to it.
Peter McCormack: Do you think there's a potential in the future that some of these things that people are doing are clearly things where if they were happening in the stock market or forex you could end up in prison. So there is some things which can't be proved but arguably fraudulent. Do you think that is something that will change? Do you think there's regulation going to come in for it? Or do you just not even care?
Luke Martin: No I think regulation is definitely going to step in. I definitely do. I pay attention to it. I think the CME group coming in and starting to allow Bitcoin futures and eventually these exchanges are going to have to be regulated whether it's through the CFTC or not there is going to be a lot more rules and a lot more scrutiny from these regulators watching what's going on. So a lot of the stuff that you're seeing today, i know they try to crackdown on different telegram pump and dump groups were ICO manipulation definitely goes on. I think we are going to see as this industry grows as it brings in more attention and more money it's definitely going to increase the scrutiny from regulators.
Peter McCormack: And with that regulation coming in and you talked about relating to the CME futures, there's a lot of people including myself, as a trader who don't really understand what the impact will CME will be. There's different opinions some people say is validating and it will drive up the price of bitcoin but also others are saying that it's a potential to actually bring the price down because of the potential to short it. And also other people don't really understand that actually with the CME features are they even buying bitcoin or is it just a paper trade? What is your understanding of this and what you think the impact will be?
Luke Martin: Yeah the biggest impact and the biggest takeaway that I see from it and the biggest impact I see it having on the space is there's a few risks that are keeping institutional funds and larger accounts, whether they are institutional or not that are keeping them from investing. Most of them are operational risks some are you know volatility and normal risks.
Peter McCormack: When you say operational, to hold in Bitcoin?
Luke Martin: Holding the actual bitcoin, storing the bitcoin making sure your funds are safe. Learning just how things operate in the space. One of the risk that they have to deal with is there's not a lot of ways for them to manage risk. Futures allow these larger players to do that so I suppose your long one million dollars US in Bitcoin. You want to hedge away some of that exposure in case bitcoin has to fall, you can sell futures and that hedges away or reduces or mitigates some of that risk so it opens the door and allows these bigger funds to control risk in a new way. I think it's bullish for bitcoin whether or not they're shorting or selling futures. I think it's bullish for Bitcoin because it checks off another box for those institutional funds to come in.
Peter McCormack: We had Coinbase announce they're going to be supporting institutional investments with 10 million dollars minimum spends. We've also had this week that the news that Square are accepting crypto. There is constant rumors about Amazon so I don't know about you but I kind of feel like we are about to approach some kind of tipping point.
Luke Martin: Yeah it's funny I feel like every other week it's almost a new tipping point that gets touched. Coinbase allowing new custodial services which is one of those operational risks I talked about. There's just not a lot of those out there. There are some boutique banks that allow it and some other firms that will help you store. Coinbase doing that is a huge step. Square and all these other companies, the more mainstream this gets we're going to continue to see this and the more that it's on CNBC and Bloomberg I think each each little milestone makes me increasingly bullish in an asset that I'm already bullish on.
Peter McCormack: And it's interesting because at the start of the year we started with a market cap of seventeen point seven billion and people invested in Bitcoin but it was growing slowly. I mean yeah it was growing quick but relative to what it's done recently has been growing slowly but it feels like now with the widespread news, and the more people coming into the space actually the majority of the money's actually just really going into bitcoin rather than into alt coins and therefore, for a lot of people just holding bitcoin over the last few months would have been just a great investment. How do you feel this is going to carry on? Do you feel like the majority money is just going to go into bitcoin or do you think they'll be going into other assets. Where do you think the institutional guys will be going?
Luke Martin: Before thinking about that question, going back to liquidity a little bit, bitcoin seems to be the only asset big enough or with enough volume and stuff like that that can even accept these institutional investments. If an institutional fund wants to take a position in some of these coins that are lower in the top 100 or even in the top 100 coins on coinmarketcap. They're going to move that market significantly. I mean I have retail traders that I work with that move the market on some of the coins and can't take positions and some of these small cap coins because when they buy they move up 10 percent. So I think bitcoin is going to continue to benefit from institutional guys coming in more than anyone else. I think as the market grows and some of these coins are able to grow their market cap and earn more volume I think they will also benefit as well. But I think bitcoin is the immediate beneficiary here.
Peter McCormack: Looking at coinmarketcap, right high up in there we have one called bitconnect. What do you feel about that?
Luke Martin: Yeah I really haven't spent too much time diving into it but just having a background and going to business school and learning about what happened with Bernie Madoff and all these other high yield investment schemes, just running the numbers in a very rudimentary and looking at it very quickly, it's something that I'm staying very far away from. Any of these multilevel marketing schemes that are guaranteeing, whether it's 1 percent or whether it's a little bit less than 1 percent a day, it's going to be really interesting to see if bitcoin does stop going up and if we see a massive correction, I'm not sure how bitconnect pays off that, when this new flow of YouTubers and Twitter guys are bringing in, you know a lot of people are into this bitconnect coin but if that new money stops it, in volatility or Bitcoin goes down it's going to be really interesting to see where that goes. I don't want to say anything definitive but I'm staying far far away from it.
Peter McCormack: What about Tether though? Tether is another one that keeps coming up. I'm seeing both sides of the argument, I'm seeing that dude on Twitter "bitfinexed" who's constantly tweeting and saying a bunch more of them have been printed and the price is going up, and he's got it down as full fraud. But then I saw a counter argument that said - look they don't have banking services. If somebody wants to come in and buy a million or 10 million of crypto, and what they're doing is they're selling them 10 million tether so they can go straight into the exchange and trade. So I'm seeing both sides of the tether argument but there are enough people now that keep raising it as a potential concern. Have you looked into it?
Luke Martin: I haven't looked into it as deeply, similar to bitconnect, I haven't paid too much attention to it, but with this one I'm less skeptical. Bitconnect seems like that's a major red flag for me. I don't buy the conspiracy as much. I think it's more a function of, like you said, they don't have all the banking services available that they probably want, maybe they're matching when someone is buying a certain amount of bitcoin they generate a certain amount of tethers in case that person wants to sell bitcoin and buy tethers. So I'm not paying too much attention to it. I think if one exchange was printing, you know if it's Biffinex and they're printing these fake tethers, I think the rest of the exchange markets and that stuff would balance out. It would create such an arbitrage if they were really inflating the price that much in bitcoin. I don't buy it, I don't buy too much into it. I don't like Tether in that I don't think it is audited. But I don't think it carries any more risk than having your money on an exchange anyway. There's always exchange risk.
Peter McCormack: Well yeah but I guess some tether positions where I've wanted to move out into fiat I've had to pay my exchange fees. Some people like the using tether to avoid that so they are essentially staying in fiat but they're not in fiat. Have you done that or would you do that?
Luke Martin: Yeah I've done it. I try to limit the amount of money that I have on the exchange. I keep the massive, large proportion of my funds in hardware wallets. But if I am going to keep some money on the exchange it definitely makes sense to not sell all the way out to USD. But I mean that risk is always there if your money is on the exchange. We see exchanges go down left and right especially ones that are unregulated and if you're a U.S. citizen or if you're a European citizen you're trading on an exchange that's in a different country you're probably not protected so that risk is always there. I don't think tethers carry a significantly higher risk than already being on an exchange.
Peter McCormack: And you mentioned hardware wallet. That's one of the the most important things that people need to consider. Whenever I have somebody phone me up and they're like I want to get into this. The first thing I do is tell them to go on Ledger and buy two nanos. I said that's the first thing you should do. I'm not going to ask you about your approach to security like I don't tell anyone mine. But for new people that come in just try and make it clear to them, how important is security?
Luke Martin: Yeah it's funny I actually had one of my friends in real life, and slowly as they get into the crypto space that's been one of the funnier things about having one of these Twitter accounts now that people look to, is they'll find my Twitter account or they'll say hey man I didn't know you were in this, how do I get invested? What are the first steps that i would take? This was the first time that I had done this. Speaking to my friend yesterday, I said buy a hardware wallet even before you buy your Bitcoin or before you buy some Ether. It might not seem worth it right now but it's only 100 euros.
Peter McCormack: I think it's less than that. I think I got two for like 120.
Luke Martin: Even if you're only investing 100 dollars right now, if that investment grows and winds up 600 percent this year. If you invest 1000 or even 500 bucks or 100 bucks it's worth it. It lets you sleep easier at night. And as your account grows it's just one of those things that you have to do. You have to do it.
Peter McCormack: And one of the things we didn't cover it, I shot over it actually. We didn't even cover ICOs. What's your view on ICOs? I personally don't invest in them. I did do CFI, made a little bit of money but I just stay away from them now. What's your view on these things?
Luke Martin: Yeah I was big on ICOs this summer and I think the market caught on really quick. There's obviously going to be bad actors that try to exploit any kind of opportunity when there's something like this and this much money in it. But, what we saw is a shift earlier in the summer, they were raising the majority of funds from the public crowd sales very slowly you start to see more of these private sales or the bonuses start to pop up and these ICOs will still get sold out and would still perform well. And then just in the last month or two it slowly shifted to now they're raising an equal amount of money in the private or the presale or these deals that aren't even on the white paper and start getting dumped immediately when they hit the market until now and you look at October and this month and people have really caught on and there's too many ICOs coming out, too many coins are getting dumped immediately at exchange. I haven't invested in an ICO for about two months now just for that reason. You can always buy the tokens it seems, even the oversubscribed ICOs after it hits the exchange. I think people kind of caught on. If they can develop a better framework that somehow incentivises people or if they're just pricing at more failure and maybe not valuing their project at 40 million off the bat. If some of these founders and some of these companies have a framework and maybe choose a more fair valuation I think there's definitely still an opportunity to do well in ICOs but the holding period needs to be longer. The mindset needs to change from investors that you can't just flip these tokens. Now I only invest in ICOs if I was to invest in one that I know I'm investing in the company and want that company to do well in the next year and the years to come. I don't think the flip opportunities are there anymore.
Peter McCormack: And yet, if you're investing in a company how many raise 200 million the first round? It just doesn't happen. And actually that's why I talk to you about CFD before I came here, I didn't invest in the ICO and I wish I had of. But I was drawn to it because it actually had such a low raise and I felt like it was a bit more realistic. I've worked in the startup space and actually, these days you struggle to raise money. if you've got no track record you struggle to raise money or unless you have got some kind of product. So it just feels like the lower ICO raises are the better ones. What do you think about that?
Luke Martin: Yeah lower raises are good. If a project is raising a larger amount as long as you can see on their white paper, if you can see in their roadmap, if you can see where these funds are going, if it's going to product development, if they already have a prototype, if they already have these things in development and I understand where my money is going then it makes sense. Some of these companies are just slapping on 30-40 million, I don't think they're taking too much into account on tokenomics and what that actually means for their token and for their network. If they just assign arbitrary value and try to assign 60 million, what happens is it raises a lot less as opposed to if they maybe attach 15 million. They probably hit their cap. If they need 60 million they might only raise 5 million because people understand you know how unattached those founders are from reality.
Peter McCormack: Do you think the ICO bubble or whatever was the thing that is maybe suppressing the Ethereum price from growing and that there was too much downward sales pressure on it, because once they've raised they need the money to spend to hire the team. So they've got to sell their Ethereum.
Luke Martin: Yeah I think it's a factor. But I also think it's a great use case of Ethereum. Some people hate on the whole ICO movement. I think what they're doing, and what what I like about Ethereum is, they're really testing the limits on what we can do here. And they're comfortable, they know some things are going to go wrong. They know the system isn't perfect but I think a lot of positive things are to come out of this. Obviously there are some bad actors and some bad projects and investors and speculators need to be careful. But I think overall this is going to drive a lot of innovation, good projects and good new technology is going to come from this. I think Ethereum will continue to do well. As long as Bitcoin goes up it's Dollar price should go up. Against Bitcoin I'm not sure.
Peter McCormack: It's made a small move today actually. But there's been a lot of people out on Twitter shouting out now saying that they are seeing a big move for it. I got involved. There are some other things that are going to compete with Ethereum or going to bring new ICOs in. EOS is coming, we've got Komodo doing it's decentralized ICOs. The big rumour that Neo is going to be the only platform for ICOs within China. What do you think of these coins? Are you invested in these coins? Do you think these are good long term bets?
Luke Martin: It's funny I gave Neo to my free telegram group and I also took that trade a few days ago for a different reason. They had the Aphelion ICO coming out. I think NEO will do well. They're allowing different programming languages to work on their platform more than solidity. I think that's a good benefit there. But with Ethereum, they're going to continue, they're the first mover. That's where the majority of these apps are going. They are the biggest. It's the same thing with Bitcoin, it's just the biggest, these coins are going to continue to benefit in the short run when people sign into Coinbase and all these new accounts are coming. They have a few coins they can buy and it's Bitcoin, Ethereum and Litecoin, they can't buy Komodo so smaller amounts of money are going to move into those. They do have a potential to grow larger, but right now I would prefer to hold Ethereum.
Peter McCormack: And everyone wants to know what's going to be on Coinbase next. We saw what it did for litecoin. I have my guesses, I think it's gonna be Ripple or bitcoin cash. Not that I want it to be either of those but they do feel like good projects and actually i've read a few times people think it might be BAT. Do you have any thoughts on this?
Luke Martin: I think from a corporate side, just from the business side of things the people that are backing bitcoin cash it makes sense that Bitcoin cash would get on there. I know there was a big ripple rumour that it was going to get on their back and that swell conference was coming out and that whole conference flopped. Yeah we'll see. I'm not very event driven or a news or a catalyst trader too much. It does help when there's that fundamental story going on in the background but I don't pay too much attention to it.
Peter McCormack: And you bring up Ripple, we talked about it beforehand. I've made money on Ripple. I'm not in it anymore. When people first start investing, almost 50 percent of them ask me about Ripple, should I get into Ripple? No. Just stay away from it. It's just not worth it. What are your views on Ripple?
Luke Martin: I'm staying away from Ripple, especially watching it after that swell conference. You know a really nice benefit I get from from having all these people contact me every single day and getting a nice pulse on the market is I get to speak with a lot of very very intelligent people on the blockchain space. And I respect their opinions highly and almost all of them agree that they don't like Ripple. If you are a Ripple supporter and you listen to this right now I apologise. But yeah I'm staying away from Ripple. I think the technology is good. Sure. But I don't understand why there should be a token attached. It's just the valuation seems a little too high for me and no matter the news that comes out, it seems suppressed every single time.
Peter McCormack: Yeah and the amex news came out and the price jumps and it feels like every time the price jumps and then it falls back down. I stay away from it. Before I move on. I just want to cover some things before we finish but before I move on to the next question. Any other cool investments you want to tell people about or cool coins you think right now are hot, things that you would say get into?
Luke Martin: More than coins I'm going to step back a little bit and take that more into sectors. I think the privacy coin sector I think that will continue to benefit and outperform in the medium to long term. We're seeing a lot of these uber, ultra high net worth crowd as they get into cryptocurrencies. And whether it's for legal reasons or you know not so legal reasons, for a lot of people it makes sense. I mean even me or you are are some of these bigger guys that are in Bitcoin, they don't want to let everyone else see where their money is. So I think these privacy coins are going to continue to out perform coins like Zcash, Zcoin, Monero all these. I like that sector a lot.
Peter McCormack: Yeah as i said to you I was in Zcash before it came out but took Rand's tip today and I went into Zcoin and I bought enough for a ZNode. When I got into Dash I think it was £14. So it would have been £14,000 pounds for a Dash masternode and now it's like £35,000 which is out of step but I've made money on Monero, I've made money on Verge so there is some really good ones, I completely agree. Just talk a bit about your business before we finish up, let people know what you're doing. You've got a group out there but let people know what you're doing and what your business is and how they can find you.
Luke Martin: Yeah definitely. So I got in the space and started sharing my ideas on Twitter. I grew just because I think I was helping people more than make money, I was helping people understand what's going on and I think when you have that understanding you're able to feel more confident you're able to build a process you're able to just better manage risk with your investments and that's probably the biggest thing that most people need to focus on. What they don't realize is if you can minimize those drawdowns and stuff you can perform really well but you can find me on Twitter. I built a few telegram groups after the Twitter , it kind of got a little bit outrageous trying to answers messages. Those free ones did so well and there's just not enough time in the day, I can't respond to all the DM's and stuff that I get. So I do have a premier group that I also have that's capped at 100 members right now. It's the same stuff you see on my Twitter or my telegram. It's really focused on just explaining what's going on, how to build a process. It gives you a chance at an inside look to see every single move that I'm making. And more than me making you money providing a signal, it's really based on teaching you and teaching methods or my process that you can then take. If you only do stay for a month you can use that process forever, you can use it as you continue to speculate in these assets and you understand you have the confidence to act and manage risk a little bit better. You can find me on my website too - venturecoinist.com has everything on there and I'm always going to provide the free content too. So I have both those options for you guys.
Peter McCormack: I'll provide all that in the show notes and all links to things so everyone can find and access you. There are a lot of groups out there now. Some stand out as shady, I'm not going to pull any names out but what's your general view on this? Cab you give some advice to people, because the reason people tend to join a group is because they want someone to tell them how to make money, tell them what to buy, when to buy and when to to exit. What are your views on the space and where do you differentiate yourself?
Luke Martin: Coming from the industry that I worked in fx qnd derivatives. This market is very similar in a lot of ways and what this seems like is it's just a more immature version of a lot of the FX groups and academies and educational services that I was seeing so, it really helped me having that knowledge and having that viewpoint. I have seen what works and what doesn't, outlandish claims of being able to make 100 or 500 percent a month. I know that's not going to work. I can also tell you know who has it who has a background in finance who actually knows what they're talking about versus someone who doesn't so much. So my only advice would be, regardless of what group you join or if you join a group or not a free group or paid, you're only going to get out of it what you put in. So it's the same thing with having a personal trainer, Joining a group of anything, you know if you join a group in crypto and you just expect to make money off the bat it's not going to work, especially in a group like mine. I'm not just giving you signals to make you money. You know I do a live stream every single day I teach you how I'm charting. I break down my chart - What does this line mean? What value does this mean? How do you draw a fib? What is this RSI indicator I'm using? What does this mean when bitcoin goes up vs alts going down? What is my macro picture? So regardless of what group you join, mine or someone else's, do your research, be very skeptical - be skeptical of me as well. And you have to put in the work. It's kind of my only advice.
Peter McCormack: And it seems like crypto has taken over your life. You're pretty busy with it. But you know give us a picture of what your day is like. What is it like for you now? What does this mean for you in terms of your life?
Luke Martin: Yeah crypto certainly taken over my life. Like I said earlier I went to school, I had the goal of getting a front office job or working in investment management or working on a trading desk or something. Crypto allowed me to do that immediately and it allows me to do what I love full time so I wake up at 5:00 or 6:00 a.m. You know sometimes I sleep in a little bit later and I don't set an alarm which is also the nice part about running your own business and I don't have to set an alarm so I wake up whatever time it is in the morning, I get a workout, I look at the bitcoin chart, understand what's going on the bigger picture. Look at any of the trades that may or may not have.
Peter McCormack: That's a really interesting, so the first thing you do is look at the bitcoin chart? That drives your day?.
Luke Martin: Oh yes. Always.
Peter McCormack: Okay let's go through that.
Luke Martin: So I look at the bitcoin chart and I break this down in my group I give this on Twitter and I give it my free telegrams. Bitcoin drives everything and drives all my decision making. So if I'm looking at Bitcoin and it is up on the day and suppose it just rose to the top of the channel, let's look at price action for the last two weeks. Bitcoin rises to the top of the channel - What does this mean? if bitcoin starts to correct massively, alts have historically done well over the last year when Bitcoin starts to correct as Bitcoin rises to the top of the channel it's historically been a good move to take profits and move into alts or fiat. So I look at that Bitcoin chart and that dictates every move for the rest of the day, if Bitcoin is hanging in a range that day and I see some massive resistance, yeah play some alts. If I see bitcoin and it looks very bullish and it's breaking through resistance, maybe just sit back and watch. Don't be diving into alts because the alts are going to be continue to be suppressed. I let bitcoin dictate all my moves
Peter McCormack: Is this a seven day a week thing for you now?
Luke Martin: Yeah this is seven days I try to take try to take some time off on Sunday to watch some football games.
Peter McCormack: My football or your football?!
Luke Martin: oh my football - American football!
Peter McCormack: who's your team?
Luke Martin: I don't even have a team. I just do it for the fantasy. I do it for the bragging rights. I've got some buddies at home I play in a league with but I'm a hockey guy.
Peter McCormack: Do you go and watch the LA Kings?
Luke Martin: I've been to a few kings games but my team - i'm a Philadelphia Flyers fan..
Peter McCormack: Ok cool. It's a long day though right? I mean just Sunday you don't give yourself any time to do anything else out of the space?
Luke Martin: Yes. So I still work out. The last two months have been absolutely insane so my work life balance has been a bit more extreme. So I also like to do Brazilian jujitsu. I play hockey once I have some time, I haven't found a league down here yet. But those two things and then also just trying to get a workout in every single day. That kind of clears my mind. Taking a walk in the morning. Other than that I mean it's not really work to me. So when I start working and I work you know the only thing that bothers me is when my my e-mail inbox or Twitter DM or something like that fills up, it's never like I'm never working on this and i'm over here pulling my hair. I enjoy it, it's fun every single day.
Peter McCormack: To close out with a few things. This has been great by the way. just close out with a few things. Firstly what does the future hold for crypto? Where do you think we're going over the next kind of three months, next year, next five years and then what does the future hold for you?
Luke Martin: In crypto, i mean the sky's the limit guys. You know as this continues to grow and people don't really realise it but I don't realise it either because I'm in this bubble all day. I'm working with people that are only in crypto that understand what Bitcoin and alt coins and these different coins do. But when I do leave my little office here and I go out into the world and have conversations with other friends that aren't in the space, a lot of them still don't even understand. Some people still have this connotation with Bitcoin that it's only used for money laundering or to buy you know some drugs on the Silk Road or something so I still think we're at that very very very beginning. And I know I don't even think anyone can fathom how big this is going to get. For me, my future, I don't really know, things are changing so fast just in the last two or three months I have no idea. Ideally in five or ten years, I literally can't even say - who knows. I think what we're going to see down the road is that there's going to be family offices. Kind of what I wanted to do before I got in the cryptos is either run you know an investment shop or an alternative investment shop and consulting with clients and helping them manage their wealth and grow their wealth. And I think down the road as these crypto assets gain mass adoption and they become bigger, it would be really cool to run a family shop or my own office or my own firm helping clients invest in, understand these assets and the benefits it can bring.
Peter McCormack: Is there any specific reading material you can recommend, or resources, old school resources, new school resources, you'd say look if you're getting into this space and you're gonna trade and you can't hold, is there any kind of books or things that stand out, or films or you know anything that's important?
Luke Martin: So I'm a little bit different in that respect. I know a lot of guys will throw out their favourite books. I just got into this space just from doing. There's so much stuff in this that a book can't teach you and even if you do learn it... I don't want to say don't read books but if you're reading a book, I think the best way to learn this is through a demo account or just to dive in with just a little bit of money some risk capital that you're OK losing that isn't going to affect your quality of life. One book that I did just read I want to give them a shout out - Chris Burniske, I just bought his book and I've only read the intro and the first chapter but it's been a great start but in order to actually learn about trading I think you just have to do it. I don't think there's anything you can read and it's going to teach you the same skills or teach you the same lessons that doing and kind of just creating an account will do.
Peter McCormack: Any closing thoughts, anything you want to add?
Luke Martin: Thanks for having me on man. For anyone that follows me or anything like that feel free to reach out. I like working with everyone, meeting new people in the space, meeting people like yourself. It's so fun, everyone's so open and welcoming and ready to help each other so feel free to reach out.