Trading Lessons All Traders Should Know - Alessio Rastani | Podcast
Key Points Discussed in this interview
- Financial markets and the information overload
- The forward-looking nature of technical analysis
- Bitcoin Breakout and 2019 forecast
- Alessio’s number one lesson for trading
In this podcast interview Senior Analyst, Tyler Yell talks with Alessio Rastani. Alessio was named as one of the best crypto Youtubers of 2019 and is a stock market and forex trader who owns the site, Leading Trader. Alessio has accumulated the loyalty of thousands of traders with his honest and passionate approach to trading the markets and his success has been fuelled by his desire to help others grow and achieve their own trading goals.
This article presents the highlights of the podcast so be sure to listen to the full interview below.
Listen to the full podcast here:
Google Play and SoundCloud links produced at the end of the article.
Financial markets and the information overload
Tyler Yell: You are the founder and CEO of Leading Trader, would you mind sharing with us how this company got started and what inspired you to get it started?
Alessio Rastani: Back in 2009 I was doing a number of live seminars around the UK and people were constantly looking for information. However, the problem is not a lack of information but rather that there is way too much information online. The real challenge is to try to decipher where the good information is. Markets are constantly evolving and something that may have worked 20 years ago, may not apply anymore.
My goal has always been to provide useful, reliable and honest information whether in my videos, or on my site. What I think sets me apart is that I always assume that the viewer of my videos have no prior knowledge of the topic and therefore, I try to explain concepts on a very fundamental and basic level. Additionally, if I make a prediction in the market I also back this up with historical evidence, an indicator or theory etc.
The forward-looking nature of technical analysis
TY: Why do you think charting analysis is important and helpful for traders.
AR: Firstly, professional traders and some of the best traders in the world use it. If you have read the book from Jack Schwager called, ‘Market Wizards’ you will find out that Billion-dollar hedge fund managers and other successful traders, have made their fortunes with the assistance of technical analysis.
Secondly, the biggest critics of technical and chart analysis are people who say it’s voodoo, or that you are simply just witnessing random noise on a chart. They tend to believe that fundamentals are the only way to analyze markets. I have nothing against fundamental analysis. The only criticism I have of fundamental analysis is that it is backward looking – relying solely on fundamental analysis is like driving a car while looking only at the rearview mirror.
Bitcoin Breakout and 2019 forecast
TY: You have brought a lot of insight into the crypto market with your popular YouTube videos; what developments have caught your eye regarding bitcoin, both now and looking forward.
AR: I think 2019 is the year we could see a bottom in bitcoin. Recently I’ve seen multiple publications indicating that people have thrown in the towel when it comes to bitcoin. Traditionally, when publications get extremely negative on any market, you could probably bet that you are coming pretty close to a bottom.
I think the bottom is more likely to appear in the second half of 2019 but there is one proviso, as long as the economy does not fall into a recession, bitcoin is going to be ok. If we do find ourselves in a recession, things could get much worse for bitcoin and other markets. People often think that in a recession that gold goes up – this is not necessarily true. If you look back to the recession of 2008, gold lost a third of its value. This is because in a recession, unemployment rises, and people are often forced to drawdown their savings or cash in their gold. Continuing with the same logic, if a recession takes hold, people may start cashing in their bitcoin.
Another point about bitcoin, I do think that it is possible and probable that we will approach the high of $20 000 but it may take longer than people think. Of course, no one can say for sure that it will reach $20 000 but it is likely, in my opinion. Therefore, even if Bitcoin reaches a bottom and starts a bull rally – it will take a long time. When bitcoin peaked in 2013, it took a year and a half to get back to that previous high which is also something we saw in gold in 2011. Gold almost reached $2000 and is yet to approach those levels again. It’s important to remember that whenever any market becomes a bubble, it’s common for these markets to take a considerable amount of time before those levels are re-tested.
TY: From a trading perspective, what surprised you in 2018 and what potential developments do you think could make for a good trading environment in 2019?
AR: First of all, I was surprised the S&P didn’t rise to 3000 before the recent correction. The big question now is whether it will go back to the September high before we have a major bear market. Secondly, there was no Halloween effect, which is the phenomenon in October/November where the stock market experiences strong moves to the upside. This could be seen as a warning sign and was a warning sign of what was to transpire in December.
As mentioned earlier, I think bitcoin is one to watch this year as so many people have turned against it, which leads me to think we could reach a bottom this year. Additionally, I’m watching the Pound Sterling with regard to Brexit and the wider possibility that the UK leaving the EU could potentially be the start of the disintegration of the Europe. I admit that this may be a bit extreme but it’s not impossible either.
I am also quite bearish on the Euro (EUR/USD) as it has frequently tested support at 1.13 which is interesting because there is a proven theory that the more often a market comes down to test support, the more likely it is that it will break through that support. This is something we saw in bitcoin when it dropped multiple times to $6 000 after many failed rallies. I actually made the mistake of not adhering to this rule in 2018 and we subsequently saw bitcoin break way below $6 000.
Bitcoin (daily chart) testing the $6000 level
Alessio’s number one lesson for trading
The one lesson you could learn to differentiate yourself from the rest (apart from the professionals who already know this) is that you should never commit yourself to one perspective or position. Remember that any analysis is based on probabilities so never commit yourself to one position. You need to be flexible because if the market does something you do not expect and moves against you, you need to be able to change your mind and cut your risk. Most professional traders will tell you that as soon as your original perspective/analysis is proven to be incorrect, get the heck out.
This is why it is crucial to have an exit strategy. Unless you are a long term buy-and-hold trader you should always have an exit strategy. Ask yourself if the chart is still telling you what you believed one week ago? If it’s not, then you should consider getting out of the trade to reduce your risk tremendously. People may counter this by asking what happens if you get out of the trade and it then moves in your favor. The answer is simple, you simply get back into the trade. So, the main takeaway from this is: be flexible, be willing to accept when you are wrong, and reduce your risk.
Keep up to date with the latest from Alessio Rastani:
Alessio’s website Leading Trader: www.leadingtrader.com
Subscribe to Alessio’s YouTube channel: https://www.youtube.com/alessiorastani
Follow Alessio on Twitter: @alessiorastani
- New to cryptocurrency trading? Enhance your bitcoin trading knowledge by taking a look at our Introduction to Bitcoin Trading guide.
- Take a look at our analysts’ trading forecasts for popular markets and the top trading opportunities in 2019.
- At DailyFX we researched over 100.000 live IG Group accounts to find out the secrets of successful traders and published the findings in our Traits of Successful Traders report.
- [Podcast] Federal Reserve Bank insider, Danielle DiMartino Booth explains why she feels 2019 could be pivotal, in our latest podcast interview.
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