AMA recap — Trading101 : Trading Essentials with Akil Stokes of Tier One Trading
On December 29, 2021, we’re pleased to invite Akil Stokes from Tier One Trading into our BingX Academy AMA Series, who has graced the session with many insights on the current and coming market trends, cryptocurrency trading and more!
Below are the recap to the AMA:
- Akil, tell us about yourself and how you got into trading?
I started trading back in 2007, really I knew nothing about investing, nothing about markets. It was my next step to the financial education journey. My father was good at teaching me, he wasn’t an expert but taught basic things like how you should save money and put it into a savings account to get interest. I moved into the money market and even bought some bonds as a kid. When I graduated from college he said: “Hey, you should look into the financial markets”. I got involved in them. Stock market first and foremost, I fell in love with it, obviously as a source of making money, but also because of the game, it was interesting. The puzzle of putting things together and making the right calls, it was intriguing and was kind of motivational. Fortunately, I graduated from college during a recession time here in the US, I couldn’t get a job, like a real job to save my life, so this provided a perfect opportunity to follow my dream risk-free. I said: “Hey, I found something I love, I found something that earns me money, and earns me freedom, not only financial freedom but a freedom of time.” And I said: “You know what, I’m gonna go for it, I’m young, if I fail I have plenty of time to rebound and try something else”. That’s what allowed me to dive head first into the financial market. Fast forward 15 years later it was a good decision. I’m happy, I did all of the dumb stuff you could think of, which is probably what makes me a great coach now, because I tell all of these stories of dumb stuff I did, all those fails worth it. I have no regrets of my past, every misstep is a lesson I learn myself, a lesson I teach my kids, a lesson I can teach traders as well.
2. How was the trading so far in 2021?
2021 was good. It started off well and there was a really slow period at the end of the summer. I expect, usually, the summer to be slow but we caught a really really slow period between July and October, which usually in September markets start moving again but we are in an unprecedented time. So, I don’t know what to expect. All we can do is to adapt to what the market gives us, follow our plan and try not to make mistakes. So, a solid year, I’m happy with it, looking for another one in 2022.
3. Have you been following the crypto market and have you been involved in crypto trading?
So, I’ve been following it more than I used to. Because many traders I work with are also crypto-traders. Me, personally, I’m not involved in the crypto market, nothing against the crypto market, I don’t mind the crypto market, anything like that. I’m just undereducated in it. So, for me, if I’m not highly educated in something, I don’t want to put my money at risk. But we do follow it from the technical perspective, looking for trading opportunities in the market. I tell you this, each market has a different personality, the stock market has a different personality, the forex market has a different personality than the crypto crypto market. But, at the end the technical analyses are the same, all charts move the same, they go up, they go down, they go sideways. They print the same type of candlesticks. They may do it in a little bit of a different way. In my experience the crypto market is a little bit more younger, the younger means immature. That’s not a negative thing but it means like big moves are big moves, it’s emotional. From a low risk perspective that is a negative sign, because you don’t want to have a 50% drop. But from a trader’s perspective that volatility, that emotion I guess, that offers an opportunity. If you are on the right side of the market, if you can analyse the market in a correct way there are some amazing opportunities in there. And the same technical analysis we are doing at the Forex market is exactly the same we do in the crypto market.
4. Correlations, are they real? And do you see a price movement correlation of any traditional asset to Bitcoin?
They are real — Yes. Are they real all the time — No. I think the issue with correlation is that people get in love with it and think that when something is correlated it has to do something all the time. So, you have oil and the Canadian dollar, something like that. So people assume that when oil does that, CAD has to do that, something like that. Because the US Dollar Index is doing this, Euro/USD has to do this, because Gold is doing this, Bitcoin has to be doing that. The trick is that correlations tend to happen, however they change over time. So, something that was correlated two years ago may not be necessarily correlated now. As a trader, I don’t use correlations at all, because the chart will tell me all the information I need. If I need any information about buying, selling, strength, weakness, where the price would go, I get all of that information from the price chart, an individual price chart. I don’t look for different price charts for that. Now, if you go into a longer term investing perspective, so for the people who are buying and holding for months, years, decades, now correlations become more important because you have historical correlations and you can make long-term judgments off of it. I’m not saying that correlations don’t exist, but I think you need to be careful in following in love with them because they do change all the time. Something correlated in this moment might not be correlated in the next. I think if you are using this as an indicator for your buying and selling, you are going to be in a lot of trouble.
5. What are the best performing strategies for 2021?
For me, price action strategy. I don’t break down my strategies into different categories, I consider myself as a price action trader. There are different tactics in there, there are advanced pattern trading, structure trading, trend continuation trading, counter-trend but it all involves price action. Reading a price chart and making a decision off of support and resistance levels, supply and demand levels, individual candlesticks and stuff like that. I would say, the center-piece of my philosophy, personally, is support and resistance. No decision is made in the market without support and resistance, as far as trade entries, as far as trade exits, as far as stops. But if we need to split it up between price action and harmonic patterns: gartly, bat, cypher, and stuff like that, the price action side was better than the harmonic side this year.
6. Is chart pattern trading still valid when trading in traditional markets and cryptocurrency markets?
Yes, especially harmonic ones, especially historic patterns, double tops, double bottoms, pennants, flags, wedges, head and shoulders. My business partner, I think it was last year, Jason Graystone, looked at a descending triangle and we both took it two different ways. I took it as a short-term trade, he took it as a more of a long-term investor, even in two different directions. But that classic pattern was a reason for a great trade for him on Bitcoin. We also looked at a few pattern formations as far as channels and breakouts of channels, we saw that drop and a base happened a few months ago. So, historic patterns are going to be very prevalent in any market and they are going to give the same clues. And I say that if you can understand how to read a price chart, you can understand especially the historic classic patterns in the market, you are going to have a massive advantage in analysing any type of market.
7. Trading should not be based on technical analysis only, do you agree?
I’m biased technically, I think we need to be careful and make sure we understand the difference between trading and investing. As far as trading , I believe in technicals 100%. I believe you can be a successful trader trading 100% technicals in trading. I think fundamentals are a driver into more longer term investing. Most fundamentals in the market are complete nonsense. Either they are pointless or they are manufactured to get people to do certain things. Now, with that being said, if you understand both, it certainly gives you an edge, and this is kind of going more into the investment side. Let’s say you understand the fundamentals of Bitcoin and let’s say you have this fundamental backing, whatever you heard or saw, fundamental reports you read give you bullish bias as far as Bitcoin. Now, when you have the bullish bias, you can add the technicals to that you think about the technicals to be the actual target. Now you know it will get bullish and this is the sign, the signal you were looking for to get bullish. Now you can put those together and be even more powerful. I call those “homerun trades”, typically in my trades I’m in and out in the market pretty quickly. I see a technical setup and technical signal, I’ll get in, I’ll get out at the first sign of danger and then I’m done. During the “homerun trades”, what I’m doing is I’m adding fundamentals, so maybe there is a fundamental announcement on the horizon which I feel is going to be beneficial towards a bullish position. Now, all of a sudden, if I get thar bullish signal and that aligns with the bullish signal I have from the fundamental side, that allows me to be more aggressive on my targets and make me instead of getting out right here (at a certain level) I allow to ride and catch a bigger move. They can certainly be used together, I have a technical bias, I’m always going to favor technicals massively over fundamentals but they can certainly be blended. I just think as a trader, as a retail trader, if you try and trade off fundamentals 100%, I think you are going to be in a lot of trouble.
8. What are your forecasts for 2022? Some experts say that this year will be tough and we might face a steeper downtrend in the global economy. Do you agree?
I don’t know. I wish I could forecast and if I did I would have a lot of trades on. Economic policies are going to be interesting. I was asked last year about 2021 and I said that we will be out of the global pandemic and we are still in it and we will still be in it in 2022. The year hasn’t started yet so I don’t know how it is going to go, how it will affect the monetary policy. I think it will be a difficult year because we are still dealing with the unknown. We are on a decision-making cycle where every decision, not every decision but a lot of decisions, are being based off of this pandemic. We’ve been seeing it in the US, where we’ve been saying one thing for six months and all of a sudden the number spikes and we change right away. And you will see that across the globe with different economies and different countries. So, everyone is waiting for Canada to do something, and other countries feel like they have permission to do it too. And all of that is going to be based on ultimately how this pandemic goes, do we go back to a lockdown, how does that affect the economy, do job rebound etc. So, I do think it will be a tough year, because every time you get fundamental-based uncertainty, you get a more sporadic market. I think it is going to be difficult, I try to take it day by day and not focus too much on longer term periods too much, because a lot of it is just pretty hard to predict. Because we just don’t know.
9. Do you think cryptocurrency trading will be as public and widely-used as stock-trading? I mean are cryptocurrencies going to evolve in the manner where we will see banks and brokers who offer crypto-trading alongside stock trading?
I think some. The cryptomarket is still interesting and there is a lot of speculation in that market. For me, I still don’t see a strong foundational value in crypto, it’s more than a speculation that says: “Hey, this will become something”. And I think what will happen is, you will see a lot of exotic cryptocurrencies be shaken out as people start to see that there is no rule under a “get rich quick” tactic. I think we will see a handful of strong ones survive and I think they will be actively offered. The fact that they are gaining popularity, it’s only a matter of time when the banks will capitalize and take advantage of it. I just don’t think that there will be a million different coins or something like that. Probably there will be a strong handful and the rest will be kind of shaken out.
10. Which assets should we watch closely in 2022, which market will be the most volatile?
Crypto market will be the most volatile. I’m interested in a lot of individual stocks. I’m ways away from stock investment years but I want to get back to it for a more individual stock investment basis. The jumps in technology are happening so quickly. We started off with making a handful of jumps in a long time period, now we are seeing bigger jumps in a very short period of time. And I am interested in virtual, the virtual space, with Facebook going to Meta and this whole idea. Me and my wife are watching a lot of futuristic movies and I always say that this is going to happen. So building out these virtual spaces and having an upgraded virtual world it’s going to be interesting to see who is going to take advantage of that space. Because I think it will be a kind of a Gold rush where there are a handful of opportunities available and there will be a handful of companies who will take advantage of it. I think it’s still at the very beginning, so if you can find a company that has a positive long-term outlook then hop on to it now. The tech space is interesting to me, because we are on the horizon of the next big jump in my opinion. So this will be interesting to watch.