Interview with an FTX trader: sustainable returns above 200% a year remain elusive

According to ForkLog’s survey data, 56.8% of readers trade cryptocurrencies, and 41.6% are interested in profiting from trading. Meanwhile, 22.7% of users have experience trading cryptocurrency derivatives.

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ForkLog has launched a series of interviews with traders on the derivatives exchange FTX to learn how they learned to trade profitably and what they advise newcomers to do.

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In the first interview, professional trader Alexander Orlov talked about scalping without leverage, trading against the news, and a financial plan for beginners.

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ForkLog: How long have you been trading?

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Alexander: I have been trading cryptocurrency since 2016.

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ForkLog: How much do you earn per month?

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Alexander: Since 2016 my deposit has grown about 50-fold. I currently work with capital of size $1 million. The growth curve of capital is similar to the heartbeat on a cardiogram, so it’s hard for me to name an average monthly earnings.

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ForkLog: How and when did you become interested in investing and trading?

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Alexander: In 2014 I mined Bitcoin until its price fell below $1000. In 2015 the price of 1 BTC fell below $100, and in 2016 Bitcoin began to rise again. In the spring of 2016 I bought Bitcoin at $400 and started trading.

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ForkLog: How did you learn to trade: from books, from another trader, at a bank?

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Alexander: I taught myself by trial and error. I did not take courses, did not study TA. On trading I read only “Reminiscences of a Stock Operator” about Jesse Livermore. I think that’s my advantage: I see the market differently, not like other traders.

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Currently I mentor other traders on Telegram.

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ForkLog: Where did you trade before FTX? Why switch to FTX?

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Alexander: I have traded on BitMEX since 2018. In 2020 I switched to FTX for lower fees and a wider range of trading instruments.

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ForkLog: Which instruments do you trade now?

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Alexander: At the moment I trade futures, as well as daily and weekly BTC MOVE contracts.

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ForkLog: What trading strategies do you use?

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Alexander: I predominantly use scalping: I enter the market against the local trend during liquidations. For example, in a rising Bitcoin market I wait for a local drop of 2-10%, and buy during liquidations of long positions. After such drops the price often returns to previous levels, and I close the position with a profit.

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ForkLog: Do you read analytics from other traders or analyze markets yourself?

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Alexander: I follow the news, but trade against them. Even the most important news cannot fundamentally change the price of an asset by 30-50%. Typically, the rise or fall after a news release ends in a retracement.

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ForkLog: What tools do you use for analysis?

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Alexander: I use fractals, trend boundaries, vertical levels, volumes and intuition. The intuition works best: if I had always listened to it, I would have earned ten times more.

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ForkLog: What is the average size of your position?

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Alexander: For Bitcoin trades I allocate 50-100% of the deposit. In scalping I sometimes use leverage up to 3x, but quickly close such positions. For trades in volatile cryptocurrencies like XRP I use no more than 20% of the deposit.

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ForkLog: How often does the market take your stops?

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Alexander: I rarely use stop-loss orders. Instead I close the position with a smart stop. Example: I bought Bitcoin at $18,200. The price rose to $18,700, fell to $17,700, and jumped to $18,300. I set a mental stop at $18,300, the retracement from a strong impulse.

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ForkLog: What do you do in case of losses? How would you advise other traders to proceed?

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Alexander: It is impossible to trade without losses, so I accept losing money without emotions. At the same time I try to calculate risks so that even in a market crash I would lose no more than 30% of the deposit.

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I would advise traders to find a comfortable level of risk: to avoid losing too much and earning too little. This requires mathematics and knowledge of psychology.

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ForkLog: What would you advise newcomers who want to learn to trade?

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Alexander: Beginners need to realistically assess their financial capabilities. I am sure that a good trader cannot earn more than 200% per year. If you’re lucky you might earn more, but this cannot be called a stable income.

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Newcomers often come to the exchange with a deposit of $100. In a year of trading they will earn $100–$200 — but what about living? To make trading a primary source of income, a deposit of at least $10,000 is needed. But even then, expenses will eat into profits and capital won’t grow.

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Beginner traders should save money and, in their spare time, learn to trade with a small amount. It’s not worth starting with a demo account, as trading real money and play money differ psychologically.

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If in a year of trading a novice grows their micro-deposit several times, while not using leverage or buying altcoins with all their money — they are ready to trade a larger sum.

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Such training will show whether a trader has analytical thinking, emotional resilience, self-criticism and decision-making ability.

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