I was, in a former life, a trader in the City, which sounds a lot more glamorous on paper than it was in reality.
Think the Wolf of Wall Street in the Vauxhall conference and you’re some way there, as I traded my little heart out to pay my desk fees of circa £1,600 per month, as well as an extortionate profit share (should I make profits), yet no loss share if I didn’t.
It was a short-lived career but it started a lifelong study of Japanese candlestick charts, technical and fundamental analysis and its fair to say I can talk an extremely good game, even if I don’t necessarily play one. The reason for that is being a consistently profitable trader is 90% psychology, as we learn, as with many other aspects of our lives, not to hold on to losers too long which, in one fell swoop, blow the profits made from our previous 10 winners.
Read more: The highs the lows and the liquid lunches: my year as a City trader
So, what is crypto? It’s basically virtual currency, aka coins and tokens, that you cannot physically pick up. It’s not too far away from us relying heavily on our chip and pin cards now as we rarely pay cash to store owners as we used to.
As with the Euro, Sterling or Yen, there are different currencies which exist on the ‘blockchain’, which, although it sounds exciting, is extremely dull. It is restrictive, as the ‘gas’ fees you must pay to mine on supercomputers are now not only humungous, but fresh Bitcoin is rapidly running out (there is a finite supply of 21 million and more than 18 million have been mined thus far).
The beauty of crypto currencies is that it takes the banking system out of the equation, which has not been well received by the institutions. Many countries are forcing regulation on owners, think black cabs vs Uber, as they scratch around for a piece of the pie.
Bitcoin transactions are pretty much non-traceable, making them attractive to criminals, but also to those who don’t trust the banks and who don’t want to have to pay for the privilege of using their own money.
That said, they are not fool proof: It is estimated 20% of all bitcoin have been ‘lost’, due to the owners losing their access keys. In effect the keys are a super-duper long password which, if you don’t write it down and keep it safe, means your money disappears forever once lost, despite you knowing it’s out there somewhere.
Developed as recently as 2009, Bitcoin's creator, the mysterious Satoshi Nakamoto, made the first transaction on May 22, 2010, ordering $40 worth of pizzas, which today would equate to $380 million, making them the most expensive flavoured flatbreads in history.
Transactions cannot be reversed and bitcoin theft is rife, yet its popularity shows little sign of abating despite the recent price crashes which, in any financial arena, is to be expected due to the cyclical nature of the markets.
Now it is impossible to ‘teach’ a quarter of a century of trading experience in a few hundred words in the local paper, and as one observer put it: if he is such as expert, why does he ‘only’ teach for a living? The answer to that is ‘levels’: most footballers are not Premier League, and it’s no shame to be lower league or semi-pro as you put enjoyment over risking the house, buying new cars you can’t afford or putting food on the family table.
That said, many have ‘fluked’ getting rich off crypto: huge previous price runs have attracted millions of investors who, with lashings of luck and immaculate timing, despite a vacuum of knowledge, have misleadingly led them to believe they are the modern-day Gordon Gecko, whereas the truth is they happened to catch the big wave as it came floating past. You may have read about get-rich-quick schemes involving Bitcoin mining, which rarely come to fruition.
Many of these cocky newly gilded have, predictably, now held their trades far too long and, with Bitcoin now trading around £19k per coin, with the peak having been £69k, they have lost fortunes.
I could merrily chunter on about going long and short, stochastics, Fibonacci and support and resistance lines, but there are few short cuts, with the nub being you really must go learn it yourself. As for me, I will continue to try and spot the next big thing as I make videos bedecked in my xpertcrypto T-shirt and hope I am not a laggard come the next virtual token gold rush.
- Brett Ellis is a teacher
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here