Crypto Investing #67 – For Active Stocks, Futures, Forex, Options Traders & Hedge Fund Managers

What’s up, guys. This is Tai Zen. Before I start, I want to let you guys know that typically my videos are simple so that everyone can benefit from it. I tried to keep the language and the vocabulary as simple as I can.

However, in this video, I want to give you a heads up that it’s not going to be simple. It’s going to be very technical because this video is specifically towards active stock futures, forex and options traders and hedge fund managers, financial advisors and money managers.

If you’re a beginner and you’re following my channel, this video may not make sense to you and that’s okay. It’s rare that I make these types of videos.

Nonetheless, recently I got approached by some hedge fund managers and active traders that want to know about cryptocurrencies, if it’s legit or not and what the advantages of cryptocurrency investing are versus the traditional markets.

When I’ve talked about the traditional markets, I’m talking about the stocks, the futures, the forex, and the options market.

So don’t get upset and don’t be worried if you don’t understand this video cause it’s not for you. It’s specifically for active traders, hedge fund managers, and money managers.

The question I always get from those professionals is whether Bitcoin and cryptocurrencies are legit.

The answer is absolute yes. There’s a ton of money to be made and it’s the world’s biggest bull market right now in human history. It’s not bullshit.

The second question is whether this is something that we, hedge fund manager or an active trader, need to invest in.

The answer is absolute yes. It’s the biggest bull market in human history. You don’t want to be a hedge fund manager or an active trader and not participate in it.

Next question is what the differences that you’ve noticed between the traditional markets versus the crypto market are. There are several things I want to cover so that you’ll be aware of because we lost thousands of dollars for not knowing this.

First of all, let’s talk about liquidity. That’s the number one thing that you have to be concerned as an active trader or a hedge fund manager.

If you’re an active trader, you can get away with trading on popular exchanges such as coinbase.com, kraken.com, Bitstamp, Bitfinex. Those are the cryptocurrency exchanges that have enough volume for you to trade as an active trader.

Now, in Bitcoin, on average, they trade more than $500,000,000 a day. if you’re trading between $25,000 to $50,000 in click a mouse and just getting in and out, there’s plenty of liquidity for that.

If you’re trading between like $50,000 to $100,000, you might need a few clicks that might take you 1 or 2 minutes. Let’s just say up to 5 minutes to get $100,000 filled in and out. When I say get filled in and out, it means you don’t move the market prices.

The spreads can be very, very tight and it can be very wide at sometimes. When Bitcoin is trading at $1,800, you can expect spreads to be as high as $1.50, $1.60 and as low as 1 penny spread.

I’m sure that if you trade a big enough account, the exchanges will let you hook up your API and let you go beyond 2 decimal places in terms of USD. That’s as far as liquidity in the spread goes.

Now with the Altcoins, the word Altcoins means alternative coin or alternative currency. Any coin or cryptocurrency that is not Bitcoin is considered an altcoin in the world of cryptocurrencies.

In the Altcoins, the spreads and the liquidity is a little bit less, but it’s growing by leaps and bounds every day.

At this moment, in order for you to fill $50,000 order, that might take you a up to 30 minutes, depending upon which Altcoin.

If you’re trading Altcoin that is in the top 20, most actively traded Altcoin, you can expect to get your $50,000 order with less than half an hour.

Anything that’s between $50,000 to $100,000, which doesn’t affect the price in the market is going to take you anywhere between 30 minutes to 1 hour.

I don’t see that happening in the click of a mouse because you got to put your orders in and do a few thousand dollars at a time. For an active trader, you can get away with doing that. It’s no problem.

If you are a hedge fund and you’re trading multiple millions of USD in addition to using Coinbase, Bitinex or Kraken, you going to have to go through what’s called an over-the-counter (OTC) trades or off-the-market trade.

I don’t know if the term over-the-counter is the correct term for cryptocurrency trading because when you do it, it’s actually not over the counter. It’s kind of like under the counter.

Therefore, the term over-the-counter is not the correct term. It should be off-the-market or private trades. To differentiate between the 2, I’m going to call it private trades.

There are several different places that if you’re a hedge fund or you’re a big active trader, who are trading like over a million dollars, need to look into.

There’s a place called Cumberland Mining. It’s not a Bitcoin mining company and it’s not an earth mining company that digs for gold or silver or anything like that.

It’s just the name of the company, Cumberland Mining. If you google Cumberland Mining with the word Bitcoin, you’ll see their website come up.

What they do is private transactions. If you’re trading up to 8 a cryptocurrency account, you have to get what’s called an AML/KYC. AML stands for anti-money laundering and KYC means that know your customers.

In the world of cryptocurrency, you can trade probably up to $10,000 privately and anonymously. However, once you start getting into 6, 7 and 8 figures accounts, you really don’t have much of a choice unless you just want to buy it up privately from another trader and hold it.

If you want to actively move money around with that large amount of money, you have to go through an exchange or a company such as Coinbase, Kraken or Cumberland Mining to do the AML/ KYC.

You have to pass those AML/KYC applications to show that you’re not a terrorist or a drug dealer laundering drug money.

Once you pass those requirements, you can negotiate with them. When I say negotiate with them, I mean you let them know how much volume you’re doing and they will approve you for that kind of volume.

If you plan on trading like $1 million, you ask for a minimum of 3 times or more, because in the cryptocurrency market, you are going to triple that account much faster than you will ever anticipate in your life.

Therefore, when it does happen, you’re not stuck trying to move money in and out of the accounts. That’s a bare minimum I would say.

If you are very, very serious, I would go ahead and get approved for 5 to 10 times the amount that you would normally put in.

The reason is there are several people that I’ve coached getting stuck moving money in and out. It eats uptime. It eats into their profits when they need to move money in and out for security reasons and for profit-taking reasons.

Those are the 2 primary reasons why you want a higher limit than you actually trade because there was the time the market spikes up to 500%. What we call is 5X. The X just means times or multiples.

When your account grows 3 to 5 multiples of what you started out with, you need to be able to move money in and out. The number one reason that you need to move money in and out very rapidly is for security reasons to protect the funds that you have. The number two reason is for profit-taking.

You don’t want to wait until your account grows to that limit, then go ask for a higher limit, because that’s going to take several weeks.

That’s what I would say to do so that all the paperwork is done and you can focus on trading.

The other thing that you need to know is if you’re putting as 7 or 8 figures account in there, I would even go as far as asking for insurance.

Just like in the futures market, in the forex market, if your account is big enough, you can ask the brokers to insure your portfolio.

Basically, you ask him to find out if there are ways that you can insure and requests an in premium. You might have to pay a premium, but it’s worth for insurance reasons.

The other thing that I would suggest that you do because some of the exchanges may not do that is to requests as a whitelisting.

Basically, you have to go through a live verification on Skype. You have to show them your id, your driver’s license, your passports, your visas and all the credentials that they need to run all kinds of credit background checks on you to make sure that you’re legit and you’re the person who you claim you are.

Once you do that, they’ll let you whitelist certain accounts. You’re going to create a specific multi-signature wallet account at Coinbase or with any type of multi-signature wallet.

In case there was a hack or somebody tries to hack your Coinbase accounts, the only account that they can withdraw the money to is your whitelisted account numbers.

Make sure that you do that if you have a large 6, 7 or 8 figure account that you’re trading with.

Even if you’re not a hedge fund, that is mandatory when you’re trading other people’s money. There’s no options and choices about that.

The other thing too is that you have to be concerned with keeping wallets for security reasons.

You have to maintain some hardware wallets. Some of the hardware wallets that our team recommends to clients that we work with are the Ledger wallet and the Trezor wallet.

Now, I’m sure there are other ones out there like KeepKey and others. We cannot say they’re good or bad because we just haven’t tested them.

You can make copies of the accounts on those hardware wallets. That’s mandatory and there’s no going around that.

There are 3 types of wallets you’re going to need and use it at the exchange where you move money in and out into a waypoint wallet.

I recommend using either exodus.io or jaxx.io. Those two wallets are waypoint wallets.

So from the exchange, you move it to one of those waypoints, which I designate as a waypoint wallet on your laptop or your desktop. Then, from there, you move it into your hardware wallet.

If you need to move it out of your hardware walls, it still goes from your hardware wallets to your waypoint wallet, which is exodus or Jaxx, then from there to the exchanges. That’s for privacy and security reasons.

You can move it directly from the hardware wallet straight to the exchanges, but the exchanges have a copy of where your wallet is going.

That’s a private matter and you may want to keep it private. You may have clients that want to maintain privacy. That’s one of the ways that I would suggest.

If you want even more privacy, you can convert your cryptocurrencies into Monero, Dash, Particl or any of the top privacy coins. Then from there, move it back out of it.

Now this works better if you have 6, 7 figure account. Once it gets into the 8 figures account, you might have problems doing that.

Getting back to where I was saying about Cumberland Mining, I have not been paid to say this. I’ve had clients and people on our team used their services where they do private block trade. It doesn’t show up on the exchanges and they trade millions of dollars all the time privately.

This is not like in the stock market where every transaction has to be published for everybody to see unless you’re like a big institution, which has to publish it until the end of days.

However, in Bitcoins and cryptocurrencies, pretty much everybody publishes their transactions on the public chain.

If you do it through a private exchange or with a private individual, obviously those transactions don’t show up.

With the big and private exchanges such as a Cumberland Mining, they require that you do 50 Bitcoins at a time. They charge like 0.5% or 1% fee to make the transactions.

What they do is they have traders at the desk and they’ll make 5 10 Bitcoin transaction all day long for you until your order gets filled.

Now, you might think that you can do that. I have coaching clients that I work with who just don’t have the time to sit there and move 100, 200, 500 Bitcoins in and out like that.

They just rather pay somebody 0.5% and let them sit there and do it. Once you call them up on the phone and agree on the price of the Bitcoin for 100 Bitcoins you’re going to trade, you’re locked in that price.

When you’re trading a hundred or a thousand Bitcoins at a time, you should not worry about whether or not the price goes up or the price goes down.

Once you hit your profit targets and you’re ready to take profits, you need a way to just unload it. In the minute you send them the hundred or a thousand Bitcoins, they cut you a check right away on the same day. Just be aware of that.

Again, I am not endorsing Cumberland Mining or any of these places. It’s just one of the private exchanges that people on our team have used and our coaching clients have used.

Therefore, we know that it works. We’ve seen the transactions happen multiple times with a large amount of money. We’re just reporting back on it.

We are not paid by Cumberland Mining to say that we are not endorsed by them. They probably don’t even know who the hell we are.

Before using it, do your due diligence. As of right now, I don’t see why we would not use continue using them and why we would not point clients that way.

The other thing that you need to know is if you’re trading on large account in the stock market, you will be doing a lot of VWAP orders. VWAP is the short form of a volume-weighted average price. You may already know this if you’re a hedge fund.

It means everything that you want to buy has to be in a price range and not a specific price.

Whenever you are trying to move 100 Bitcoins in or 1000 Bitcoins, you have to tell yourself and plan ahead that you’re going to get it between this price and this price.

I’m going to give you an example. If you want to buy 1000 Bitcoins at $1,000, you are going to have to start buying it like around $950 to $1,100. There’s going to be a $50 to $100 plus or minus.

If you want 1000 Bitcoins, you’d have to plan ahead that you might have to buy Bitcoins at $1,050, $950, $1,020 or $980 and just keep buying them up until you get that average price.

Now, if you’re an active trader, who are trading a 7 figure account, and want to buy 1000 Bitcoins, the best place that I would recommend is to go through a reputable source or trader that has a 100 Bitcoin supply, so you can actually get the order film and don’t get slipped too hard.

If you’re trading 7 or 8 figure account, just always plan that you’ll have to buy in a certain range. The higher the price, the higher that range will be.

if you’re a hedge fund manager or a money manager, you should already know that we should on red candles and sell on green candles. That goes the same when you take profits.

If you buy in around 1000, there’s going to be a $50 plus or minus. When you go to sell it to make profits, you should expect $50 to $100 in price difference as well.

If you get in at 1000 while your goal is to take profits at 2000, and you walk away with only 800 or 850 profit instead of 1000, to me, that’s actually a good feel. You’re doing good. If you’re trading like a 7 or 8 figure account, expect that to happen.

Another thing I want to talk about is profit potential. If you hear people talking about making a 100%, 200, 500% averages, that’s normal.

I have several coaching clients where they make 300% average a year for the last 4 years. I have others that have an average of 500%, 600%. We have anywhere between 300% to 600% a year average on multiple coaching clients and that’s normal.

As a hedge fund, if you’re training 8 figure account, I would anticipate on the l 300% to 400% range a year simply because of the liquidity issue.

However, the good news is that as the days go by, the liquidity is increasing like every year. Now, I noticed that the liquidity is increasing by like 10 fold or more.

To give you an example, when Leon and I first got into cryptocurrency investing back at the beginning of 2014, we were lucky if any cryptocurrency was trading $100,000 a day.

In 2017, the top 20 cryptocurrencies trade like $5 million a day easily without any problem.

For an active trader, you can trade the top 20 cryptocurrencies in and out every day without any problems at all.

If you’re a hedge fund trading 8 figure or higher account, I would probably recommend you focus the majority of your money on the top 10 cryptocurrencies that trade light $10,000,000, $20,000,000 or higher each day.

If you’re watching this video at the end of 2017 or further along in a time when you’re trading an 8 figure account, you should not have a problem trading the top 20 cryptocurrencies at all, because of the run rate.

I just want to do this first part to give you an idea. If you’re a big active trader or a hedge fund manager or money manager and trading 7 or 8figure account, I just want you to be aware of some of the things that are going on.

This may be a little bit technical and the numbers may be a little bit big for our typical traders of this channel.

However, I’ve had so many hedge funds and large account active traders contacted me privately to ask me and Leon if this shit is legit or not. Therefore, I just want to share that with you.

If you’re a 7 or 8 figure trader, money manager or a hedge fund manager and you want our team to consult you about investing into cryptocurrencies, please contact me privately at my email listed on our website www.cryptocurrency.market.

We’ll schedule a time on Skype or Google Hangout, then we can discuss what your objectives are, so we can consult you on that.

Typically, we normally do a 4-day private boot camp for our subscribers and followers. We also do that for your entire hedge fund team, all the traders and managers.

If you’re an active trader and you want us to coach you privately, we will spend 4 days with you to teach you everything so that you can understand all the nooks and crannies in a private setting. We will set up the computers and the hardware wallet. It’s a complete package.

In other words, when we’re done with your team, you will be focusing on the investing side, not all the bullshit hardware and software side of getting started in cryptocurrency investing.

Some of the clients prefer that way because they don’t want to spend time goofing around and trying to figure out what to do. They would rather focus on the trading side and not the actual set upside.

That’s the consulting service that we provide for a 7 or 8 figure active traders and hedge funds managers.

If you are interested in this, contact me privately and then we’ll schedule an appointment to see what we can do to help get you set up and get you going. We’re not the right fit for everyone.

After that initial consultation, there are usually 3 outcomes:

One is we come to the conclusion that we’re not the right fit for you, or that cryptocurrency at this moment is not the right fit for your hedge fund or your active trading goals. Therefore, nothing happens there.

Two is you’ll get the information that you need to go back to your team and reevaluate.

Three is you might decide that we’re the right fit for you and we can work together, so we will set up the private boot camp training for you.

Either way will help you to decide whether you should get into cryptocurrency investing or stay out of it altogether. If you do decide to get into it, we will set up immediately and get going.

There are a good 3 to 5 years run on this cryptocurrency bull market before the market levels out. The risk is much safer. The 100% to 500% returns you can get each year will start to die out and not be there anymore.

Therefore, if you want to take advantage of that, contact us privately and we can discuss it with you.

I’m going to wrap this video up.

If you are the active traders and the hedge fund managers and you like these types of videos that I’m making here, give me a thumbs up. Leave in the comments that you want more advanced level videos like this.

If not, I’ll stop making them because I don’t want to waste time making it if it doesn’t benefit you.

Thanks for watching this video. I’ll see you in a future video.

 

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