Let this be a warning to all Crypto Traders.

In this lovely chart you can see that there was a blip in the Bitstamp BTC price. This sketchy wick is not visible on other exchange feeds, so it only affected Bitstamp traders as far as I know.

It's not untypical behaviour for a Crypto Exchange, so I am not picking on Bitstamp alone. They are all kind of the same, and I don't think Bitstamp are bad, at all.

I streamed this morning on this topic, but I want to cover it officially as I think it is very important and holds several lessons for all Crypto traders, new and old.

www.tradingview.com/streams/PTGzIBivBw/

1. Crypto Exchanges are not regulated.
2. Crypto Exchanges can (and do) sell information to whomever they want. This includes large traders who can bully markets around.
3. When you place a Stop Loss Order, this is visible to the exchange, and therefore it's visible to whomever they sell data.

The potential for abuse is there and you know it. If you got caught in the evil wick, and you called Bitstamp and complained, how far would you expect to get with your complaint? There you were, buying the trendline touch for a few hundred $ potential profit and bang! Hopefully you were on the toilet and missed it.

Let's do some logic:

A. Trading in ANYTHING is hard to master. It's like a poker game against the world. You can win and you can lose, but the odds are you will be one of the 75% who lose money. Joining the 25% who don't lose takes time and knowledge. The Pro's know your psychology and they will take advantage of you as you flip back and forth cutting losses.

B. Trading in FX and Commodities IS regulated. If you get a price spike that stops you out with your broker and you can show that other brokers didn't get the spike** and it was unreasonable, then you call your broker and explain, and ask to have your trade reinstated. They may try and stonewall you, but if you don't get anywhere and your case is good, you can tell them you will be writing to their regulator about them. Then they either have to explain to the regulator that their behaviour to their customer is in fact reasonable, or they re-instate your trade. Bear in mind that they expect to get 90% of your money anyway given enough time, and if you leave, they won't get it. Don't be afraid to carry out the threat. Make notes, screenshots etc. Write out the case and email it to your broker, saying it goes to the regulator if they don't behave.

C. Trading in big Crypto (BTC, ETH, XRP, ADA etc) is very prone to hype and panic. The best TA (Technical Analysis) will struggle when you are dealing with Crypto. Much of it is young and only partially formed, TA-wise, and even the real price spikes are legendary.

D. EXCEPTION: If you are trading alt-coins and you know your subject well, then buying these near lows can be very profitable. I am talking about the big coins where you are prone to price manipulation.

Conclusion: The game is already very hard to master. If you enjoy trading, there are easier things to trade than Crypto.

Here endeth the lesson.


** FX markets have rollover time each night, and spreads do widen a lot, but even so, if you get stopped out on a 50 pip spread pop when the normal spread widening is like 2 pips, then complain.