Inside a trader's mind: Q&A with 52kskew
52kskew is a full-time quantitative intra-day trader of both crypto & TradFi markets, who has been active in the cryptocurrency market since early 2019. Over the past years, Skew has built up a sizable following on Twitter, by sharing insights into the market on a daily basis as well as macro perspective & market foresight.
In today’s article, WOO X gets an exclusive look into Skew’s kitchen, to learn more about his path to becoming a profitable trader, mistakes he made along the way, and valuable lessons he has learned. Read on to steal a few of his tricks!
Allow me to introduce today's chef: 52kskew.
Introducing 52kskew
While Skew likes to maintain an anonymous presence on the internet, we know he started trading in early 2019 – after a brief career in the cybersecurity space. Looking back to his time in university, he describes how he wasn't a very good student at all, underlining his belief that anyone can achieve success in any form they set their mind on.
Skew enjoys the interaction with his followers. Helping people, and sharing insights from what he learns each and every week is a big motivator for him. On top of that, Skew likes to set ambitious goals to achieve every day or week – which helps him stay sharp & motivated to work hard on achieving his longer-term goals.
Daily Routine
Skew starts his day by making sure he gets a good night's sleep – at least 8 hours a night. When he wakes up, he enters into a strict morning routine in which he works out, eats a protein-rich breakfast, and gets ready to get to work.
From there, he kicks off his trading by checking his macro overview templates, while he checks up on important news he missed while asleep. He does not necessarily adhere to the time zone he lives in – but rather tries to adjust his sleeping schedule to be as in tune as possible with the current market trends.
After getting an initial sense of what the markets are doing, he studies the trend and structure from a technical and quantitative perspective to inform his trades for that day and help make the most logical trades with respect to the trend.
The day isn't completely filled with trading-related activity though, as Skew takes regular breaks to read, which he finds a great way to relax without completely slacking off. Skew also enjoys learning new things or getting in some coding before ending the day.
Q: When someone asks you "What do you do for a living", how do you answer?
A: "Haha, that's a funny question because many people don't mention they are in crypto or even involved in crypto nowadays unless explicitly asked. That being said, I typically say that I work in finance, and trade financial markets. I find this easier to explain than to go into detail on what I actually do: quantitative, intra-day trading."
Fair enough, Skew. Let's dive into the nitty-gritty of your trading journey then, shall we?
Skew's trading journey
Skew started trading in 2019 – after he was looking into derivatives trading and how these contracts worked out of curiosity. It did not take very long for him to find BitMEX – where he found easy access to a highly volatile (and thus tradable) asset: Bitcoin.
In the meantime, he had found a few trading strategies online and started trying those out on BitMEX.
"Trading in 2019 was a great time to learn given the market dynamics; one of the easier years to spot trends and just ride them. The margin chop came later on with macro influences, that when I focused more on understanding macro other than just trading."
While he describes a relatively smooth start to his trading journey, there is a little more to the story. After all, beginners make mistakes. One of the bigger mistakes Skew made at the start of his journey was overcomplicating lower timeframe trades, without the context of the HTF picture.
"I think it’s very easy for many traders, especially low time frame traders to forget the HTF picture and its significance."
Since then, he's changed his system to the point where he always builds his trades from the perspective of HTF levels (such as weekly or daily reclaims/flips) to then trade with the flow of the market & 4h trend.
Patience is another struggle, especially when markets take their time before the move you expect finally comes. Those tests of patience can easily shake you out of a winning trade before they play out. Skew deals with this by religiously sticking to the plan, while not ignoring new data either.
Trading style & edge
Skew has a very systematic approach to life, and thus to trading as well. As such, he has a set number of requirements to enter trades, and if these conditions are not met, he does not trade. As a result, his system is catered to specific market conditions, whether that is choppy, or trending price action.
No matter the environment, all of his strategies require two things: market momentum, and liquidity.
When asked about his edge, Skew discusses how edge can sometimes be as simple as understanding when the market is overly exposed, or crowded in a tight price range – which will lead you to understand what comes next. Skew believes his edge generally lies in the nuance of derivative markets – either in mispricing or short-term opportunities.
Q: Did your trading style change over the years?
A: Yes. Considering how I went from swing trading in 2019, to a high-frequency driven trading – I would say it dramatically changed. Not only in the trading style though, my style has also become much more fine-tuned and refined since then. Throughout it all, being disciplined, determined & consistent has been crucial.
"I think as you trade, the before and after is highly relative to how you perceive things. This plays a lot into weighing risk vs return & market outcome."
Looking back, Skew found that taking the time to learn what works, and building on that further was integral to his success, stating that you should not rush yourself before you can consistently make sustained returns, with minimal drawdowns.
Q: As a quantitative trader, is there any data we should be aware of?
A: "I think all traders should get themselves familiar with available market data tools like Open Interest, liquidity tools or profiles & CVDs because most often market data will blatantly identify areas of good (or poor) risk, which price will then confirm later. Eventually, this forces you to re-think how and where you take on positions.
Skew also mentions the usefulness of statistics, not only for backtesting but to inform trades as well. Seasonality affects markets more than you think, both on a daily and monthly scale. Skew also uses statistics to conceptualize his risk profiles.
Moreover, he finds the futures curve and term structure in options are quite useful for taking advantage of mispriced contracts. It's worth it to read up on contango, backwardation, and volatility!
Finally, correlations are another big part of Skew's trading. For instance, USD and yields have an inverse correlation to high beta currencies, as well as risk assets (ES, BTC, ETH).
Q: What are your expectations for the new year?
A: I think the next few years actually are going to be quite significant & important for the overall market, this includes the future economy, central banks, bonds/treasuries, companies or stocks, and crypto.
Generally, it's not going to be what people expect. Skew expects recessionary effects throughout 2024-2026 – but how this affects the markets remains to be seen.
In terms of crypto, Skew expects new liquidity to hit the market, with stablecoins slowly seeing new inflows rather than outflows. Skew expects younger altcoins to do very well. It looks forward to Bitcoin and Ethereum spot ETFs being approved in 2024 – stating that they could very well spark a speculative mania similar to the SPAC & IPO manias.
Word of thanks
A big thank you to Skew for taking the time to share his thoughts with us today. Be sure to check out his Twitter to learn more about his trading style, or follow him on his journey.
Author's Disclaimer: This article has been written for informational purposes only. It should not be construed as trading or investment advice in any shape or form.
Editor's note: CryptoJelleNL provides insights into the cryptocurrency industry. He has been actively participating in financial markets for over 5 years, primarily focusing on long-term investments in both the stock market and crypto. While he watches the returns of those investments roll in, he writes articles for multiple platforms. From now on, he will also contribute his insights for WOO.
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