Trading tips from eToro’s Elite Popular Investor

Published : 05 December 2018

The 29-year-old English trader Jay Edward Smith – also called Jay Nemesis – is quite impressive. In 2015 and 2016, he yielded a 40% and 75% profit respectively, without excessive drawdowns. In 2017, Jay Edward Smith has achieved a return of over 330%. These results have, among other things, given the 29-year-old Englishman some talking time with Bloomberg. Jay Edward Smith has a special background. He quit primary school due to anxiety, but learned to trade by himself using thorough research and preparation. Today, Jay Edward Smith has millions of dollars under management, and he is also one the most copied traders on the eToro trading platform (read our review here) – he has the status of an Elite Popular Investor, with over 88,000 followers and nearly 5,000 copy traders on eToro.

Daytrader.dk, the nordic sister-site of Coinisseur, has been allowed to ask Jay Edward Smith a number of questions about his methods and life as a trader. Several of these tips are particularly useful to most traders and investors:

Jay does not look like a usual stock trader. But his methods are effective.

Who are you and what is your background?

My name is Jay, I’m 29, live in Basingstoke (UK) and quit my job in the summer of 2017 to trade full-time on eToro. I grew up in an average family, and since the age of 13 I’ve been fascinated with economics, politics, technology, futurism and the Internet. Throughout school I was in the top set for everything except English (I’m really bad at words), but was very shy and eventually stopped attending school due to social anxiety.

As a result of this I started playing video games and quickly discovered the emerging world of e-sports back in around 2003. I went on to play several games at a semi-professional/professional level, including Brood War, Trackmania Nations, Command & Conquer 3 and Starcraft 2.

With no qualifications I worked several different warehouse roles while teaching myself about markets, business and economics from the Internet. Between my e-sports winnings and my warehouse job I was making enough to invest around £100-200 ($127 – 254) per month in my trading. In 2012 I discovered Bitcoin, spent a few weeks researching it and took the decision to withdraw 75% of my trading balance to invest in Bitcoin in early 2013. A few years ago I moved to Southampton to work a job in e-sports as part of a small startup called Multiplay, where I worked on Insomnia – The UK’s biggest gaming festival. After 2.5 years, I felt confident enough to quit my job and do this full-time.

How did you get into trading in general?

When I was 15 years old we got Sky TV in the UK, and for the first time I discovered Bloomberg and CNBC. I had already been interested in economics and markets, and this fuelled my curiosity. I spent several years learning, reading earnings reports, learning how to read charts from investopedia definitions and testing fake trades in a spreadsheet. When I was around 19 I signed up to share.com and did my first real trades, trading based on fundamentals in tech stocks for long-term wins. A few years later I switched to trading on eToro.

You are mostly recognized as a cryptotrader. How did you get into crypto?

I genuinely don’t remember where I first learned about Bitcoin, I suspect it could have been on a futurology or technology forum. Quickly I saw the overlap in the kinds of people involved in Bitcoin as those I had befriended in e-sports and technology forums. I spent a few weeks wrapping my head around how cryptography works, the technologies that combined to make Bitcoin what it is, and the different potential attack vectors and how Bitcoin was secure against them. Once I really understood it I was hooked, the community was amazing back then, nobody was really in it to get rich. It was more about changing the world, visionaries, experimenters and entrepreneurs.

Which strategies do you use when spotting a trade, and do you use different strategies on different markets?

Generally I stick to a core theme when picking what to trade. I seek disruption, disruptive business models, technologies and ideas. In my earlier trades this led me towards Google as Android was born, Microsoft as they began to focus on building a full ecosystem, Nokia as they tried one last time to survive in smartphones, Arm and Qualcomm as they competed for smartphone hardware dominance. All of these were reliant on analysing what I believed were the plans behind the products for each company. Android wanted to undercut the competition and offer accessibility, Microsoft were trying to lock their console and business users into their ecosystem, Nokia were betting on selling to Microsoft if their Windows phones failed.

For cryptos the strategy is similar, but you must think more about different economic models and the demographics likely to support different projects. On top of that crypto is much more focused on the team behind the products and the constant need for progress in the code and surrounding infrastructure. The same underlying disruption themes continue, Ethereum was an easy spot, prior to that NXT and XCP were the most innovative smart-contract platform attempts, but both were hindered by availability. EOS has used the same trick against Ethereum, offering massive availability benefits and entirely new economic models for projects looking to launch a token.

I still use some basic technical analysis to decide on entry and exit points, and even actively trade something that I believe has long-term upside potential. I primarily use Moving averages, Parabolic SAR, Support/Resistance levels, trend lines and Fibonacci’s for my TA.

Any specifics of your strategies people can use as “out of the box”?

From a technical perspective for day-trading, I find using Parabolic SAR and Support/Resistance levels works on a wide range of stocks and cryptocurrencies. Generally I would look for something trading in a stable range with 1-5%, and use Parabolic SAR on the 4h, 1h, 30m, 15m and sometimes 5m charts to pick an entry point. Ideally you want all of these below the candles, about to hit the next candle on each timeframe as it approaches resistance to open a short, or below the candles as the candle drops to a support level for a long trade. It’s usually worth setting a sensible SL (stop loss) just below support or above resistance accordingly, and it’s still worthwhile checking the RSI and moving averages (EMA) on a daily chart before deciding to trade it.

It takes a bit of practice, but it’s a method I really enjoy. Usually I would look to take profit well before the next resistance/support level. If you nail this technique you can sometimes perfectly switch from long to short to long 4-5 times in a day and earn a few percent on something that hasn’t actually increased or decreased in value substantially from the start to end of the day.

How do you balance your portfolio?

My portfolio has always had an approx. 50/50 split between crypto and tech stocks. This means that profit wise some 80-90% of the profit comes from the cryptos, with a target of 70%+ each year (this can vary dramatically based on the markets though). The stocks should provide between 10-25% profit, which is enough to cover most potential drawdown from the crypto positions. I tend to hold around 40 different individual positions in my cryptos and stocks respectively, and up to 10 trades in commodities, indices, ETFs, and currencies, if there is a good opportunity. I generally never let my account go flat, always opting to keep exposure to the stocks and cryptos I believe in most fundamentally for the long-term.

During bear markets, which I am worse at trading, I try to keep around 25% of funds available. In bull markets I prefer to keep my available balance reasonably low, around 5-10%.

What is your take on crypto in the long term?

For the long term I am extremely bullish on most of the top 10 cryptos, but specifically Bitcoin, Dash, Ethereum, EOS, and Cardano. Bitcoin especially I feel has a very low risk level compared to the potential reward for holding over 1-2 years.

EOS is my bet for the “next big crypto” I’ve been supporting it since July last year and already it’s had huge upside, but long-term I see it as Ethereum’s primary competitor.

If people like to copy you on eToro, what should they be aware of?

Three things:

1. Drawdown from cryptocurrencies. When the market tanks due to hacks or other unexpected news I will likely be unable to protect my copiers from the full impact of it, as a result there will be periods were the copier could drop by 10% or even 20% in a single month. Generally speaking, this only happens a couple of times a year, and sometimes I am able to trade the move effectively to reduce it. This is something all of my copiers should be aware of. Over the long term these drops should be less impactful, but if it happens right after you start copying, it can be a scary experience.

2. Copy new trades! I am an active trader and within 3 months all of my trades are usually cycled and new ones are opened. As a result, I do not believe that copying open trades is worth the risk.

3. I am political. This means I refuse to trade some instruments entirely, as I am opposed to it morally or ethically. It also means I can be quite outspoken. For example, I refuse to invest in fossil fuel companies and will only generally short things like oil. Another example most my copiers very quickly learn is my opinions on XRP and Ripple (I think the tech is bad and the company is exploitative and bad for society). Even some companies such as Amazon and Starbucks I have internal debates about, whether I should invest in them or not. I’m a big believer in voting with your wallet, so I just don’t like supporting some things.

I guess another thing is that I consider myself transparent and approachable, I stream live on Twitch and make regular Youtube videos and blog posts, if you have questions or want me to explain something, just ask 🙂

Have you become rich by trading?

That depends how you define rich. As mentioned in my background, I came from working in very low paid jobs and surviving on a diet of ready meals, so for me when my eToro income surpassed £2000 (circa $2560) per month I was very happy. Fast forward a few months and include my crypto profits and I now consider myself quite rich. Many of my copiers still have more money than I do though, and I think society would view me as being a little further down the ladder in reality.

One thing I work very hard to do is be transparent about what I earn, and the costs of doing this job. I have reinvested a substantial amount of my pay in hiring someone to assist me full-time, in better equipment to do my job better, and in attending more crypto events to ensure I am always up-to-date with new information.

But yes, I can afford nice things, a holiday, to give a lot of money to charity and to hire one of my friends full-time to help, so I guess I’m rich.

What is your best trading-advice?

If you are thinking about it when you go to sleep, when you are at work, out with your friends or family, or watching TV, you’ve probably invested more than you can afford to lose. Be sensible, if you trade a full year and come out at a loss due to consistent under-performing, quit while you’re ahead, either change strategy or let someone else do it for you.

Finally, if you are tempted to go off eToro or Coinbase and start investing in some altcoins be aware of the risk. I have lost hundreds of thousands of dollars to exchange hacks, wallet bugs, my own stupidity, and even my PC breaking. Cryptos are still not something for anyone who is not technically competent to deal with the risk. If you can’t build your own PC and install your own operating systems then you are almost certainly unfit to manage cryptocurrency securely.

How do you relax?

I like exploring cities and travelling, so the holidays I can now afford thanks to my copiers are very much appreciated. Budapest is my top tip on where to go for a chilled city break, unbelievable atmosphere. Most of the time I just play games to switch off, I’m always down to play online with my copiers too, so if you want to play you should join my Discord server. Finally, I’ve always enjoyed taking photos. I’m looking to buy my first proper grown-up camera soon to see if I’m actually good at it or not.

If you wish to copy Jay Nemesis’ trades, you might also be interested in reading our review of the eToro platform here.

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