 When we're going to see this butterfly to finish, I don't think we need that space now. And people are saying, why is gold down? Surely that's a safe haven. Well, no. When the baby gets thrown out with the bath water, when it comes to Bitcoin price, I'm happy that it is dropping. You know why? If it touches that 3,700 market gain, I'll be a buyer again on that. Hi, everyone. I'm Giovanni. Welcome back to our show. Today, it's a very dramatic day for global markets. To figure out what is going on, we talked to Chief Market Analyst at AvaTrade, Naima Slam, and co-founder at EasyTrader, Charlie Barton. In the past 24 hours, we have been witnessing a bloodbath in all the markets. We have been witnessing Bitcoin falling by almost a quarter. What is going on? Thanks for having me. Look, Bitcoin has seen the biggest drop today since 2017. And the reason that drop is happening because investors are immensely anxious about the market reaction, what is happening in the traditional equity markets, we all know that both institutional and retail investors have been very active in the last year or so in buying Bitcoin. Now, because of this massive plunge in the equity markets, they have no other option but to liquidate some of their positions in other assets such as Bitcoin and of course, Gold is also seeing massive pressure because of that in order to save themselves from margin calls in traditional assets. That is the only particular reason that I can think of that why we are seeing this massive plunge in the Bitcoin price. Otherwise, right now, this is the moment that we are going to check whether the fundamentals of Bitcoins are going to be put to test because monetary policy around the globe, which is utilized, which is implemented by central bank, is going to be tested. So if that policy is really going to remain in place, now is the time in the coming quarters, we're going to really see enormous amount of a stress test with respect to that monetary policy. So we shouldn't be seeing that this sort of a massive sell-off in the Bitcoin price. In fact, I believe that we should see the massive surge in the Bitcoin price, but that's not happening. The only reason and the actual factual reason that I can share that with you is investors are liquidating some of their positions and putting that money in order to cover the margin call. But when it comes to Bitcoin price, I'm happy that it is dropping. You know why? If it touches that 3,700 mark again, I'll be a buyer again on that. Okay, we know why the stock markets are selling off. The equity markets are selling off because of the economic impact of the coronavirus spreading worldwide. But people are saying to me, why is gold selling off? Why is Bitcoin selling off? Because up until recently, if the equity markets have been coming down, sometimes we've seen the likes of Bitcoin doing quite well. But it is just like I think when I was last doing a call with you guys in January, when everybody's selling everything, if everyone's losing on their equity portfolios, then they end up selling what they've been doing well on to offset some of their losses. So that's why I mean, gold is down massively today. And people are saying, why is gold down? You know, surely that's a safe haven. Well, no, the baby gets thrown out with the bath water when the markets get to this sort of stage. And we saw this in the financial crisis back in 2008, 2009, 2010, for periods where gold actually would have periods where it would pull back because that intense moments when everybody's selling or their equity portfolios are going down, then they need to cash out of some of their profitable positions. And that's what we're seeing with gold. And like you said, Bitcoin is down today as well. And when do you think this bloodbath will be finished? I think there is a lot more to go. Look, you know, if you are to speaking of a wonder percentage moves, right? So look at the percentage move right now in front of you. This is the stock 600. We have not seen these sort of a wonder plunge in the market going back all the way to 1980s. 4,300 massive wonder plunge since 1987. Look at 40, similar message. But when you look at the 4,000, the Italian index, I'm not seeing that sort of a sell-off in the 4,000 index index, which is insane. You know why? Because it is Italy, which is under enormous amount of pressure. It is Italy, which is under lockdown, under a lockdown condition now. And it is Italy, where we're going to see the massive banking crisis. We heard from Christine Lagarde that she didn't reduce interest, right? But Germany came out and then they said, okay, you know what? We are going to take extraordinary measures, meaning they're not going to run the balanced budget anymore. Again, going back to our earlier conversation of testing the monitoring policies by central banks, right? So Germany is going to introduce massive budget spending in order to soften the blow of coronavirus. Now, to answer your question precisely, when are we going to see this blood-butter finish? I don't think we need that space now. The, yes, the massive plunges that I have just explained to you over the charts, like stock 600, FTSE 100, CAD 40, we could see some sort of a retracement because these plunges are, you know, unprecedented. Like I said, the last time we've seen any sort of this sort of a massive sell-off at this magnitude, you have to go back in the history all the way to 1980s to 1970 in order to witness that. But overall, for investors' perspective, I think I'm going to hold my bullets because I'm still waiting for these markets to fall a lot more than what they are because we are still sitting at 25% correction from all time high. And I'm not a buyer until and unless I start seeing that 40% mark. Well, the global central banks, the central banks and the governments around the world, they've still got some armour, so to speak, some ammunition up their sleeves. So there's still going to be measures that will come in. And we saw the Federal Reserve last week make that unprecedented move of cutting rates ahead of next, what is next week's Federal Reserve meeting, the FOMC meeting. And they're going to cut rates again next week, but there could be other measures. And in this environment, what I've just been saying to my traders here today is that you've got to stay connected to what's going on in the news because at any moment, the US could come out with something else at any time. And then all of a sudden you're thinking, oh, hold on a second, the markets are all bouncing or rallying what's going on. It's because maybe someone's gone in the US, the government or the Treasury or the Federal Reserve come out or something. But generally, this isn't over, is it? We're not in a containment stage at the moment. The economic fallout is still there. Now the markets are forward pricing, so they're trying to already forward price in, well, what is that economic fallout going to be? And that's what we're seeing at the moment. We're seeing uncertainty in the markets, which is what's creating this huge volatility. We can talk about what opportunities there are, but I don't think that the equity markets are done yet. Now, don't get me wrong, they could bounce at any stage and put in some good, oversold technical bounces. But I very much doubt that the stock markets have made a lot just yet. I suspect as the stock markets come down, Bitcoin will fall further now. So when I was last with you, we were talking about Bitcoin had been having a nice run, so I'm just looking away at this chart at the moment. Bitcoin had been having a nice run into January and into February. And I was talking about Bitcoin doing a pullback, but I wasn't expecting it to pull back this much, I must admit. But these are unprecedented times. These are beyond your standard deviation events. So most of the time we trade within standard deviations, we know what roughly the markets do, the sort of volatility to expect. And we've now gone to this high volatility environment again, which we haven't seen in the equity markets since the financial crisis. We're going to get a lot of the weaker hands will get cleared out of this. I still actually see the long term prospects for Bitcoin. But this is great because this is going to see a lot of people throw in the town and say, that's it, I'm sick of trading Bitcoin now. I'm off. And that's the way the markets work. It's the same with the way that the equity markets work. And it always has been that way. Markets have good runs, then they either have periods of consolidation where it bores investors out of positions, or they have bear markets. And that gets people out of positions as well. So I see this as a good thing. It's a flush. Could it come back down and revisit 3000? Yes, it could. But I still see in a year, 18 months time, that's where I see it gradually trickle its way back up. Okay, so talking about what you're doing in this exact moment, how are you reacting to this situation? Like, how are you managing your portfolio? Are you just waiting for things to go even worse? Or what are you doing exactly? We're selling into rallies. That's that's all we're going to do. Any debt cat bounces in an opportunity for you to sell the rally. Why? Economic data is going to get even worse. And nothing is baked into the earnings, like we discussed that before. So this is an opportunity for you to sell into the rallies. But be mindful, the moment that we come close to any of those important 200 a moving average, especially let me give you a take, e mini futures for S and P 500 index, touched the already touched the 200 a moving average. And every time we have touched the 200 a moving average over the last 20 years, I'm talking about two error over here, the prices have bounced back sharply up. So I think I'm expecting that bounce today. But I'm still not sure whether, you know, if this is the end of the sell off, I think we're going to still see massive, massive drop from here. And in terms of buying that opportunity, I think I'm waiting for the S and P 500 index to drop below the 200 a moving average by 20%. And then I'm going to come into the market with full force and fit with full ammunition and then start buying everything. Interestingly, I had shorted gold with some of our traders just a week or two ago, week or so ago, remember when it was, we put a gold short in. And we have our reasons for shorting gold when you would think the gold would be flying higher. So yes, I do have a number of different positions in the market. But interestingly, I'm not in the S and P or the Dow right now, I shorted the S and P fun enough, right near the highs with some of our traders. But I came out long ago. And this is the reality, people think the professional traders, they they get in, you know, like the S and P I shorted it the highs, and I'd still be in it right now at the lows. And that's just not the reality. I took a nice little what is now a tiny chunk of the market. But what seemed like a decent trade at the time. And now, you know, you think, I missed out a bit there, but we can't capture it all. So don't worry if you're missing out, because there'll be another opportunity around the corner. These markets are moving fast. The best thing that people can do is manage their risk and just wait for the next opportunity. And don't worry if you've missed out on some because there's going to be plenty more opportunities coming. Yeah. So as far as my trading is concerned, yes, a lot of trading in like some Euro dollar as well to don't mind trading that because it's the world's most liquid currency. So yeah, that's where that's how I feel on Bitcoin. I do think that in the long term, it's going to be fine. But who knows in the short term, because like I said, the baby gets thrown out with the bath water and it could still come lower if the equity markets do still go lower. If you had to give a piece of advice to an average trader who is trying to figure out what to do, how to best profit from this situation of immense crisis, what would that be? Well, first of all, I don't give out advice. So I can show suggestions. So that is if you are an investor, hold your horses for the time being. The markets let this dust settle a little bit and then walk into it. Because remember, we have two strategies. This is your support zone. This being your upper line, this being your door line. Market falls like a knife in this zone. You can buy it right here. Then you have very, very skilled traders who are going to find that bottom. Then you have investors who are slightly risk averse. They want to see, they want to buy it when the market comes out of their support zone. So for retail investors who are not skilled, wait for that moment, wait for the price to come out of that support zone. We still don't know where the bottom is in the market. But we know that we are willing to buy it up to 30% or up to 40%. When that's all for this account is on, come on. You've got to buy it at that particular point. Because this is the closest thing that we have seen near the Bitcoin hype. When that ICO hype happened, look at the activity at broker's level. The volumes are going through the roof because everyone is trying to take some piece of the pie right now. And on the other hand, if you are a day trader, this is the best time for you to get involved into. Because that 1000 percentage point has become a norm. Even today, we've seen circuit breaker in the S&P 500 index. During this particular week, there has been two different occasions when the S&P 500 has broken its circuit, right? Meaning more than 7% move on the market. So to summarise, passive investor, wait, day traders get involved with it, enormous amount of volatility. Okay, all right. There's different parts of what my personal strategy is. One is we have to manage risk. I'm seeing lots of people blowing their accounts out there. I speak to my regulators for my fund and they were talking about how many people are blowing up because they're not using things like stop losses. I constantly go on about this with trade about traders. But if you're going to trade without stop losses in this sort of environment, and if you're going to nightingale into positions, adding to losing positions, you're going to get blown out of the water. So please respect your risk management, risk a maximum of 1% per trade. That would be the first piece of advice that I could give as far as a strategy is concerned. Reduce your position size and have wider stops than you would normally have. The market, like I've already said, the volatility is expanded to a great extent. So we've got to have wider stops in order to account for that volatility. The other thing from a risk perspective is be really careful. If you want to trade stock indices, be really careful. The S&P keeps on getting shut, the S&P and the Dow because they're hitting their circuit breakers. So you might well think you're going to capture a bounce and then all of a sudden the circuit breaker kicks in, you get stuck in a position and then the market reopens another several hundred points lower than where you were. So sometimes you just have to accept that certain markets are untradable if you want to manage your risk. So it all comes under the banner of risk then. That was Naim Aslam and Charlie Barton. Thank you guys. Don't forget to subscribe to our channel with more updates on the turmoil and golfing the global markets.