Scott Melker, better known as The Wolf of All Streets, is a trader and crypto advocate who is far more approachable than his online handle might sugge
Scott Melker, better known as The Wolf of All Streets, is a trader and crypto advocate who is far more approachable than his online handle might suggest. A former DJ, Melker operates a small crypto advocacy empire spanning YouTube videos, podcasts and a popular newsletter.
Scott Melker is open about his initial intentions in the crypto industry. “I simply came to trade and make money,” he admits, getting involved after hearing friends go on about the gold-paved streets of the blockchain world where 100x weekly returns were common. Being familiar with the more conservative movements of the stock markets since childhood, Melker was lucky to learn proper trading before entering the unregulated crypto casino.
“XRP was like a penny or something then,” he recalls. Crypto was also popular in the DJ community, something Melker attributes to the community’s risk-taking nature. He attributes his success to lucky timing in early 2016, soon cashing out his initial investment to play with his winnings.
“There was this sort of groundswell in the DJ community. They understand technology, and they’re kind of wild and speculative. That’s how I first discovered it.”
The crypto beats stopped soon enough. The 2018 bear market meant that “If you wanted to stick around, you really had to justify it to yourself, and you probably went way further down the rabbit hole to understand the importance of the movement,” Melker explains. He began to truly appreciate Bitcoin’s fundamentals and “understand the purpose of individual altcoins.”
Trading
Though Melker has invested in hundreds of tokens over the years, he believes that “Bitcoin is the most important asset ever created” and that everyone should strive to have some exposure to it. Ether rises nearly to Bitcoin’s level of importance and may well have more upside, he says, while altcoins are akin to individual speculative technology investments.
Soon after changing his Twitter tune from music to crypto in 2017, Melker connected with Christopher Inks of TexasWest Capital, who became a mentor to him. Melker became something of an analyst for Inks’ fund, sharing charts and trading ideas. He clarifies that he did not trade anyone else’s money, and lacks licenses to do so.
The Wolf emphasizes that trading is not easy, whether in stocks or crypto. “To trade full time for decades, you are like a unicorn,” he explains, adding that the crypto markets are especially brutal because they operate 24/7, without pause, meaning that traders don’t have an opportunity to recharge while markets are closed. Of course, you don’t need to trade all the time — Melker himself uses leverage to trade Bitcoin only two or three times per year.
A curious aspect of trading is that as one’s portfolio grows, so do the sizes of bets one should make to remain profitable — doing otherwise would be akin to taking out $10,000 in casino chips only to spend all evening making $1 bets.
“When your portfolio reaches a certain size, you have to be willing to ratchet up the size of your trades as a percentage — and those numbers can start to become uncomfortably big.”
Learning to fail
Melker is quick to point out that the odds are stacked against day traders. “95% of traders fail — they go bust quickly,” Melker states, explaining that those aspiring to be serious traders need to be prepared to lose their invested assets several times over. “Most don’t have the time or capital for that,” he says. In 2012, Melker invested his entire portfolio into ARYx Therapeutics, which went to zero. Despite such setbacks, Melker counts himself lucky for “learning the hard lessons before crypto.” He finds that most who first discover trading via cryptocurrency tend to lose everything to leverage.
“You have to be able to learn on the job and go broke multiple times and still stick with it.”
Though “Investors almost always do better than traders,” Melker strongly recommends those determined to trade study up on risk management. Long-term profitability, he explains, is not about selling tops and buying bottoms but rather “the way that you protect your capital and allow yourself to hit home runs.” He uses the example that a trader can be right less than half the time and remain wildly profitable if they know when to cut their losses. Even one win out of 10 can be a recipe for success.
“It’s a math game of taking small losses and big wins.”
Another piece of advice is to never risk more than 1% of one’s portfolio on a single trade. However, this is far from foolproof. For example, 30% of a portfolio could be spread over 30 altcoin positions, all of which suffer when Bitcoin takes an unexpected dive. Ego is the enemy, and emotional attachment to positions is to be avoided — something that may be even harder when it comes to NFTs.
“To stay profitable long…
cointelegraph.com