Most crypto heads look down on the stockmarket and fall into phrasings like “OK Boomer, GL with your prehistoric GRANDPA STONKS 😂 ”.
The recent pumps on $AAPL, $TSLA, $AMD, and many others have proved the naysayers that it’s always important to have a broad and open vision on the market as a whole. Go where the money is it seems?!
Against popular (crypto)belief, Scott Melker, aka The Wolf Of All Streets, kept diversifying his portfolio in both cryptocurrencies and traditional markets. And good god, he did that with success! 💰
Besides the fact that Scott is a bright mind when it comes to not letting bias make him miss out on superb opportunities, he’s also advocating for risk management to his followers; something I can really appreciate as a trader who knows how hard it can be to be disciplined day in day out.
I had the pleasure to interview this living legend who happens to have a successful DJ-career under his belt as well(!).
He shared some great stuff and insights, I hope you guys enjoy it :)
Without further ado, let’s start! 🔥
“Good morning, Scott! How did you turned the guy we’re seeing in the picture below into the man you are today?”
I would love to believe that I am still that guy, but I think it’s clear that I’ve gone through a major transformation since that photo was snapped 22 years ago in my college kitchen.
I do still listen to The Pharcyde and own the same turntables that I was playing on. Hairline has receded a bit.
That phase of my life offered the initial spark for both careers that have held my interest over the past few decades — music and trading. I was far too irresponsible and scattered to appreciate the resources that were available to me for learning finance and trading at the Wharton School. As they famously say “college is wasted on the young.” However, DJing parties and producing music stuck and was my main focus until roughly 5 years ago when my daughter was born.
I had so much success as a DJ and producer that there was little reason for me to pursue my other interests. I made it from “bedroom DJ” to stadium DJ in a matter of years.
The transformation to a fully functioning adult took me longer than most. I was generally living check to check until my 30s, scraping together funds from various DJ gigs and side marketing and consulting projects. I was not concerned about money — it never mattered to me, as long as I had enough to get by. I even went through a phase when I was delivering packages for a commercial editing house in NYC to afford rent and be able to focus on music. I favored experience over money and would spend every last penny I had for a single trip at that time in my life. That laissez-faire attitude hurt me tremendously at the time financially, but it’s not something I regret because it was so much fun.
Things changed when I met my wife, and even more so when my daughter was born. I had no interest in continuing my heavy travel schedule for DJing — I wanted to be home with my family. That’s when my casual long-time hobby of trading and investing became a more serious pursuit. It’s also when saving money and considering the future became essential.
“What does your daily routine look like?”
My routine is largely dictated by my children. Go figure. I’m basically a soccer mom. On a weekday, my schedule is pretty structured. Everything is out the window on the weekends, but I spend very little time trading or watching the market during that time. I am of the firm belief that free time is more valuable than money, so I try as much as possible to enjoy the freedom that trading affords.
Wakeup, usually with my 7-month-old son. I’ve never needed an alarm clock, but he certainly acts like one. As he is playing, I usually do my first check of the markets and charts, catch up on news and get a general feel for the day. My wife is usually up as well, which affords me the chance to take 30–60 minutes each morning to get my bearings and check a few charts.
I wake my 4-year-old daughter up, get her breakfast and spend the next hour chasing her around and trying to get her ready for school. I eat plain oatmeal with a banana for breakfast every single day.
Driving my daughter back and forth to school — I generally listen to news radio on the way home to see how the United States is destroying the world on that given day.
9 AM — 12 PM
This is when I really get to work. The first thing I do is check-in with Discord, answer any questions our members may have and assure that they are sorted. Then I do a deep dive into Twitter, news, and charts for the next few hours. If it’s a Tuesday or Thursday, I spend my time preparing and sending The Wolf Den newsletter, which is a significant undertaking.
I eat lunch with my wife every day. She runs a very successful internet marketing company so she makes her own schedule.
Back to work until 4 PM, more of the same from above.
Crossfit — every single weekday. I have ADHD, this is the best cure. I believe that every trader should have a life outside of trading and that exercise should be a key component. I value this time when my phone is in the car and I am solely focused on the task at hand, Working out is the best release of stress that I know and is an ideal way to reset your mind.
5:15 PM — 7:30 PM
I pick my daughter up from school, head home and eat dinner. This is my dedicated time with my children until they are asleep.
7:30 PM — 8:30 PM
I generally “close out my day.”
8:30 PM — 10:30 PM
Hang out with my wife, go to bed.
“As a trader, how important is risk management to you?”
It is the only thing that matters. Period. A trader can use any strategy for finding entries and exits that they see fit, as long as they have a system that they stick to. You can read tea leaves or punch yourself in the face repeatedly until you have an epiphany to find your trades — it doesn’t matter. I know traders who use almost every possible indicator, theory or strategy to trade — the only common thing that makes them a success is their attention to managing risk. It’s how you manage the trade when you decide to go heavy or light and your emotional control that makes you successful.
“Do you remember the day when you found out the hard way this was a necessary discipline being a novice trader?”
I have been investing and trading for over 2 decades — I have learned this lesson many, many times. I spoke about it recently on Twitter.
There was no “aha” moment. I think, eventually, I was just tired of losing money. Most people never reach this point, which is why almost all traders fail. For trading to be your profession, you have to learn to be profitable — otherwise, you will learn to be homeless.
“Looking at your technical analysis, I really dig the simplicity of it. How do you start out when you’re looking at a fresh chart?”
I believe that less is more when it comes to charting. Like most analysts who have spent tens of thousands of hours staring at charts and watching price action, I can effectively look at a naked chart and immediately see the relevant information. When I open a fresh chart, I can quickly identify the main areas of interest, draw a few quick lines, set a few alarms and step away. I only dig deeper for my students and members, and to help explain my process to less-experienced traders.
Depending on the asset, I usually start on a large time frame (weekly or monthly) and then drill down on the areas of interest on lower time frames. My standard chart for any crypto asset shows 4 windows — monthly, weekly, daily, 4 hour. Something like what is shown below.
I clean these charts up to share with Twitter, Discord and the newsletter. If you are trying to teach someone something, I believe that you should remove every line and indicator that is not being used to illustrate your specific point. I have some very messy charts that I never share.
After years of testing strategies, indicators and ideas, I have really come back to simple lines and zones, alongside RSI, which I use to spot divergences and likely reversals. That’s about it. Again, it’s how you manage your risk according to these lines that truly matters. I could spend hours a day analyzing an asset and chart, but it is more likely to muddle my general premise than to support it. I view technical analysis as a risk management tool — that is it.
My biggest legacy trade last year was Tesla, a stock that I have traded successfully for many years based on common sense and simple chart ideas — basically one line and the idea that the herd was emotionally aggressive in the other direction.
This is my ideal type of trade. One or two lines, a clean invalidation to cut it loose and a rational premise.
“If you had to choose between only trading Bitcoin or altcoins for the rest of your life, which one would it be and why?”
Bitcoin, and it’s not even close. I trade altcoins to get more Bitcoin — I trade Bitcoin to get more money. I may have given a different answer in 2017, but not for one moment since.
Bitcoin is tradable almost every day. While I am not a scalper and prefer to avoid range-bound assets and sideways price action, that option is available for traders with BTC. Altcoins are rarely worth trading, in my opinion. The market conditions have to be nearly perfect for it to be worth the effort and those market conditions change the moment Bitcoin decides to sneeze. The days of easy 10x gains on altcoins are in the past.
Further, the decision to trade Bitcoin would require far less work! It’s one chart to focus on and is somewhat easier than most assets to analyze from a technical perspective. I can trade Bitcoin effectively with only a few minutes of effort a day. Trading alts is the opposite — finding those that are likely to move is a full-time job. No thanks.
“What is your outlook on Bitcoin and Ethereum for this quarter?”
My outlook for this quarter is — overwhelmingly indifferent. I doubt that is the specific answer that your readers want, but I have been somewhat crystal clear that I try to avoid long term price predictions. Further, a quarter is a very short time frame, in my mind. I try to build positions that I can retire on.
I believe that technical analysis is a risk management tool and cannot help predict the future. I don’t have a crystal ball. Making long term predictions is usually a fool’s errand — you are more than likely going to be wrong and are opening yourself to undue criticism from emotional trolls on Twitter.
That said, I am very optimistic about the future of Bitcoin, which is why I trade to accumulate more of it. I don’t really care what price target it hits, as long as it trends up over a long time frame.
“When looking at all the other altcoins, which ones have your increased attention this year?”
From a technical perspective, there are none. I still believe that Bitcoin rules the market and that the entire basket of altcoins is affected disproportionately by Bitcoin’s moves. Until this is not the case, I view trading altcoins as a strategy for increasing my Bitcoin holdings. I am indifferent to which one accomplishes that goal in the coming year, if any.
I also generally believe that STOs will perform well in the future, namely exchange tokens. They have real utility, so an exchange token for a successful exchange should fair well.
“What’s the best advice you ever received and would like to pass on?”
“Don’t be an asshole.” — My Dad
I’m not actually sure if my parents actually said those exact words to me, but that was the overwhelming lesson of my childhood, and even young adulthood. I went through various stages of life where I was exceptionally selfish or interacted with people poorly. The best advice that I can give is to treat people kindly and with respect, and to go out of your way to help them when you can.
It sounds cliche, but people and relationships are all that truly matter.
Thanks for reading, I really hope you enjoyed it. Scott gave me quite some food for thought and I hope that goes for you as well.
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