Crypto trader Scott Melker, ‘The Wolf of All Streets’, has revealed how he lost it all and made it back three times – and the lessons he learned.

Melker, a crypto trader and investor at Texas West Capital, told his 56,000 followers he’d learned the hard way how to become a successful investor.

All of his losses were sustained in traditional equities markets – but he says the lessons he learned can help newer investors avoid crashing in more volatile crypto markets.

Losing it in 2001

“In 2001, I had to cash out a mutual fund I bought at graduation for a 40% loss to pay bills. It was my entire savings,” he said.

Melker – who is also a DJ and producer who creates and performs internationally as mashup remixer The Melker Project, MBS and FUNKONTROL – said he’d been in debt for years afterwards.

“The worst part was that I was in debt until 2006 when I booked a stadium tour in Japan that paid off all of my bills and allowed me to start investing again.”

CRYPTO TRADING LESSON LEARNED: “Never put everything into the market if you are going to likely need the money. Save cash for a few month’s bills first.”

Thanks, the entire reason I am on here is to try to help people avoid the same mistakes. — The Wolf Of All Streets (@scottmelker) December 3, 2019

In a case of very unfortunate market timing, he’d just started to build his portfolio back up when the Global Financial Crisis saw the Dow Jones Industrial Average drop a total of 54% to March 2009, from its 2007 peak.

Losing it in 2009

Melker lost 80% of his account in the crash.

“The stock market crash came at the worst time, right when I was feeling secure and back on my feet.

He worked his way out of that buy buying the dip, when valuations were low and there were bargains to be had.

CRYPTO TRADING LESSON LEARNED: “Don’t sell the bottom. I recovered everything and more by putting MORE money into the market.”

Incidentally, Melker is attracted to the idea that when the Fear and Greed Index bottoms out at Extreme Fear, the market is more likely to go up than down.

He approvingly quotes Warren Buffett: “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”.

(That said, Buffett’s value investing philosophy doesn’t apply directly to crypto due to the inherent difficulty in valuing speculative projects).

Losing it in 2011

And finally, Melker bet everything he had on a dodgy stock tip for ARYx Therapeutics, Inc. and maintained his faith as the stock plummeted ever lower due to his reliance on bad information.

He had to give up on trading for a year.

“In 2011 I went “all in” on a stock tip and rode it from around $6 to 0. Didn’t make another trade for over a year.”

CRYPTO TRADING LESSON LEARNED: “Never go all-in on anything, dummy.”

A Bitcoiners argued against this of course, saying if he’d gone all in on Bitcoin in 2011 he’d never have to argue again.

But Melker replied simply you: “Can’t count on luck”.

In 2001, I had to cash out a mutual fund I bought at graduation for a 40% loss to pay bills. It was my entire savings. In 2009 I lost 80% of my account in the crash. In 2011 I went "all in" on a stock tip and rode it from around $6 to 0. Didn't make another trade for over a year. https://t.co/J2oMHRZZaA — The Wolf Of All Streets (@scottmelker) December 3, 2019

Melker, who has just launched his crypto trading newsletter The Wolf’s Den, said he was only on Crypto Twitter to help others learn from his experiences.

“The entire reason I’m on here is to try and help people avoid the same mistakes.”

The inaugural edition of his newsletter in late November begins with a similar mission statement.

“My hope is to help my subscribers avoid the common mistakes responsible for the failures of most traders and investors, most of which I have made myself.

“These mistakes are largely a result of emotional decision making and poor risk management.”

Melker has also written in the past of 10 mistakes that will send you broke while crypto trading.

They include:

Starting with real money rather than paper trading

Trading without a stop loss

Failing to maintain balanced portfolio

Adding to a losing trade

Failing to keep a trading journal

Risking more than you can afford to lose

Being undercapitalized

Using leverage

Acting on trading patterns and indicators that are not clearly understood

Following the herd