To help you get to know T3 Live’s impressive bench of trading talent, we’ve launched an interview series called “Meet the Traders.”
Today, we are proud to introduce you to Mark Melnick, the mastermind behind our Melnick Newsbeat program.
In this interview, you're going to find out:
So without further adieu, we are proud to introduce you to Mark Melnick:
Mark, thank you for joining us! Tell us a little bit about yourself.
I grew up in a rough neighborhood in Brooklyn New York.
When I was growing up, I aspired to be an astronaut due to my fascination with the cosmos.
How did you first get involved with the markets?
I was a professional video gamer until I was 19. I had accepted a contract to play professionally for a team in Sweden.
They offered me $90,000 a year plus free housing, which was an amazing offer for a kid starting college.
But before I flew out, I discovered day trading, and immediately fell in love with the freedom and opportunities the markets could offer.
So I backed out of the gaming deal. It seemed risky at the time, but becoming a trader was the best decision of my professional life.
How would you describe your trading methodology?
I don’t focus on a specific methodology as much as adapting to what’s working.
The majority of traders keep using the same strategies over and over again.
That may work for a while, but the market is constantly evolving and changing.
You can make money with a strategy for 10 straight years, but if evolution passes you by, you’re going to run straight into a brick wall.
That’s why I believe trading education should focus on what’s working right now, rather than what worked in the past.
So my strategy evolves with the ebb and flow of the market. If a certain setup starts working, I will milk it for every last drop.
I constantly update my traders on what is working in current market conditions so they can create alpha on a consistent basis.
Let me give you an example.
Recently, stocks that have been breaking through ascending support lines have been buyable after the second red day of follow-through.
So if stock XYZ has a support level at $50.00, we should try to really buy the stock about 2% lower ($49.00) on the second red day after a break of ascending support.
In the samples I have traded, this strategy has been working 84% of the time. If the success rate breaks down, I’ll tweak it or just shut it down completely.
I will only share trade ideas that have a high statistical probability of working now.
There is no magic bullet to defeating the markets. The traders in my private room understand this, and they evolve alongside with me as market conditions change.
What is your day-to-day focus these days?
I trade mostly stocks and options, and I even dabble in warrants from time to time.
As far as time frame goes, the gamut ranges from intraday scalping to short/medium/long-term swing trades.
What is the 1 thing you wish you knew when you started as a trader?
I wish I traded options when I started. I think I’d have made a lot more money if I got into options earlier..
Do you have a certain risk management strategy for cutting losses?
Yes, and every trader should as well.
My risk management system is based on technical support lines.
And one reason I love options is that managing risk can be easier since you know your maximum loss ahead of time.
For example, if I buy $5,000 worth of calls in any given name, then $5,000 is the most I will lose.
For this reason, I passionately disagree with the idea that options are riskier than equities. This is not true if you’re using the right strategies.
Are you concerned about high-frequency and algorithmic grading?
Frankly, I don’t understand why anyone on Earth would be concerned by algorithmic trading?
I base much of my technical analysis around predicting the future moves of these algorithms so we can take advantage of them.
And of course, algos aren’t going anywhere. So let’s adapt instead of getting mad.
Many traders complain that there is too much information to deal with. How do you filter out the noise and figure out what's important?
Outside of my trading room, I am in regular contact with about 50 people outside my room that help me identify the most actionable pieces of news and data.
No trader can do it alone. Even the smartest people running the biggest hedge funds have massive teams to keep things running smoothly.
And of course, you can’t look at news alone. You have to overlay it with technical analysis to determine what kind of move you’re going to get.
When you combine smart news flow analysis with effective chart reading, you will become a more consistent trader.
You’re clearly an elite-level gamer. What has video games taught you about trading?
Video games taught me to quickly identify what’s thrown at me, and then adjust accordingly. If you can’t do this in microseconds, you lose.
The rapid decision-making required to succeed in serious gaming competition has directly helped my trading.
Are there any specific games that directly apply to trading?
Street Fighter II Championship Edition. I mastered that game when I discovered that winning was solely based on quickly and calmly identifying your opponent’s strategy, and then crushing it.
I didn’t know it at the time, but that was my first trading lesson!
But every video game can be related to trading, because they all have elements of strategy development, pattern recognition, and competition.
What is 1 thing traders can do today to start getting better results?
The best way to learn is to join a live trading room with an emphasis on live trading, and not just endless “commentary” on every tick.
You want to see see how a pro makes trades in real time.
And yes, I realize this sounds like a self-promotion but I work awfully hard to help my team make more money.
I do not yap people’s ears off, and I only talk when I have something relevant to say.
This keeps my traders focused on money and not noise.
What book should every beginning trader read?
Outside of learning basic technical analysis, books aren’t very helpful for learning to actually trade the markets. I know some people out there will disagree with this. Every trader should understand basic market concepts, like a bid and offer, candlestick charts, stuff like that.
But let me respond to your question with another question. If I took 1,000 new traders and gave them a certain trading book, would over 50% of them make money?
The answer would likely be no.
The problem with books are that they are stagnant. They never change even though markets never stop changing.
A new trader would do best to follow a trader who makes money consistently with a P&L to prove it.
Anything else is fluff.
I will say this: there are many psychology books that can help your mindset, but making money is another story.
Are there any traders you look up to?
I look up to Marc Sperling, who is my favorite trader of all-time. The man still trades real size and shares his positions with the world live. Most people do not understand how difficult that is.
I share my entries as well, which is not easy from a psychological perspective.
What would you be doing if you weren’t a trader?
Probably playing video games for a living. It is now a multi billion dollar industry, unlike what it was when I played professionally.
What would you be doing if you weren’t a trader?
I’d probably be gaming for a living. Gaming is now a multi-billion dollar industry. It’s much bigger and more global than when I played professionally.
But I still play for fun… and I’m always up for a challenge!