Develop Patience With Your Swing-Trading In The Stock Market | Podcast Episode #20

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Learn to trade, stocks successfully, learn to profit consistently. I’m Ryan Mallory and on my weekly podcast, I’m going to teach you the in and out of a complex ever-changing stock market. You will learn to trade better trait, smarter and profit bigger.

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Now let’s go trade. Everybody. This is Ryan Mallory doing a another podcast episode with you guys. This is going to be a good topic because we’re coming up on the summer months of trading. And what I like to do with these podcast episodes is to focus on topics that don’t really require me to go through charts.

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And so a lot of that has to do with strategy, a lot of it’s going to be covering topics like trading psychology and no I’m not a psychologist but I have A lot in the stock market over 25 years plus of trading.

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And so I like to consider myself pretty knowledgeable on the emotions. The feelings that come with trading the anxiety, and, and everything else. So, what I want to talk about today, is patience in the stock market because that is something that eludes a lot of us, and it’s eluded me for, for a long time.

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And while I have it today, and while I know when to show patience today, it wasn’t always that case. So what I hope to do is to make this podcast and Avenue for making you to find that patients in the stock market, a little bit more attainable, a little bit more possible.

1:42
And so I’m going to go over some points today and I think that it will help you out. So like I said, we have the summer months of trading upon us, the volume is going to shrink quite a bit and so there’s going to probably be a number of days, unless there’s Some major news that comes out over the course of the summer of kind of like what we saw back in 2011 when we had the European financial crisis taking place during the summer months or you know three or four years ago with with grease back in June, I think 2014 where Greece’s solvency was greatly affecting the stock market.

2:21
So, there are times where you can see some huge spikes of volume during the summer months. But if there’s no major headline risk, you’re probably going to see a little bit. It of a in different market and in different Market, doesn’t mean that you can’t still be profitable. I expect to still be profitable.

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I don’t care. What kind of Market is, I always expect to be profitable and while some months might be easier than others, I nonetheless expect to be profitable. So whether it’s a market with lots of volume pouring in, like, what we saw for the beginning of this year, or whether or not, it’s a market, like what we see, most Summers where a lot of people are on vacation.

2:59
Ins. And a lot of your bank’s just simply aren’t trading as frequently or as much you have you have to adapt to the market that you’re trading with. So yes. In the summer months, the market takes a lot of patience. And my first point here that I want to illustrate is don’t pile up the positions.

3:20
Well let me let me preface that first if you have 50 positions in there all up 10% each, okay? You’re not Dogpile in position. So you just have made some really great trades that are really becoming very profitable coming to fruition and and that’s one thing, but what a lot of people do is fill via trade Buy a stock they’ll trade it and you know, a couple days goes by and they might only be like up or down like a quarter of a percent because the markets just not moving much.

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The SP might only be moving two or three points in a given day, two points up. One day, three points, down the next day, four points up, one the following day, and three points down today after that. So there’s not always a lot of opportunity. And so it becomes a tendency of a lot of traders to keep piling up the positions.

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It’s because nothing’s really going on, that’s noteworthy. So if you get into a stock and it doesn’t really do anything, the one thing you don’t want to do is keep buying more and more stocks until something does something, but because what happens, then is, you have just a whole bunch of stocks that haven’t done anything yet.

4:28
And so let’s say you put ten percent on each position. And you have three or four stocks in the Market at, at the current moment and none of them are doing anything. So what do you do instead of showing patience and not buying anything else until you can get some action out of those or you replace those you instead just keep adding more positions to the portfolio, up until the point where you’re all of a sudden, 100% long and all these stocks and they haven’t done anything yet.

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So what is what is the downside of that? Well, let’s say, because you’re going to say, well, the the markets not doing anything was too. Big deal. But the market can do something, and just because the overall market during the summer months, might be quiet or dull, doesn’t mean that there’s not going to be periods of where the volume does actually pick up and makes a significant move.

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So let’s say, for instance, your long on 10 positions, and all ten positions have less than 1% in profits. And then all of a sudden, the market has a 2%. So off and your long on 10 positions. Well then all of a sudden you’re a bag, holder, you’re you’re really taking a look at, say the average stock drops two percent of your portfolio.

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Then all of a sudden you’re you’re down two percent for the month and that could have been avoided. If you would have just been patient and waited for the market to make it smooth. Because if you would have had two or three positions along, okay? Maybe you’re not taking a bad. Lick your down point, four point six percent, and then And then, what you would end up doing then is start looking at some short opportunities.

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And if the market continues to sell off, you can start to add more short positions. While closing out, those couple of long positions that you had. And then all of a sudden you’re making money to the downside, but if you’re just 100% long, it’s a lot harder to do that because you’re trying to manage a lot of losses.

6:16
In your, what most Traders will resort to is hoping and praying that the market will resolve itself back. Back to the upside. And that doesn’t always happen in the time period that we would like. So first point is, don’t pile up on the positions. Don’t keep adding more positions thinking that more is going to be better in a low volatile.

6:37
Low volatility, low volume kind of market and especially when the price ranges are small. That takes me to the second point. One of the main characteristics of the summer months, you know, and and times when you need to show patience in the stock market is when you’re seeing a Small price range combined with low volume.

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These two things are do not make good trading environments. So if the price range is say on the S&P, 500 is like, 45 points on the day. And it’s just, you’re seeing these very slow quarter point moves up down, up down, and it’s not really doing much.

7:14
And then you see, like, the volume buzz on TC 2000 is down more than 50% on the day or you can just compare it to previous. Days. And at midday, it looks like it only has like a quarter of the volume of the previous day or of the average volume, that’s a good sign of.

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Maybe not go buy anything today and just let the market, you know, Coast into the closing bell there and not try to push it because if the market doesn’t have a lot of volume, then your positions are probably not going to have enough volume to make a move either.

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And so the summer months from about May to about August is when you really start seeing the, the low volume, the small price range, really kick in. And like I said, there’s always the opportunity for headline risk to Do away with that.

8:12
Indifference at the market experience, often times in the summer months, but you want to be aware of it, and then act accordingly, when something happens. If there is a financial crisis over in Europe, and it’s causing the down to drop, 400 points and a single day, okay, that’s something to respect and throughout the whole low volume, low low or small price range.

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Market environment that we typically see in expect to have more volatility instead until the news events clean itself up some. And then my last point that I want to make is when you’re in, when you’re in these positions, if they’re not doing much raised the stops on those positions, keep keep tightening them.

8:51
Some, you don’t want to be stuck in just this never-ending trading range that never resolves itself. You don’t want to be stuck in a trading range that continues to just trade sideways because your portfolio is at risk, your Capital still at risk when you’re in a position and if it’s not doing anything, if it’s not rewarding, you why stay in it?

9:10
So, if after about ten trading days, the stock hasn’t gone anywhere after about, 10 days as a swing Trader, your stock should be doing something for Better or For Worse. It should be doing something and typically, if I’m in a stock for more than 10 days, I’m usually holding on to some pretty good profits at that point.

9:27
So yeah, raise your stop losses. You don’t need to. As each day goes by, you have more information and more price points too. Use when considering where to place your stop loss for the current trading session. So use that information don’t just stick with the current stop loss just because that’s what your original price or stop loss was kind kind of look to find Opportunities of where you can increase it and where it can still make sense for you.

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And then I’ll say this too, and I’ll wrap up the podcast. When you are looking for trades, look for stocks that despite the market having significant below average volume look for the stocks that are actually exceeding their averages.

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That’s that’s your first Telltale sign. Okay, look for stocks that are showing a lot of volume despite a low volume market after you do that. Look for stocks that are making some kind of significant move maybe they’re breaking out of a two-week consolidation pattern while the market still stuck in its own two-week.

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In pattern. Maybe it’s shown a significant bounce off of a strong support level. But what you want to do is you want to look at something that has a lot of volume, that showing a lot of Gusto, that’s showing a lot of interest by the street coupled with a price pattern.

10:47
That obviously is going to give you a good risk reward trade setup but also that it’s showing like a change in the status quo, a change that something is different about the stock, the market might be boring. The market might Not be doing anything, but this stock is and that’s what you want to look for.

11:05
So remember summer months, it’s going to require some patience, it’s going to require that you continue to manage the risk but also that you temper your expectations a little bit. You might not be 100% capitalized all the time. The market might not be trending you know Higher by 100 points each week or each you know a couple weeks it’s going to be a little bit quieter but the trade opportunities are still there.

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You just have to look for them and you have to bid the right time. To get long on on those stocks. So, whatever you do, don’t force any issues. Don’t don’t try to be a person who piles up all the positions needlessly and only just get smoked out when when the market does decide to, finally make a move and recognize the need to sort of sit on your hands.

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When there is low volume and small price ranges, and finally use new price points to consistently. Raise the stops on your trades. Look for stocks that are shown above average volume in a below average market.

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And with price action that shows that the status quo is changing, do that. And the summer is going to be great for you in your portfolio. Thanks for listening to this week’s podcast of Swing trading with Ryan Mallory. I’d like to encourage you to join me in the SharePlanner Trading Block where I navigate the financial markets every day with Traders from around the world.

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With your membership you’ll get a 7 day trial access to my trading room and text and email alerts. So go ahead and sign up by going to shareplanner.com, backslash Trading Block, that’s www.shareplanner.com/trading-block, backslash Trading Block.

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And follow me at SharePlanner on Twitter and on SharePlanner’s, Facebook page, where I provide unique market, and trading ideas every day. If you have any questions, please feel free to email me. ryan@shareplanner.com, all the best to you and God bless.