Lessons Learned From Trading | Podcast Episode #500

0:00
Hey everybody, this is Ryan Mallory with shareplanner.com’s Swing Trading the Stock Market. Today’s a very special episode because it marks my 500th episode of doing swing trade in the stock market. So I started this this podcast back in 2017.

0:17
I was kind of sporadic with it, but I stuck with it over time. I mean, I sometimes I would do one, sometimes I would do 2, sometimes I would do none at all. But I stuck with it. And I went from, you know, having, you know, 10-15 people listening to each episode to now, last I checked, there was about 7 million people that have listened to this podcast over those 500 episodes.

0:38
So it’s been a really cool experience. I’ve gotten to know a lot of you that have listened to the show faithfully over the years and I really do appreciate that quite a bit. And So what I like to do with these milestone podcast episodes in, in this particular one being the 500th 1 is to talk about the lesson that I’ve learned since the previous milestone, which would be episode 400.

1:00
So we’re talking about the lessons learned since episode 400 here and now. Back in the day when I did these podcast episodes, I would, I would also talk about my whiskey that I was trying this week on or on that particular episode and I would rate it. And I’ve gotten away from that a little bit just because I don’t have a lot of storage for those things anymore, but I do have one for today.

1:20
And so we’ll be talking about that towards the end of the show. So the lessons learned, the first one is, is that I thought that we could never have a repeat ofthe.com bubble. I like I would never see that kind of craziness enter the market. everagain.com bubble was one of the wildest rides that I had ever seen in the stock market.

1:40
I was very young at the time. I got started when I was 11 years old. That puts me back in 1991 when I got started in the stock market and I remember the.com bubble, you know, essentially popping in 2000. And I was much older at the at that point in time, I was, I was about 20 years old, but that right had been incredible.

2:00
I had made a lot of money for for that period of time trading with just $5000. I turned it into fifty $50,000 before I lost a lot of that to the to the bubble. Now we’re seeing ourselves in the same exact thing again. But it’s not just like the.com bubble, it’s much biggerthanthe.com bubble.

2:20
It’s it’s one of the biggest things I’ve ever seen seen in the stock market. Actually, it’s the biggest, it’s the biggest thing I’ve ever seen. Just such a huge bubble. Now, it also takes me back to not that I was around at this time, but I do like the history of the stock market. And one of the more famous bubbles of all time was Tulip mania.

2:38
And this is a few 100 years back where people were spending like, and today’s currency would be like spending $400.00 on a Tulip. People were spending astronomical amounts of money on tulips. It sounds crazy, but you Fast forward today, we’re not too much different I mean we are getting all hyped up about this AI stuff and we don’t really even understand it for all we know we might be creating our demise and doing this we’re likely to lead to enormous amounts of job loss and we’re just all OK with it.

3:08
Hey, if it helps us write our term paper a little bit better or helps us, you know, respond to a text message or create a funny mean, by all means, let’s let’s keep this AI engine rolling. But we’re in a similar mania. We actually so many people believe that these are like the artificial intelligence is like real intelligence, if not better.

3:31
Instead, what what we have is this just valuations entering into the market, whether it’s in video or Palantir or AMD that are just at ridiculous levels. And yet we keep buying the stock. There is really no shame among traders any more about buying stocks at ridiculous levels, expecting to go to even higher levels of ridiculousness.

3:54
So not only did I thought think that we would never see another.com bubble, but I definitely never thought we would see something equivalent to Tulip mania. And that’s kind of like what we have right here now.

4:18
Another lesson that I learned stop losses, not not how to use stop losses, but just the way that I view them and the types of stop losses I probably won’t be doing much of going forward. The 1st is putting stop losses below the the day’s lows or the previous day’s lows. There’s just not a lot of support there when you do. That doesn’t mean that there isn’t reason to do it at certain times in certain places, it was certain stocks. But by and large, putting a stop loss just below the previous day’s lows doesn’t usually set you up for a high probability trade setup.

4:40
Because if it just hit the day before, it’s more than likely has a good, or at least it has a decent chance of hitting it again the following day. Because the markets throughout the day intraday, it’s going to have some wild fluctuations and movements.

4:56
And there’s nothing to say that it can’t take out the lows from the previous day and in the process stop you out of that particular stock that you’re trading. So getting away from that because I’ve just noticed over time that my my win rate is not as good when I’m doing that, even though sometimes I feel like that it’s a very good support level, it doesn’t always work out well.

5:15
And then for the most part, getting away from putting stops below the lows of the day, that usually does not help very well unless you’re at a very momentous moment in the market where we’re hitting a market bottom following a huge sell off. Perfect example of that would be back in it. I think it was April 7th when we had the whole tariffs and, and the market was selling off because of liberation day and everything else.

5:38
And it took about about a solid month or so to finally reach that bottom. And when we did the, the market went up like 8 or 9% that day. I got in on that trade and I don’t remember for sure, but I’m, I’m, I’m pretty certain that I would, that I would have put my stop loss below the lows of that day.

5:56
But that was also the market was putting in just an incredible move and there was really no other place that you could do. And if it traded back below that level, you know that you wouldn’t want to be in that trade anyways. So that’s, that’s my thoughts on the stop losses, but I also don’t really refer to them as stop losses anymore.

6:16
The, what I also try to do is refer to them as key levels of support or key trade support levels. Why do I do that? Well, often times when we were looking at stop losses, we’ll say, well, I’ll just place it here. It’ll be 5% below where I got in and we, you know, wipe your hands off and we’re done with that.

6:32
Hey, I’m managing the risk. But really our stop losses should be below key trade levels, you know, so key support levels, we want to identify where those key levels of support are and we want to put our stops below those levels so that if they are stopped off, stopped out, you can have that confidence, that assurance.

6:51
That’s like, look, it went below a level that I had no desire to keep continuing to hold through. Cross that red line, I’m out of the trade, I’m moving on. And so it gives you a little bit more of a Peace of Mind as you’re trading now. Another thing that I have had to get more comfortable with is the fact that the markets become more like a casino to so many traders.

7:12
I noticed that shift most predominantly taking place after the whole COVID sell off and when everybody was on lockdown. You had no sports. People started gravitating to the stock market. Yet people like David Portnoy who is really promoting the different stocks he was trading, sucked in a lot of people into the market.

7:28
Better for worse. I don’t know, but I’ve seen far too many coincidences. Yes, coincidences of people trading like it’s a casino, it’s like a penny slot machine. It’s like, well, I’ll give this stock a trade.

7:45
Everybody’s buying. Oh, it’s down 5%, got to load up on that one. And then it goes down 10%. And then they have no like risk management skills. They don’t know what to do when it doesn’t go their way. There’s a lot of people using prop firms again, which I always say is a bad, bad idea. I have, you know, pest control people coming in and giving me stock tips and, and advice and tell me how they’ve got this market figured out after only trading stocks for two months.

8:09
It’s really, really turned into a casino for so many traders. There’s not a really a thought or a consideration that goes towards risk management or, or how are you going to manage the trade before you ever even get into the trade, which is something that I preach quite often.

8:27
But many people now believe that the stock market is simply never going to go down. They just think that it always buy the dip again, you, you have somebody like David Portnoy says the, you know, the stock market never goes down or never stays down. You always buy the dip and a lot of people have bought into that.

8:43
They’ve taken it as easy advice and, and really takes the thinking out of trading. Another thing is, is that they will tell you as well as like, well, everybody’s calling for a market top. Well, you got to remember back in the 90s when we were talking about the bubbleearlierthe.com bubble, there was a probably a lot of people back then calling for a market top as well.

9:06
And probably people who got out of the market right at right, you know, near the top because they were using risk management. But what you didn’t have a social media where people could express those opinions and express those views. And as a result, you didn’t really know that there was people out there calling for a top. You’re not going to have the media call for it.

9:22
I mean, when is the media ever called for a market top? So that’s that’s the difference between then with that kind of a bubble and now even with 2008 Great Recession, you didn’t have a ton of people that were on social media exposing those views.

9:39
And the main reason for it was, is that you didn’t have as heavy of a presence of people on there. And in particularly as it, you know, with the stock market, it wasn’t like people were logging on to Myspace back in the day to tell you what they thought of the stock market. Maybe somebody was, but I sure heck wasn’t. And I started SharePlanner in 2007.

9:57
I don’t know if Myspace was still around at that time or what, maybe some form of it. But the other thing that that definitely plays a huge role in the stock market is passive investing. And that’s essentially like your contributions from the IRA constantly.

10:14
Dollar cost averaging that’s become popular with a lot of of traders is, you know, they’re always dollar cost averaging into their favorite stocks, but they also do it into their retirements too. And when you have employment, it’s been, you know, low as, as it has been over the past 15 years, you’re going to have a lot of passive investing.

10:32
And these people, if they’re staying at the same places, they’re getting bigger and bigger raises and so forth. And as a result, there’s more money flowing into the market. So there’s always this flow of market. That’s why the market can’t sell off unless there’s heavy volume because it needs heavy volume in order to overwhelm the passive investing that’s taking place each and every day.

10:50
And one of the things that I’ve also done since episode 400 is launched, my flagship course, the self-made trader. Now make sure to check this out. This is my biggest accomplishment probably as as not so much as a trader, but just with SharePlanner.

11:08
I mean, as a trader, you’re looking at wins and losses and how you manage the profits. But with SharePlanner and, and since I started it back in 2007, I would say this is like the thing I’m most proud of and that is the self-made trader. It’s my life’s work. It encompasses all the lessons that I learned from the stock market over the last 30 years of trading.

11:26
It’s really, really aid an awesome course that you can take to be able to learn how to swing trade the stock market, how to manage the risk, how to know when to take profits, how to develop a watch list.

11:43
This how to develop your scans to be able to recognize patterns and candles and so forth. And how that all applies to getting in the trade, managing the trade and closing out the trade. So check that out self-made trader. You go to shareplanner.com. You click on Academy and you’ll see all the courses. Check out the self-made trader right there. I think you’ll really, really like it.

12:00
Now another thing that we had to get really used to and and it’s not that it’s just new over the last 100 episodes, but it’s become much more predominant in the everyday trading and that is government intervention. The government does not want the stock market to go down. For one, you have a lot of politicians that are trading in the market each and every day and they are getting filthy, filthy rich.

12:22
You think that they they want that cash cow to go away? Absolutely not. And you think they want the stock market to go down. No way. Now, will there be times where the market does go down? Sure. But by and large, they do not want it to go down. You also have, you know, even the president right now.

12:39
I mean, you know, President Trump will talk about the stock market all the time and and presidents in general, whether it’s Trump, whether it’s Biden, they see their success now tied to the stock market. If the stock market’s going down, their chances of re election goes down with it.

12:55
So they have an incentive to keep the stock market as high as it possibly can be. You also have a lot of just blatant intervention, whether it’s from the feds or whether it’s, you know, pulling back off of tariff threats. And then you’ll say, it’s one thing it takes the stock market and you come back the next day and say, I was just kidding, you know, oh, we’re, we’re going to ignore that.

13:18
And then the stock market rallies back. There’s a lot of people that are going out into on TV, whether it’s CNBC or Bloomberg, and they’re talking up this market as much as possible. And it’s not just the president, it’s not just members of Congress, but it’s members of the Fed as well. They’re constantly putting their opinions out there and it’s causing a lot of more volatility as a result.

13:38
Now the, the bigger question too is, is I often wonder if the, if the government views the market is too big to fail, they can it sustain a 30 or a 40% crash? Can it sustain another 2008? I think you’re going to see a lot of pensions get wiped out because their exposure towards the market is probably greater than it has ever been.

13:57
You’re going to see a lot of funds get completely wiped out and a lot of traders and investors get completely wiped out if we have a 30 or 40% pullback because they’re so leveraged, they’re so exposed to the market’s whims.

14:20
Now, risk reward, I talk about this all the time in my pocket episodes, but I feel like it’s taken. I didn’t think it could get more important than it already has, but it does. I mean, we often times will look at risk reward as whether or not to get into the trade, but it really has to to dominate the trade as well in terms of where you’re taking profits at this, where you’re taking profits at not so much a good dollar amount that you’re taking profits on, but doesn’t make sense for a reward risk ratio.

14:39
So if you’re getting into a stock at $100 and you have a stop loss at 95, well, if it goes from 100 to 102, you’re up 2%. Does that mean that’s a good place to take profits? Probably not because you’re not even getting a full 1 to one return for how much you risk.

14:57
So like when I get out, I want to always try to get out with at least a 1 to 1, ideally A2 to 1. And then that, that next lot is going to be the two to one at least. And then after that, what I’m really trying to get is like 3-4, five or six to one to really expand that, that reward multiple relative to risk.

15:18
So getting out that first third, while sometimes it feels good to take some of that risk off the table, it doesn’t make as much sense if you’re you’re risking $5 only to get $2.00 on that first first third or first quarter or even half of the trade.

15:41
So what you want to avoid doing in that regards is not making trade decisions about, oh, this feels like a good place to take some profits. Oh, it’s gone up a ton. I should go ahead and get out of it. Now. There is doesn’t mean that there isn’t like changing market conditions where you’re like, OK, I need to reduce my exposure across the board. And I’ve done that. I’ve done it even recently. But by and large, you want to make sure that you’re not going into trades and just booking profits where it feels good to you and not considering the reward that you’re booking it out relative to the risk that you’re taking on.

16:03
So shorting stocks, what my, my views are probably getting more and more conservative on shorting stocks. I, I don’t believe as much about getting short individual stocks anymore. It’s been predominantly ETS. That doesn’t mean that I won’t ever take a, a short position individual trade, but it needs to have a low level of risk.

16:24
That means I don’t want to get into a stock that even has a hint of a possibility of being bought out that has the hint of, you know, a, a huge gap higher. I’d rather spread that risk out as it pertains to shorting across like an ETF like shorting SPY or buying SH, which is the inverse ETF of shorting SPY.

16:44
So you can do SH or SDS or, or or, you know, SQQQ, but I really don’t want to trade individual stocks all that much. So those are the lessons that I’ve learned since episode 400, and it’s been an incredible journey.

17:00
I’m halfway to my goal of 1000 episodes. I don’t know how many years it’ll take me to get there, but I still hope that you’re along for the ride when I do get there one day, Lord willing. But what I have to do, though, is celebrate this 500th episode with A little bit of a bourbon here.

17:16
It’s kind of late, so I’m not going to drink too much of it. But this one is called Penelope Bourbon. It’s a straight bourbon toasted whiskey. This is 100 proof. So I always like that 100 proof. I always think that’s like the sweet spot of whiskeys get too much more than that. It starts to get hard to digest, but friend gave me this bottle said hey, you got to try this stuff out.

17:37
So I said hey, I’ll try this out on the podcast and give an honest review of it. So let’s try this joker out. See what we have here. I had done one of these in a long time. It says it’s toasted, so maybe it smells toasty, right?

17:54
Oh, it does smell good. It’s kind of like a man, I don’t know that’s it’s like you like strong cherry flavors, man. I don’t know that it almost has like a little marshmallow smell to it. Man. It’s really good at that. Kind of takes me back that oh, that’s, that’s good.

18:23
Like I said, don’t want to get more than 100 proof, but man, that is good, really good. Maybe you shouldn’t do it on the podcast because I’m having a hard time talking and drinking that at the same time. But really good. My eyes are watering. Any case, if you enjoyed this podcast episode, and I hope you did, make sure to leave me a five star review on whatever platform that you’re watching me on.

18:47
If it’s on YouTube, make sure to like and subscribe. Also, make sure to send me your emails ryan@shareplanner.com, go to ryan@shareplanner.com or send it to ryan@shareplanner.com. Let me know your questions, what you’re struggling with, what you want some clarity on.

19:04
Tell me your stories. I want to hear about it and more than likely you’ll get a podcast episode out of it. And make sure to go to shareplanner.com. Check out the self-made Trader by clicking on the Academy title up at the top. Finally, remember Jesus Christ is the way, the truth, and the life.

19:19
Nobody comes to the Father except through him. Thank you and God bless. Thanks for listening to my podcast, Swing Trading the Stock Market. I’d like to encourage you to join me in the SharePlanner Trading Block where I navigate the stock market each day with traders from around the world. With your membership, you will get a seven day trial and access to my trading room, including alerts via text, e mail and WhatsApp.

19:41
So go ahead, sign up by going to shareplanner.com/trading Block. That’s www.shareplanner.com/trading-block and follow me on Shareplanners, Twitter, Instagram and Facebook where I provide unique market and trading information every day. You have any questions, please feel free to e mail me at ryan@shareplanner.com.

20:01
All the best to you and I look forward to trading with you soon.