Afraid To Trade | Podcast Episode #128

0:07
Hey, I’m Ryan Mallory, and this is my Swing Trading the Stock Market podcast. I’m here to teach you how to trade in a complex, ever changing world of finance. Learn what it means to trade profitably and consistently, managing risk, avoiding the pitfalls of trading, and most importantly to let those winners run wild.

0:25
You can succeed at the stock market, and I’m ready to show you how. Hey, everybody, this is Ryan Mallor with Swing Trading the Stock Market and I got a good email for you guys today that we’re gonna be talking about pertaining to the stock market, pertaining to swing trading. We’re gonna tackle this one. It comes from a dude named Bubba.

0:42
Yes, we’re gonna talk about Bubba here. That’s not his real name. That’s the name I gave him because he didn’t tell me I couldn’t call him that, and I try to not give away the real identities of people just because people may not like that. So, unless otherwise given the guidance to give you a certain particular name, I give you guys a name myself.

0:58
So when you send these emails and tell me what name you want me to call you, or I’m gonna give you a really good solid red. Florida name. So, Bubba here sends me a pretty long email. So I, it was actually two different emails. So I’ve had to kind of like parse this thing together so it kind of makes sense.

1:15
But nonetheless, it’s a good solid email. He, he talks about a lot of good stuff here. And really, parts of it is about the difficulty of dealing with the stop losses and the, the The other part of it is being scared to take the trades that you see and then seeing them a couple of days later really flourish.

1:31
And now, as a trader, I, I’ve had that. I’ve dealt with that. That’s, that’s not anything uncommon to traders, but there’s certain things that you can do to combat that, and we’ll talk about that and more on this podcast. So, we’ll start off by saying, hey, Ryan, I love the podcast. And like you said, You can’t cover too much of technical analysis considering there is no visuals that you can provide on your podcast.

1:52
Ah, but there is. And you can do that by going to swingtradingthestockmarket.com. It’s my Patreon account and you can sign up for it and get my daily watch list that I update multiple times a week. I also send out daily setups every day, so you get that as well in the morning. Plus, you’re gonna get updates on the most interesting charts that I find each and every day, as well as updates.

2:12
Each week on the FA stocks plus Microsoft plus Tesla, and you’re gonna get multiple updates each week on the S&P 500, the NASDAQ, and the Russell 2000. So go to swingtradingthestockmarket.com. You’ll get all the information for it and more.

2:27
That’s all I’m going to do about plugging that. I encourage you to check it out. Now, back to this email here. So he says there’s no visuals in the podcast, obviously cause it’s just audio, but I see your podcast as a great way to get in the Mindset, which is what I really try to focus on here because so much of trading is having the right mindset.

2:43
In fact, I would probably say at least 80% of trading is having the right mindset, the right approach to trading, and having the confidence to do the right thing. A lot of people get caught up on that 20% of like getting the right stock picks and everything else, and that’s not necessarily what’s going to define your greatness as a trader.

2:59
It’s all about what’s in between the ears. I’m not talking about IQ or smarts, and if that was the case. Then the best traders out there would be your doctors and your engineers and your physicists. But it’s not. You got people of all sorts of walks of life that have been successful in the stock market, not because they were the smartest people, but they can control the emotions, they could control their psyche.

3:19
They recognize the chart for what it was, and we’re gonna get into that in this podcast here. And he says, teaching us to have the right mindset in this podcast, which really helps filter out the BS that you see in here everywhere else. On the internet. I figured I’d elaborate more on my current situation. I’m 24 years old and have been intrigued by the stock market from a very young age.

3:38
I have a great career as an engineer that I love. Thus, I don’t think I would ever want to make trading a full-time career. That is totally cool, man. And, and it’s good too that you have a good career, that you like your career, and that you’ve recognized what you want out of trading. You don’t want it as a full-time gig.

3:54
Not everybody needs it as a full-time gig, obviously. And most people won’t, so it’s good that you want to do it as a part-time and that’s that’s your aim. That’s, that’s very doable. I started looking into swing trading by reading a book on trend recognition and thought to myself, this is perfect for me, since I had zero interest in doing a bunch of research on company earnings and so forth.

4:13
You and me both, bud. I do not want to do company research at all. There’s plenty of banks that do that. They provide their research in most cases for free. No need to do that, nor do I even really want to read their research, to be honest. I know a lot of people. get caught up in doing both technical and fundamental analysis, and I, I think it’s for the most part, either or.

4:30
It doesn’t mean that you have to completely shut out the news or shut out the, the fundamentals. For instance, I don’t trade through earnings. That’s a fundamental situation that supersedes technical analysis, and I don’t hold through an earnings report because of that. I started off with $1500 in my account to just test the waters and see where that could get me.

4:47
I’m using QTrade, as mentioned above, which has an 875 commission. I think this guy is from Canada. Because I think Canada and for the most part still has commissions, which sucks. I mean, I think they’re gonna eventually have to come around to it, but I do know that there’s people in Canada that are able to trade in some US based companies.

5:05
You gotta look into that. I don’t know them offhand, but I know I’ve seen it in the, on the SharePlanner trading blog people from Canada that are able to get commission free trade. So you’ve really got to look into that, do some research on it. And if you find it out, let me know what it is because, and if anybody’s listening, let me know too, because I would love to be able to pass along.

5:21
This information in future podcasts. If you’re trading commission free in Canada or any country for that matter, I’d love to put that information out there for you guys. I’m not even familiar with QTrade. I’ve heard it mentioned a few times from people who have told me that they’re using it, but I really don’t know if it’s a good platform or not. It sounds like the, the Canadian version of the Robin Hood platform perhaps, except it’s charging you for commissions.

5:41
He says, I then apparently got cocky. I went on a few trades, 20% on Air Canada, thus the reason why he’s probably from Canada. Hey? I then apparently got cocky and lost those profits and more. Classic rookie move, yes. But it, you know, a lot of people have been doing it for a while have that same, same problem.

5:58
Before listening to your podcast, I traded a few volatile stocks that ate away at my capital, which I now realized was more gambling than analyzing the trend. You know what? I had a perfect situation that dealt with gambling in the stock market in a way that was, that was more like a, a blackjack table at Las Vegas or playing the slots or something else.

6:16
And that that involved Roku. So to give you a little bit of a background about it without again trying to get into visuals or anything else because I try to make it as easy to understand without having to look at a chart or anything of that nature. Roku had this nice bull flag that was forming, and then Thursday of last week, it broke out of it, and then Friday it just had this massive gap higher.

6:35
Now, Thursday of last week, I couldn’t trade. There just wasn’t the right risk reward to the trade. And then the following day, it just had this massive explosion to the upside. It basically went from $225 to over $250 a share. A little bit annoyed by that, but then this week, when the market got way higher, a lot of your COVID-friendly stocks pulled back quite a bit.

6:53
Roku was one of them. It pulls back to the breakout level, so I’m watching it. I don’t know if it’s gonna bounce there yet, so I’m not gonna catch a falling knife. The market closes pretty much at its lows of the day. So then yesterday, I decided, OK, I’m gonna trade this stock. If it breaks above 230, I’m gonna get long on it, and I’m gonna have a stop loss around 217-ish.

7:10
OK, I don’t remember the exact numbers. But that was a good risk reward for it. For me on that trade. I didn’t want to make the stop offs any tighter, and I didn’t want to make the stop offs any bigger. That was like the perfect setup for me. Well, it never broke above 230. Instead, it sold off the whole day, broke back below the bull flag and closed slightly below it.

7:27
Now, today it started showing signs that it was gonna gap up and there was a part of me that said, OK, am I gonna keep this trade set up going because it didn’t trigger the previous day, but I’d still like to get into this trade. I think it’s, it’s a, it’s a nice chart to it. But the big problem was is because it went like all the way down to like 206, and the only place for me to get in today would have been like 228.

7:46
So then we’re talking like, you know, close to like 9, 10%. I didn’t want to get into that kind of craziness there, OK, because one, the stop loss placement wasn’t that strong of a stop loss placement. I didn’t like it as much. It didn’t represent much support that if it broke below that support, that would be where I’d get out at.

8:03
It didn’t have any of that. And again, I’m not trying to get too visually focused here. You don’t need to pull up a chart to listen to me talking about this trait, but what did it do? It got a little bit higher. Yes, I could have taken that trade and it might have worked out fine, but it rallied like over 6.8% today.

8:19
And so, there’s a part of me that says, OK, I missed out on that trade. I missed out on that trade, it stinks. But all I was doing is just following risk reward. I was trying to manage the risk, and sometimes managing the risk means that you’re gonna miss out on some really good gains. And that that’s always a sucky part of trading.

8:35
It’s very frustrating because it’s easy to doubt yourself when you do that. You start thinking it’s like, well, how could I have traded that? Oh, then next time you see a similar situation, you’re gonna take the trade, and then you’re gonna get your hide handed to you because you ignored risk. So while Roku rallied without me, it doesn’t mean that I made a bad decision passing up on it, because again, it’s just like when you get stopped out of a trade, a stock’s gonna go up or down after that.

8:57
It’s gonna trend higher. It’s gonna trend lower, it’s gonna trend sideways. And so sometimes we base that whether or not we should have followed our stop losses off of hindsight and what it did when we got stopped out of the trade, and that’s not the right approach because we don’t, we don’t have that luxury to trade off of hindsight. We had to trade in the here and now, and Roku represented a lot of risk on that particular trade and I wasn’t going to take it at all.

9:18
So if I had taken that trade, it would have been more of a gamble, and that’s what Bubba is talking about here is he made 20% on Air Canada and then he started trading at some volatile stocks and it ate away at his capital. Here’s the thing, I don’t want it to eat away at my capital. I don’t want any trade to eat away at my capital.

9:34
Yes, there’s gonna be times where you go through losing streaks. That’s just part of trading, guys. You just gotta pop out of it. I’ve gone through enough losing streaks in my life to where I know eventually I come out of it. I talked to this one guy at a trading convention that I was at one time and I had asked him, I was like, what do you do after you’ve lost 3 or 4 trades in a row?

9:50
And he says, I don’t even know what losing 3 or 4 trades looks like. I’ve never done that before. I’m like, bull. Any case, I did not believe anything that that guy had said to me thereafter, cause everybody has gone through losing streaks. You can’t avoid it. You’re going to deal with it.

10:06
I’ve had losing streaks this year, but you snap out of it. Hey, before I forget too, we got a little whiskey we gotta try, right? I’m Barry in the lead here. This whiskey is from Jack Daniel’s. It’s called Gentleman Jack. I’ve been kind of wanting to try this for a long time. Double mellowed Tennessee whiskey distilled in bottle by Jack Daniel Distillery.

10:24
Lynchburg, Tennessee, Virginia. Trying to read this bottle, it makes you wonder if I’m turning into Stevie Wonder here, man, they make these letters so small, but anyways, it is 40% alcohol that makes it 80% proof. And again, I, I rate this on a scale of 1 to 10. No expert in the field of bourbon, whiskey, or anything else for that matter.

10:41
This isn’t even a bourbon. This is just a Tennessee whiskey. Let’s give it a shot though. Definitely better than the Regular Jack Daniel’s stuff, this is much stronger. Surprise it’s only 40%, holy cow, about knocks me on the floor drinking this.

10:57
It is strong. Mm, need another taste of this here. It’s got a really nice rich color. I love the color on it, but I mean, I think all Jack Daniel’s has a pretty decent color to it. Again, I don’t know if there’s a lot of flavor to it, but it is pretty decent. Smells pretty good, and you know, I have a guy that sent me an email and I’m gonna tell you guys about it.

11:15
I’m gonna experiment with it a little bit more, but he was giving me some tips on how to, how to taste the full flavors of the bourbon, and I’m gonna try that out a couple times and then get back to you in the next episode or one of the next two episodes. Good, good whiskey though. I don’t think it’s great and I don’t think it’s bad.

11:31
I think it’s like a 68 out of 10, 68 out of 10 is what I would give it here. No, I, I really, when I’m, when I’m drinking these whiskeys, I, I, I, I look forward to kind of give me an experience. I don’t know if I’m really getting an experience from this. There’s a lot of whiskeys that will give you that good experience, that good flavor, that good taste.

11:49
But anyways, not bad 68, that’s all I can really give it. It’s not bad, but it’s not great, so it’s kind of there in between. Picking up though with Bubba, well, he has to say. He talks about how he’s trading like $500 and he says it takes a while to actually start seeing profits when you only make 5% on trade.

12:06
Look, you can make profits on 5%. I get, you know, if you’re only trading with $500 that’s gonna be like $25 and then commissions are gonna eat into that. And yeah, that, that, that’s pretty rough. I mean, you’re not gonna make much money off of it, but, you know, if you can do that consistently, you will make money even though the majority of your money is going to be going to commissions.

12:23
That’s why I think it’s important with this whole groundbreaking development among most of your brokerages here in the United States where they’ve gone commission free, that there’s bound to be something that you can find. Find that loophole that you can get in commission free trading because it really does make a difference, even more so from being able to take partial profits along the way too.

12:41
But really don’t, don’t worry about getting rich or getting a lot of profits. Just worry about executing good trades. If you start executing good trades consistently and regularly year after year after year, you’re going to make those profits. So don’t dollar watch. And when I say dollar watch, and that’s when you’re starting to be more concerned with how much money your account’s making rather than following your trade setups.

13:00
When we start following what our dollar amounts are on, on winning trades and losing trades, we start personalizing that and start making decisions that have nothing to do with the stock market, but more so with our own personal lives. But here he, he brings, and this is why I want to bring it home, and this is really the gist of the whole episode here, and that is about being scared to trade.

13:18
He says, I find myself lacking a bit of confidence before a trade. It always seems like I’m getting stomped out towards the end of the day, I’m taking these 4% losses, and I don’t want to lose the little capital that I have. It’s currently at $1200 even though the charts look good, I’m afraid to take that trade.

13:34
So I also even found myself being correct about my analysis a day or two later when the predicted trend occurs. Any advice you can give me for this stage in my career? Well, yes. The more you trade, the more confident you’re gonna get. And you know what, most traders do blow out accounts.

13:49
It’s better to blow out a small account than a large account. Now I’m not saying go be reckless and blow out your account and lose your money. I’m never saying that, I’m just saying that you’re not gonna be considered a failure in trading if you blow out an account. Again, try not to. Don’t, don’t go blowing out an account if you don’t, you know, at all.

14:07
Don’t, don’t do that. But trading is about a process and it’s good that you’re starting with a small amount. It sucks that you’re doing that and having to pay commissions because, again, in the United States, I’m not trying to bring this home back to the United States even though about 74% of you guys are from the United States. I’m trying to be respectful to the 26% that are not.

14:24
Starting small when it’s commission-free is, is the way to go until you get your sea legs. And then the more and more confident that you get and the better that you get, the more consistent you get, that’s when you start adding more capital to your trading. And I’m not trying to marginalize $1200.

14:40
I’m not. It’s significant and it’s important, and it’s important to Bubba here. But you can paper trade for a long time, but it’s never going to give you the full experience of trading with your own capital. You’re not gonna feel the emotions, you’re not gonna feel the gravity of a bad trade, you’re just gonna move on to the next trade.

14:56
You’re like, oh, OK, I’ll reset my paper trade account. You have to trade with your own money in order to feel what it’s really like to be a trader. And that’s what I try to do in so many of these podcasts is really get you in the right mindset as a trader when you’re trading your own money because there’s so many emotions that are involved in it.

15:14
But you have to come to a point too where you’re gonna say, am I gonna trust my analysis or am I not? If I’m wrong, does that necessarily mean that I’m bad at analyzing trades? No, it doesn’t mean that at all. And he talks about how, yeah, I get stopped out all the time before the end of the day. Well, him being new to trading, that could just be a trend with the market right now.

15:32
You’ve seen a lot of end of day sell-offs that have taken a lot of people out of stocks. I’ve been stopped out of trades as a result. Sometimes it just deals more with the market conditions than anything else. If we’re rallying in the morning, which we’ve seen a couple of times this week, and then we’re selling off in the afternoon, then yeah, you may be getting stopped out, but it also got to ask yourself, what kind of stocks am I trading?

15:51
Am I trading stock that has a beta of like 2 or 3? And when I’m talking about beta, it’s like how much more does a stock move in conjunction with the market. So if the market goes up 1%, is this thing going up 4 or 5% every time on average? Or if it’s going down 1%, is it going down 4 or 5%? You may be trading with too much beta. And if that’s the case, then you need to, you know, hone in.

16:08
Those parameters and maybe reduce the beta on your trades. Again, I’m not trying to get too technical. Beta, I’ve already explained that, it’s just simply figuring out how much volatility there is associated with an individual stock relative to the overall market. But try to cut down on volatility if that’s whipping you around a lot.

16:23
Also, it doesn’t hurt to do some paper trades, but you can’t live in paper trade territory. That’s just bad. It’s like wanting to know how to swim, but you’re refusing to get into the water. You got to get in the water if you want to swim and doing it with a small account that gives you the opportunity to make mistakes without, you know, setting you back for life.

16:41
But it sounds like Bubba’s problem is not that he doesn’t know how to chart, that he doesn’t know how to find the trends or the analysis, but he just needs to have more confidence in what he’s doing. And trading is so much about confidence. You have to put yourself out there. As a trader, you have to take the trades that meet your parameters for what’s acceptable.

16:59
And if it’s causing you still too much anxiety, then reduce your position sizes. It’s a little bit harder as you get into a smaller and smaller account with commissions, but if you don’t have commissions, well, you just keep reducing it until it’s with a dollar amount that you’re comfortable with. Look, in a commission-free environment, if it’s trading with $10 and you can get fractional shares, by all means, that’s what I would be doing if I couldn’t handle it, and you have to start somewhere.

17:21
So for Bubba here, he’s got to start somewhere. He’s got to start building. So, that’s gonna do it for this episode. I encourage you guys, make sure you’re going to the platform that you’re listening to it on. Either subscribe or leave a review. If there’s an option to leave a review, please be sure to do that. 5 stars mean the world to me.

17:37
It continues to let me to put out these episodes multiple times a week. I love doing this. It’s the most favorite thing that I do each and every week. Send me your emails just like Bubba did here, and I will be sure to get to them. When I get to a point to where I can’t get to them all, I’ll let you guys know.

17:53
But right now, I can get to all your emails, OK? And I want to thank you guys too for October, 62,000+ people listening to the podcast. That’s awesome. I really, really do appreciate that. If you have any questions, send me your emails ryan@shareplanner.comF. Thank you guys. God bless.

18:08
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 7 day trial and access to my trading room, including alerts via text, email.

18:25
And WhatsApp. So go ahead, sign up by going to shareplanner.com/tradingblock. That’s www.shareplanner.com/trading-block, and follow me on SharePlanner’s Twitter, Instagram, and Facebook where I provide unique market and trading information every day.

18:41
If you have any questions, please feel free to email me at ryan@shareplanner.com. All the best to you and I look forward to trading with you soon.