Don’t Get Cocky | Podcast Episode #120

0:00
Hey everybody, this is Ryan Mallory with Swing Trading the Stock Market here, and I am excited about this email that we’re gonna be talking about today. It’s a solid email, man. This guy has some really good questions. I think that no matter if you’re experienced or not experienced as a trader, you’re going to deal with this issue and it’s an issue of cockiness.

0:20
Being cocky in the stock market is one of the worst things that you can do to yourself because when you start thinking that I know what I’m doing here, that’s when the market humbles you. It happens to me. It happens to everybody. I think the mark of an experienced traders when it probably happens to you less and less and less, and we’re gonna get into this trader.

0:36
It’s really nice, open and honest email here, man. This guy, I think he’s from Sweden, which is kind of cool too. I get these things from all over the world. I got an email just today from some dude in Norway, man. It’s, it’s great because not only am I just getting like experiences from traders in the United States, but I’m getting experiences from people who trade in different markets than what I’ve ever even traded in.

0:57
So it’s really cool to get that experience firsthand and hearing people’s stories because technical analysis and swing trading transcends the markets. Whether you’re trading in Hong Kong, whether you’re trading in Australia, Norway, Sweden, or the United States, it doesn’t matter, it all works together.

1:14
So today’s bourbon of choice actually is not a bourbon. It’s a Japanese whiskey. And I haven’t really delved too much into Japanese whiskey just from a personal standpoint. I tend to stick with the bourbons, but the guy emailed me and says, hey, Ryan, I got a really good whiskey, you gotta try it. If you like things outside of bourbon, let me know.

1:30
I’ll send it to you. I said, hey, send it to me. I got it this week. I’m really excited about it is, I don’t know if I’m saying it right. So if I’m saying it wrong, you guys can correct me, but it’s Hibiki S Santori Whiskey. It’s a Japanese harmony, a meticulous blend of the finest selection of whiskey.

1:47
It’s 43% alcohol, 86% proof. I think I’ve maybe only had like one or two whiskeys that were Japanese, Japanese whiskeys. In my lifetime. I haven’t had a lot. I have a friend that likes him a lot, so when I go over there, I’ve had one or two of them.

2:03
He said this, this was a pretty good choice. So I, I’m gonna give it a shot here, man. This guy, he was really pumped about me trying this, so I’m, I’m excited to do it too. I’ve been, I got it a couple of days ago and I’ve been looking forward to doing this. So let’s, let’s get after it. Again, it’s Japanese whiskey and biki.

2:19
I think I’m saying it right. I’m just kind of like freehanding it there, right? I think that that’s more than probably 2 as I covered the ice cube. It’s looks pretty good. Let’s give it a shot here. It’s like, it’s like a pretty thin color. It’s almost like see-through. Man, that is smooth.

2:35
Oh, that’s smooth. I had a friend that said, hey, if you don’t like it, Let me know. I’ll I’ll take it off your hands. I’m not giving it away. That, that, that’s good. Uh, this is really good. I like it. Oh, this is a solid choice right here. Look, if you have, if you have some whiskeys that you want me to try, I’m not gonna turn them down.

2:52
You can send them right my way, man. I will, I will try them out right here on my podcast. I love these things. Just, uh, direct message me, email me, whatever. There’s like a million ways to get a hold of me. Just, just get a hold of me. And, uh, I’ll try it out, but this This, this is pretty good, man. Golly.

3:08
I hope it’s, I mean, it’s 43%, poured myself a pretty, that was a pretty heavy pour. I give it like a 4-3, man. 4-3 out of 1 to on a scale of 0 to 5, I give it a 4-3. That is really good. I, I, I mean, I wasn’t sure if I would like it as much as most of the bourbons that I like.

3:25
This is right up there in the same category as some of my favorites. It is really good. Good again. This is something that Jared from last week, if you remember his email, sent it in to me. Hibiki Santori whiskey. Man, he, he is on top of the world with this one, man. This is good. This is good.

3:40
I, after I finish this bottle, I’m gonna go get myself another one. I’m not gonna finish it by tomorrow, I promise, OK? I mean, no, I’m not going to, but. This is good, this is good stuff. Thanks, Jared. That’s, that’s great. So today’s email. That I’m going through.

3:57
Do I come across as like a, a Dear Abby person when I’m doing this stuff? I hope not. I’m not trying to come across as a Dear Abby, but your emails are guys, they’re great. This, he sent me this one on October 4th. So if you’ve got some emails that you’ve sent to me and I haven’t done them, and you send them to me before October 4th, send them to me again.

4:14
I’m, I’m a little bit more organized now. I wasn’t so much organized in the past with these emails. I was just trying to like remember where I had them in my inbox. Now I got a separate folder. They get Sent right into that folder. I always have them, so I’m just working my way back. So if I didn’t get to yours, resend your email to me and then I’ll get to it.

4:31
I, I promise. So, um, and if you wanna send me a bottle of whiskey, that helps too. That’ll that’ll get you right to the front of the queue every time. That’s good. Oh, by the way, too, I set up an Instagram account. A couple of you guys asked me to start doing these things and reviewing them with a video, and I did.

4:48
It is, uh, jeez, I just start, I just set this thing up. It is at SharePlanner or whiskey on Instagram, so check that out. It’s pretty cool. Uh, I’ll be doing some of these videos here. You’ll be able to see it in. The background on my first video, you’re gonna find it’s like, holy cow, Ryan, that, that looks hideous.

5:04
Uh, yeah, I got a football game playing in the background. Uh, I got a knife sticking out of the table. I don’t know why there’s a knife sticking out of the table. Maybe that’s just the Florida man in me, could be. But again, this guy’s email comes from Sweden. So he starts off and says, super good podcast, love it.

5:20
He says, thoughts on single malt whiskey. So, yeah, the scotches, I, I, I haven’t really done too much of the scotch. I’m not against scotch. I’ll drink scotch. I like scotch. Uh, I, I tend to prefer the bourbon more so. I’ve never tried these two brands that he mentions here. He talks about, uh, McAllen 18 and, uh, Lagavolin 16.

5:39
I bet you I butchered that second name, Lagavolin. I don’t know it. I really don’t. I know, I know some of you guys are probably listening to me right now you’re like, oh my gosh, what is wrong with this guy? I, I’m, I’m sorry, I don’t, I don’t know these, but uh I know I looked them up on Google just to see what they were, see if I actually have come across these bottle for.

5:59
The McAllen, I’ve, I’ve come across that 1 may have had it. I may have had, I think I might have actually, now that I think about it, I have a friend that he’s a little bit more on the uppity up and he, he lives and dies by the scotch. He brought some over one time. I tried it. I, I think that’s what it was.

6:15
I don’t, I don’t know if it was that exact scotch, but I do know it was that brand. It’s pretty good. Hey, if you want me to try it, send it my way. I’ll, I’ll, I’ll put it on air. I’ll, I’ll drink it. I’ll let you know what I think, man. I, look, If it’s a whiskey, I’ll drink it. I like all those whiskeys. I like having them. Look, as traders, and I think I’ve said this before in another podcast episode, as traders, it’s, it’s a hard world that we operated.

6:38
I mean, you just think back to this past week. I mean, we thought everything was going good on the market. If you’re a bull, if you’re a bear, it went really good. Uh, by the end, but, you know, throughout the day, the market was going and trending higher and everything felt good and all of a sudden, a tweet came out about the stimulus stocks being shut down and the whole stock market flipped out 75 points to the downside.

6:57
It sucked. But that’s the world we live in. So yeah, you, you gotta, I don’t know how you’re a trader and you don’t drink bourbon. Um, you almost have to something of choice, something of choice, but you gotta take a little bit of the edge off at night. It doesn’t mean you go out and become a raging alcoholic. That’s not what I’m trying to say at all here. But when you’ve had a rough day, it kind of helps.

7:14
Or if you’re doing a podcast, it’s really fun to drink and do a podcast at the same time. So yeah, I, I have not tried these yet, um. I’m open to trying them, so lack of a line. I have a feeling I’m saying that wrong. And then McAllen. Anyways, he starts off by saying, I started trading in January this year, quite a year to start studying price charts.

7:35
You’re not kidding. This, if you started trading this year, especially if you started before March, you have seen an incredible array of price action, because there’s a lot of people who started trading in March and to no fault of their own. Of course, I call them Robin Hood bros because a lot of them went to the Robin Hood platform, which is funny because a lot of them are attracted to Robin Hood because they’re free commissions, but everybody has free commissions now, so there’s no point in using Robin Hood, except for the fact they have like fancy cool looking charts that they don’t offer you anything and Addition or even close to like what Think or swim or Schwab or Fidelity probably offers you, but nonetheless, people like it, they get like a free stock or something when they’re signing up.

8:19
It’s like one share of, what is that gonna do for you? One share? And it’s probably like in most cases like a 2 or $3 share. I don’t know that for sure, but I’m guessing. If you started before March and you started in January, God bless you, man, because when you started off in January, the market was on a tear.

8:36
Up until like February 19th, I think it was, the market was going up almost on a daily basis, kind of like what we’ve been seeing a lot of, you know, since the March bottoms, but It has been going crazy in January and February.

8:51
And then all of a sudden the whole floor fell out. So all of a sudden you have this euphoria of like, OK, stock market trading isn’t all that bad. It just keeps going higher. And then if you have like the life ripped out of you in, in February, late February and March, only to think that OK, the world’s coming to an end and then all of a sudden we just rip higher in the middle of a pandemic to new all-time highs, way beyond new all-time highs on the tech sector and in the NASDAQ.

9:14
As well, S&P 500 went to new all-time highs, and like half of America is like still shut down. Go figure that one. But nonetheless, I mean, you think about it, if you traded since January, you have probably compacted 5 years, 6 years of trading experience into the last 10 months of trading.

9:34
You really have. I mean, there’s a, there is a lot to learn. I do not think that this has been an easy trading year by any means. I would say over the last I mean, I’ve been trading since I was 11 years old. Now, when I was 11 years old trading, I wasn’t like good at what I was doing. I was pretty oblivious to everything when I was trading it.

9:49
I, I didn’t really kind of come into my own probably until like 2004, 2005 when the stock market started becoming a lot more understandable to me because I didn’t graduate high school until 1999.

10:05
I turned 40 years old this year. So I started pretty early on after I got out of college and. In terms of really applying myself to the stock market from 11 years old up until I was out of college, I was kind of oblivious to it. The reality really didn’t hit me until 2000 when the stock com bubble blew up.

10:23
That was when all of a sudden I realized, oh man, I can lose my shirt in the stock market. I got to start figuring out how to practice risk in the stock market. So that was a really big learning experience that 200 to 2003, and that was like, it really felt like a long time, like the stock market was never gonna bottom. It took like The better part of like 3 years, more than 3 years for the stock market to bottom, it was crazy.

10:44
We talk about 2008, where the stock market, you know, the Great Recession, it bottomed out and we’re like, man, that was an awful year. And then we think about COVID, where the stock market dropped for almost a month. Yeah, it was pretty crazy how much it dropped within that time period, but still it was less than a month.

11:01
But when you look back at like the dot-com bubble, it dropped for like 3 years. So it didn’t go anywhere for 3 years. But I don’t know. I, I, I started talking about that stuff and I don’t even know why I started getting onto that. But I was just basically saying that this guy who started in January’s probably put about 5 years, um, into his trading experience by just trading since January.

11:23
Oh, I know what I was gonna say. I was saying that, OK, I’ve traded all these different years. I’ve traded the dot-com bubble. I’ve, I’ve traded the 2008, 2009, great recession. I’ve traded the quarter 4 sell-off. I’ve traded the, the financial meltdown over in Europe back in what was that like 2014, 2015.

11:41
I don’t remember exactly when that was, but I’ve traded a whole bunch of them. I really felt like up until this year I, I’d seen almost everything in the stock market. No, no, I haven’t. I mean, and maybe that’s part of the getting cocky part that we got to address today.

11:58
But I think this is the most challenging year. And it’s not that I’m like getting hammered or anything by the market, far from it, but it is still very, very difficult because you have this pandemic, you have social unrest, you have record unemployment, and you have all these other factors, horrible GDP in the back of your mind while you’re trying to stay bullish on a stock market.

12:19
It’s, it’s really messes with your mind. You have to, you really have to disconnect yourself from reality to trade this market, and that makes it hard. So, for, oh, and he asked me to call him Lorenzo. That sounds Italian. Now, the guy’s from Sweden, and again, You spell something out on paper.

12:38
I’m, and I’ve never seen the word before spelled out. I’m probably gonna mangle it. Even if I’ve heard the word before, I’m probably gonna mangle it. It’s kind of like George W. Bush in that regard. If you remember him, whether you thought he was a good president or a bad president, guy could not pronunciate worth a crap.

12:54
He was horrible. I’m the same way. This guy tells me he wants me to call him, I think it’s Lorencio, L O R E N C E O. I like it when you guys give me names too. I’m still dying to use Jethro. I think, I think I got somebody out there that’s a candidate for Jethro.

13:09
But Lorenzo, what, what confuses me about it is that he is from Sweden and he wants me to call him Lorenzo. So I would kind of think like, I, I try to give you guys Florida man names, right? Like Jethro, Judd. Beatrice, stuff like that. This guy’s from Sweden, he’s telling me Lorenzo and I’m thinking Italian like Lorencio.

13:28
I don’t know, maybe I’m wrong on that. Oh man, this is good stuff. I like this Japanese whiskey. I’m drinking this stuff tomorrow night too. I was, I had an old fashioned before I started this podcast, so maybe that was a bad idea. I got a good old fashioned.

13:44
That’s part of the problem when you can make a really good drink is that you drink your drinks. OK, anyways, I’m, I am, man, it’s getting hard for me to dig into this email, so I, I have a feeling this is gonna be a long podcast, so forgive me if that’s the case. So he says, I’m a full-time software developer from Sweden.

14:02
I have a number of software developers that, that have reached out to me. That’s kind of cool. I wonder what the uh connection is there. I trade a lot of software stocks, but I don’t think that has any, any ties to that. When it comes to trading, I feel technical analysis is right up my alley, and I agree because you know why?

14:17
Technical analysis should be up every retail trader’s alley because we’re not big brokerage firms, we’re not big banks. We can’t study fundamentals like the banks can do. They, we can’t talk to the CEOs, even me, and I have a pretty big, uh. Social following out there.

14:32
I mean, I guess if you combined everything, I can’t call like a CEO of a S&P 500 company and say, hey, I wanna talk to you from my podcast. They’re gonna like, who are you? When it comes to trading, I feel TA is right up my alley. I’m currently reading books on trading and at the same time, back to Testing strategies.

14:48
OK, good, good. So I like it. I like to see you guys like applying yourselves to the stock market and, and reading and learning. You got to be careful about some of the stuff you’re learning. I think sometimes the most boring books are the best books. Um, there’s like a book called like the, the Bible of technical analysis.

15:04
It is the driest thing I’ve ever read, and I still read it, and I still review it, and I still reference it for patterns and charts and technical analysis. It’s boring, but I recommend it because you’re gonna learn from it. They’re not trying to sell a system or something quirky like that.

15:20
My issue so far when it comes to execution, I can snipe out a good opportunity that fits all of my criteria, wait for my setup, go for it, and boom, a profit. Good, right? Yeah, my problems start when, when I get to the next trade after a win, I get cocky. I know I am a rookie, and then I am in competition with people that have done this for years, but after one win, I get a feeling that I’m on top of the world and no matter what trade I take, I will score a win.

15:45
Oh. It’s getting scary where this is going, but it’s very, very, very relatable. I then get excited and start seeing setups that are crap in reality, but now they look good, super good, and it ends up with me breaking my plan of execution, taking a bad trade, and naturally falling back.

16:02
I am almost plus or minus 0. OK, so I guess that’s break even, right? I almost always give back my last winning trade this way. Whoa, dude, I love this guy’s honesty. This guy’s honesty is like 100% right now. But you’re right, I closed out another percentage of my BABA trade, Baba, Alibaba.

16:22
I had closed out like the first half of it for 5%, and then I sold another quarter of it today for 1/4 of the original for another 8.1%. It felt good. It felt really good. And so what I have to make sure is that when I get into the next trade that I’m not just, you know, glossing over some of the risks that applying to the, the next trade.

16:42
I need to be more meticulous than I was with the Baba trade, the BABA trade, the Alibaba. How do you guys say it? Do you guys say ababa? I kind of feel weird calling a baba, like I’m asking for like a bottle or something from, from somebody to drink. I call it Baba.

16:57
OK. Alibaba. I’ll just say Alibaba for this podcast because I’m weirding out a little bit saying Baba right now. So, you gotta be more and more meticulous with every next trade you get on, especially if you start getting on a win streak where you’re like 456 in a row, man, you gotta get even more meticulous because when you don’t, you’re gonna start justifying every trade in your site.

17:17
You’re like, look at that trade. Kodak. Up 300%, buy it. You don’t wanna be like that. You do not want to get that cocky because that’s what does ultimately burn you. And then a lot of times too, as you start getting that cocky, you start taking bigger, bigger position sizes.

17:32
Make sure you do not increase your position sizes during a big win streak. That, that’s like the last thing you should do. Because people do, they get cocky and they’re like, man, I’ve made 10% on each of the last 10 trades that I’ve made. I’m going all in on this trade or I’m going 50% in on this trade when you’ve only been trading 5 or 10%.

17:48
The emotions of the game completely change when you change your position size. So don’t do that. But you have to be more and more meticulous. If you find yourself getting cocky after winning trade, maybe take a day off, maybe take a complete day off, say, I’m not gonna touch the market the next day.

18:05
I know it seems a little bit backward thing like, man, ride the hot hand or I I don’t know if you have a hot hand after one trade, but, but if you, let’s say you had 5 winning trades in a row, you know, maybe if you start feeling that cockiness, go to the beach. If you live on the coast, go to the mountains if you live in the middle of the country, right?

18:21
So don’t let yourself get up in the hype that you’re better than what you are. I tell people this, and I, I, I, I say this all the time. When I’m right, I’m lucky. When I’m wrong, it’s my fault. I deserved it. And the reason why I say that is because I’m afraid of myself when it comes to the stock market.

18:36
I am petrified by myself when it comes to the stock market. And that’s not what you hear a lot of people say. They won’t tell you that stuff. They’ll just try to tell you how good at picking stocks they are. Well, I know for a fact that being a good trader does not come down to being a great stock picker.

18:52
I think a person who’s a good trader can take almost random charts and probably beat you at it. What sets them apart with technical analysis is it gives them an additional edge in their trading on top of how they manage the risk. So you have to manage the risk in order to execute good trades or have good stock picks because all the stock picks in the world will not matter if you don’t manage the risk.

19:15
So I think Lorenzo is having a little bit of problem managing the risk because he’s getting cocky. He’s justifying trades, and that’s another good point here. Don’t justify trades. If you start justifying trades, you can justify anything. And I was even thinking about that this week.

19:31
I traded Tesla this week. Man, I’ve been waiting for it to break out of this triangle and it was a legitimate breakout, right? And I was, and, and, and it was frustrating too as well because I traded it twice and it got hammered twice by Trump tweets. And I’m not, I’m not here to Say I like Trump or I dislike Trump, I dislike Trump tweets that mess up my trades, OK?

19:51
I think as traders, we can all come together and say, as traders, we don’t like it when Trump messes up our trades because of a tweet that he puts out, OK? I think that goes for all traders. Now, if he puts out something that causes the stock market to crash, and I’m sure, I love that Trump tweet. Put that Trump tweet out there every day.

20:07
But when I’m long on a stock like Tesla, and I was long on a bunch of other stocks too, but I, but I, I tend to take, you know, notice of the ones that I lose on. And Tesla was one that I lost on twice this week and it was on both times because of a Trump tweet.

20:23
And, and so I, I started reflecting on it, you know, since I’ve been out of that second trade, and I was like, should I have been a little bit more meticulous on my trade setups with Tesla? Should I have looked for more of a strong support level under to where if it broke it, it was much more of a clear signal that the trade was going to go south.

20:41
And so that’s something that I have to always ask myself, regardless if I have a winning trade or a losing trade, I go through every one of my trades and I’m always considering where did I go right and where did I go wrong at. And the one thing I would probably say on those two attempts at the Tesla trade, I think the technical analysis was right, but I think the stop loss placement was not right.

21:00
The other trade that I have in my portfolio, all very solid trade so far. I like every one of their stop losses. Looking back, I don’t know if I like the stop loss placement on the Tesla trade as much because I definitely wanted to get in on that trade on the breakout of that triangle pattern that I had been watching for quite a while.

21:16
And when it did, you know, maybe, maybe that, that stop loss wasn’t that great in terms of holding the stock up if it was going to get close or near to testing it. So, Lorenzo goes on to say, I realize that my issue is more psychological than trading strategy related. Yes, you’re getting cocky, you even mentioned it in your email.

21:35
Do you have any good tips or stories from your beginning or am I just a dumpster fight? You’re definitely not a dumpster fire, man, this is, this is growing pains, man. You have gone through a firestorm of a trading year this year. This is the craziest thing that I’ve ever seen. It really is.

21:50
There’s nothing that really compares to what we’ve seen this year, both to the sell-off, to the rally, and everything in between. It’s crazy. OK. We still have a VIX with the stock market at all-time highs that’s well above 20, pretty close to 30, and we’re not even done yet. We get an election next month and who knows what that’s gonna create for the stock market.

22:09
So I gave you some of my stories, I gave you some of my tips. You’re definitely not a dumpster fire. And in terms of, he asked, he asked about one book called Trading in the Zone. Um, I have that on my bookshelf. I the, the author’s escaping me right now, but you can get it off of Amazon. Yeah, it’s not a bad book.

22:24
I think it’s a good book. Um, I would definitely recommend it. I read, read it. It was a long time ago, probably like 10 years ago, but it was a good book. Um, there’s not a lot of good trading books, believe it or not, out there. So, but I like, but I like what Lorencio brought to the table today, man.

22:40
He, he brought a lot of good things to the table. I think he addressed a lot of solid issues that a lot of us struggle with. And I, I even brought you some of my own personal experiences with like my own Tesla trade and some of my earlier experiences. Trading is hard and the worst thing that you can do besides not using stop losses and managing the risk, I would say one of them is being cocky because the market is the great humbler.

22:58
The market will humble you if you don’t humble yourself first. And I’m not trying to sound like religious or anything like that by saying that, but show the stock market the proper respect because the market will humble you if you get cocky. So remember, in the end, if you make a winning trade, you got lucky.

23:16
If you made a bad trade, you deserved it because you made a bad trade. And by the way, make sure to check out swingtradingthestockmarket.com. Has some great information. If you want to go beyond what I offer here on my podcast. It has all the information that you could get in my terms of my research every day in the stock market.

23:35
I give you multiple updates each week on the S&P 500, the Russell, the Nasdaq. On top of that, I’m gonna give you all my research on the FAC stocks like Facebook, Apple, Amazon, Netflix, Google, Tesla, Microsoft, and you’re going to get my watchlists. You’re going to get all the different charts that I find interesting each and every day.

23:53
So make sure to sign up for that at swingtradingthestockmarket.com. It also supports this podcast and make sure, and the biggest compliment you can give me, and I really appreciate it, all of you guys that have done it, some of you guys email and let me know and I appreciate it, is, is reviewing the podcast because it really helps me continue to build this podcast.

24:12
I tell you what, I love this podcast more than anything that I do. There’s nothing more that I like than reading your emails, talking about it. Drinking on some bourbon. I drank this entire thing. It was way too much that I drank, but I got some melted ice through at the end. I’m gonna drink that too.

24:27
Make sure to leave a review. Um, if, if this, if this podcast has blessed you or helped you in any way, I, I, I really, it motivates me beyond you can anything you can imagine, uh, to continue to do these things because I love this so much. So make sure to do that. Thank you guys and God bless.