Punting on the Trade | Podcast Episode #138

0:00
Hey, everybody, this is Ryan Mallory with Swing Trading the Stock Market. We’ve got a good episode here today. Excited about talking about this because I’m actually going back and I’m going to talk about a previous episode that I did where I talked about how honoring your stop losses and getting out of your stop losses is a lot like football, where, you know what, sometimes you’re gonna lose some games.

0:21
Sometimes you’re gonna win some game, and the good teams win more times than they don’t, and they go on to the playoffs and they win when it counts, and they win in the Super Bowl, right? That’s, that’s what we all know great teams to do. And that’s what I was equating trading with. But then I got an email from this guy, and I’m gonna call him Reggie Roby.

0:38
Some of you guys may know who that name is, OK? The guy He passed away, I think back in 2005. He was a Miami Dolphins punter. So why am I using that name? For this listener? Simple. because he wrote me and gave me a totally different but better analogy on what honoring your star bosses is all about.

0:57
And I, and I 100% agree. I stand corrected. He gave me a much better illustration, a better outlook, and that’s what I’m gonna go with today and I want to dig deeper into that illustration that he gave me because I really think that sometimes the more we can make trading stable and relatable, the more confidence we’re going to have in our actions and why we take those actions.

1:17
But first, what whiskey am I drinking? This one is Clyde May’s original Alabama style whiskey. It’s not a bourbon, can’t have a bourbon from Alabama. No offense to Alabama people, that’s just the way it works. I didn’t make the rules, but it’s Clyde May’s original Alabama style whiskey.

1:34
It’s 42.5% alcohol, 85% proof. But here’s the thing, when I try it, it’s very Very dull. That’s probably the best way I would say it’s a very dull taste. There’s nothing that really pops out at you. There’s no like heat to the whiskey. None at all, really.

1:50
It’s kind of weird. It’s kind of just like indifferent. It’s got a good color. I actually don’t think that the regular Clyde Mays bourbon is all that bad. I mean, it’s not great, it’s not horrible. It’s probably like middle of the road bourbon, it’s got a decent price point on it, but nothing I’m gonna run out and get probably anytime soon.

2:09
But this stuff here, this Alabama style stuff, it’s not a bourbon, obviously, but I’d probably say it’s no better than like a 39. It’s just not that good. There’s just nothing to it. I don’t feel like I’m experiencing anything when I drink. I’ll still finish it, but I’m not experiencing anything.

2:25
I mean, when you say it’s like original Alabama style, I want to drink it and be singing Sweet Home Alabama afterwards. That’s just not taking me to that place. But any case, getting back to this podcast here and what Reggie Roby has to say, he says, Ryan, listen to your podcast and you mentioned your friend who wouldn’t give up on a losing traits.

2:44
That was the one bad trade guy. He still talks to me. He found out that I did one. He’s like, Ryan, I heard that you did a podcast on me. I had another listener that listens to the podcast, knew the guy, calls him up, sells me out, man. Thanks a lot. But no, I’m just kidding with that guy.

3:00
But um, anyways, he calls me and I was like, I didn’t appreciate it. I was like, hey, look, don’t trade that way and I won’t make a, a podcast episode out of you. Reggie Roby says he likes the podcast and about the guy who wouldn’t give up on his losing trades. He says, I liked your sports analogy. I was pretty athletic back in the day and I’m still competitive.

3:17
I understand the whole refusing to sell a losing trade. I’ve learned to abandon that mindset, and that’s huge. Most people never get to that point. They never get to the point to where, you know what, I can still have my manhood and abandon a losing trade and not have like some kind of like identity crisis as a result.

3:33
Reggie here says, football was my sport. I look at it like this. Don’t look at selling a losing trade like losing a game. And he’s right. And this is why he’s right. He says, look at it as punting on 4th down. Teams don’t go for it on 4th and long. It’s a field position game and I try to look at the market in the same way.

3:50
I mean, this guy is like, this guy’s got me on cloud nine reading this email. I mean, it’s, it’s a brilliant email. It really is. I feel like he’s the teacher and I’m the student when I’m reading this thing. He says, selling a losing trade for a small loss is just a punt on 4th down. You’ll get the ball back again and hopefully score a TD on the next possession.

4:08
He says, love the podcast, your info along with a few key books has really helped me understand the mindset a lot better. Let me tell you, this is why I love this podcast and why I love doing it because I get emails like this and it challenges my thinking too. And it’s like, you know what? That is such a better way to look at it. It doesn’t have to be like, oh crap, I just lost the game, you know, or it’s like nobody wants to do that.

4:29
You know, it’s kind of defeating, right? But not punting the ball. Sometimes good things come out of punting the ball. In fact, a lot of good things happen from punting the ball. But then I really started thinking more and more about what his email spoke to and then like how much more it can like branch out to, like, what if you don’t punt the ball?

4:47
What is that like? What if you fake the punt? And I’m gonna go through all that. When you don’t punt the ball, and it’s like a 4th and long and you’re on your own 20, you’re like, no, I’m gonna hold on to it. And you just go for it. Well then, you’re just gonna take a bigger loss. You’re gonna give that other team prime opportunity to run up the score and create a bigger margin.

5:06
That you have to recover from in terms of point differential. And it’s the same thing in trading. When you don’t take the stop loss and you hold on to that trade, you’re just creating a bigger loss for yourself that you have to come back from. You don’t want to do that, then the next trade that you make has to be bigger and better.

5:22
So how does, how does faking a punt, and let me tell you, this season alone, I’m a big Miami Dolphins fan, and I, I gave the guy Reggie Roby as the name for this email. I loved Reggie Roby when he played for the Dolphins. The guy was unbelievable. He played from like 1983 till I think like 1995 or so, and I think he got cut from the Dolphins in 1992, but he was like the best punter they ever had.

5:43
The dude wore a watch so he can measure his hang time. That was kind of cool during the game. And he was on the Dolphins all decade team. Maybe I looked at a little bit of Wikipedia before I did this podcast just to refresh my mind. Just maybe. I don’t wanna, I don’t wanna sound like too smart, like I’m just like pulling all these facts out of my butt or something.

6:01
But nonetheless though, everything that you do has to be planned out, has to be a strategy behind it. There has to be a reason why you go for it on a 4th down. Maybe you’re deep in your opponent’s territory and it’s 4th in inches and you got the best running back in the league and you know for a fact that your guy can, can pull this off against a weak defensive line.

6:21
But what, what do we know here? We know that when you go into your trades, you have to have a strategy for every single trade that you get into. If you don’t, you don’t know what you’re supposed to do when the time comes. It’s even worse if you don’t have a strategy or if you don’t know what you’re going to do once you get in the trade, if the trade doesn’t work out for you.

6:37
It’s like going into the game and forgetting what down it is, not realizing that it’s 4th down, not realizing it’s time to get out of that trade. I know that every new trade that you take on, it’s fun and it’s exciting. After doing this since I was 11 years old, every new trade that I take has a little bit of a rush to it.

6:54
I had a little bit of an excitement to it like, what is going to be the story that’s gonna be written about this one? But there’s also a good number of those trades that turn into trades that I have to punt. And Reggie here in this email also talked about field position. I watched the Miami Dolphins game this past weekend.

7:11
And it was disappointing. It was against the Buffalo Bills. Buffalo Bills won that game by 30 points. It was like 56 to 26 if I remember correctly. And it was sad because it knocked the Dolphins out of the playoffs. Not that, with that kind of a score, they should be in the playoffs anyways because they shouldn’t be.

7:27
But early in the game, Buffalo punted the ball. They were like at their 30 or 40 yard line. They punted the ball. Dolphins actually forced them to punt. It was amazing considering how the game actually turned out. Buffalo punted that ball all the way down to the 1 yard line.

7:45
It was almost like the half-yard line. Put the Dolphins in a horrible situation, but it put the Buffalo Bills into an eventually better situation. Why is that? Dolphins had to run a quarterback sneak. Dolphins couldn’t complete anything. Dolphins had to punt the ball. Where did they punt it?

8:01
Well, they couldn’t punt it very far because the punter was in the back of his end zone, which was shorter than like the 13 yards, I think that a punter usually has. He only had like 10 yards to work with, so there’s a greater chance that he gets blocked. So he has to rush his punt a lot faster. Ball comes out.

8:16
Bills get the ball back at the 50 yard line. Who plays later? Bills are in the end zone. Now, rewind a little bit and then go back to when the Buffalo Bills had the ball at their 30 or 40 yard line and instead of electing to punt the ball down to the 1 yard line, they went for it and didn’t get it.

8:32
Well then the Dolphins, that could have swung the whole momentum of the game right there. Yeah, Buffalo was a better team, they probably knew they were a better team. In fact, I’m pretty sure they knew they were a better team, but they weren’t going to let one football possession define the whole game for them because they don’t get the 4th down, Dolphins get the ball in pristine field position.

8:48
Maybe they score a touchdown and then all of a sudden, their confidence is rocking, right? And the game was lost. But no, they punted the ball, they kept their confidence, they kept their winning attitude and place, and they got the ball back and scored a touchdown. And it’s the same thing with our trading.

9:04
Trade’s not going right for you. Fine. Honor your stock, boss. Get out of the trade. Down the road, that trade that you got out of may set up again for you in an even better fashion. I can’t tell you how many times I have had trades where I get stopped out of it and maybe like a week or two later, sometimes even like a couple days later, it sets up again for me, and I’m not doing it out of revenge.

9:25
I’m just saying, look, this is the best trade for me to be getting into at this very moment. It sets up again and I make a killing off of it. Sometimes you gotta be willing to punt the ball on your trades. Just punt it. And before I forget, make sure you guys check out swingtradingthestockmarket.com.

10:01
It’s a really good service that I provide on a Patreon account through this podcast. It’s gonna give you all the market information that you could possibly want to guide you through the week. You’re going to get my daily setups each and every day, you’re going to get market analysis multiple times a week through the S&P 500, the and the NASDAQ 100.

10:18
You’re also gonna be getting updates on all the major tech plays and big momentum plays like Facebook, Amazon, Apple, Netflix, Google, Microsoft, Tesla. Top of that, you’re gonna get the charts that I find each and every day that are pretty interesting, and you’re gonna get my watchlists updated multiple times each week.

10:34
So check that out, swingtradingthestockmarket.com, you won’t be disappointed. So, we can take this excellent example that Reggie Roby gave us here. And we can extrapolate it even further to where. How many times have we seen games won, important games?

10:59
Because instead of letting their ego get in the way on like a 4th and 5 at the 5 yard line, they took the field goal. And sometimes they’ll, they’ll make 5 or 6 field goals in a row and you make 5 field goals, you have 15 points right there on the board. And sometimes it’s just a game of positioning, right? But in the end, they came out on top because they didn’t let their ego get in the way and try to keep scoring touchdowns when they could have been settling for field goals and making sure that they could get points on the board.

11:15
Don Shula, the greatest coach of all time, I know that’s up for debate, but he does have the most wins of all time. He says, when you’re in your opponent’s territory, walk away without points on the board. Never walk away without points on the board. So, the same thing can be said too about trading. Don’t walk away without some profits in the hand.

11:37
When you’ve had some profits, when you’ve had some decent profits, don’t, don’t let those just go to waste. Protect those profits. When you’re kicking a field goal in the NFL, you’re protecting some of your points there that you think that you can have. You go down there, you’re on your opponent’s 25 yard line, that’s 1 in 10, you’re thinking, OK, I should be able to walk away with at least 3 points on the board.

11:56
But if you get to like a 4th and 10, you go for it and you don’t get it, well, you’re walking away with nothing and then your opponent goes down the field and scores 7 points. That’s a big swing. That’s a 10 point swing right there. But if you put some points on the board, that’s a big deal. Then if your opponent gets the ball back and goes down the field and score, at least it’s only a 4 point swing at that point because you got 3 points, he got 7 points.

12:13
The difference between that is he got a gain of 4 points, a net gain. So like trading, you’re up 10% on the trade. Make sure you’re coming away with some profits. Don’t let that 10% go right back down the trash and you’re taking a big loss on the trade. Walk away with some profits.

12:28
And here’s the other thing, this isn’t like a topic that I haven’t talked about before. I talk about stop losses probably in almost every episode that I do, but here’s the thing, these are very difficult concepts for people to grab hold of and there’s new people listening to this podcast all the time.

12:45
And so I want to make sure that I’m resonating with them as well. But I have often found that so many people can relate to these kinds of illustrations. I did a YouTube video this past week, and I use a rubber chicken to illustrate where to get in and where to get out on a stock and what our objective should be.

13:03
And you wanna know something? I got a lot of emails from people saying they loved that illustration. It was a stupid illustration, but it made sense. It was something that made sense to people that they could connect with. And so, I may be regurgitating some stuff that I’ve talked about before in the past, but these are important elements that come back and constantly revisit.

13:18
I don’t care if you’re an experienced trader. I can’t tell you how many times as a trader, I don’t want to follow my own stop losses, and I’m probably the biggest preacher out there of using stop losses. And yet, I’m going to tell you day in and day out, use those stop losses.

13:37
And sometimes it’s a challenge for me. I have to, at the start of every market session, I put those stop losses in because I don’t want to be forced to decide whether or not I’m gonna honor that stop loss because it’s a lot harder in the heat of the moment. And a lot of times you’re going to listen to this podcast and you’re gonna say, hey, what Ryan’s saying is making a lot of sense.

13:54
I really can relate to what he’s talking about here. I’m gonna apply it to my trading. But you better remember. Once you start getting into the trades, you have your capital at risk, your money’s on the line, it starts to become a little bit different. You have to decide for yourself, am I going to manage the risk?

14:09
Am I going to protect my profits? Am I going to make sure that I don’t let a small loss turn into a big loss? And you got to be diligent about it. You got to be diligent about it every day. You gotta be almost like a robot about it, right? I, I, market opens, boom, boom, boom, boom, boom. I’m putting in my stop losses manually every time.

14:28
Don’t even think about it anymore because I’m, it’s almost like mentally I’m automating it. And if you do it enough times, you get that experience of seeing how you’ve let your winning trades run and take off, and you make these exponential bigger gains on your winning trades while your losing trades stay very small and compact.

14:46
It’ll start to resonate with you more and more. But you got to believe in the message that managing risk is the key to your trading. I’m gonna tell you my three keys to success. One more time. Trade what you see, not what you think. That’s my first rule. Second one, manage the risk. Number 3, do numbers 1 and 2, and the profits will take care of themselves.

15:05
That’s it, guys. That’s all you gotta know. That’s it. That’s the 3 concepts that have guided me in my trading my entire career. If you enjoyed this podcast, please do me the honor of leaving a really good review on Apple, because if you enjoyed it, then maybe it does deserve a good review, right? It does help me to continue to put these out each and every week, motivates me, and it also, it encourages me.

15:21
And, uh, sometimes, so many times at least in the very beginning, I was wondering, is anybody even listening to this thing? But over the years, it’s, it’s continues to grow. I’ve got over 70,000 last month. I mean, that, that blew my mind and I was, I was off on a couple of my episodes. I didn’t even do as many episodes as I normally do.

15:41
So that was, it’s a huge blessing. You guys are blessing me just as much as I hope I can be blessing you with your trading adventures to Reggie Roby out there. Thanks for putting me in my spot. That was a very good email, very good response to a, uh, podcast episode I did in the past. And again, if you want to be on the podcast, send me your emails.

15:55
ryan@shareplanner.com. I have a folder, put them in there and I go back and I read them and I put them on the show. Thank you guys. Take care. God bless.