More Than Just Knowledge | Podcast Episode #139

0:00
Hey everybody, this is Ryan Mallory with Swing Trading the Stock Market, and this is gonna be a good episode here. You know, just to be a little bit honest, I, I came into this episode here and I was kind of looking for a, uh, some low hanging fruit. I’ll be honest, I did. But then I came around this one guy’s email and I realized, ah.

0:18
This really needs to be addressed. I mean, it’s, it’s got some unpacking to do to it. But I think that the contents of this email that I received applies to so many people because of how trading has changed so much over the last 18 months to 2 years with free commissions and with the stock market just rallying insane amounts due to just ridiculous accommodating by the Fed.

0:41
So much has changed. So many more people are. are interested in the stock market through apps like Robin Hood. I know I crack on Robin Hood and Robin Hood bros and stuff like that. I really don’t have anything against Robin Hood Bros. I don’t like the Robin Hood app, I’ll be honest with you there. But, uh, I think, I think Robin Hood bros are great for the market, man.

0:57
I think it’s added a new dynamic. I think it’s added a lot of new retail traders, but I want Robin Hood bros to be successful. I don’t want them to make stupid mistakes and they’re jumping into this. By and large, a lot of them, without really considering some of the consequences for their actions. So, you guys give me a lot of motivation to try to help you guys out and to try to make you guys better traders.

1:16
When I’m making jokes on Instagram or, or something else, you know, I’m just having a good time with you guys. Nonetheless, this email does require some serious discussion. And for the sake of clarifying who we’re talking about here, we’re giving this guy the name Poe, he says, even He even puts in the subject, you can call me Poe.

1:34
So I’m not sure if that’s like a Podammon from Star Wars or if that goes back because I feel like we’re starting to get intergalactic here. We’ve had Han Solo, I think, on one episode. So we’re getting away from like the Florida redneck names apparently, and we’re going intergalactic here because this like Poe is like synonymous with Pod Daamer, I think. But he said, just started listening to your podcast and I love it.

1:51
He says, I figured I’d give you my story. I am what you would consider a Robin Hood bro. All right, man, hey, admitting to it is like the first step at recovery, right? He says, I am a full-time student and I have 3 part-time jobs. Man, this guy’s got some hustle to him. That’s what you want to hear because the stock market takes some hustle too, man.

2:07
You got to carve out the time for it, which I don’t know how the heck he’s gonna do it as a full-time student with 3 part-time jobs. But he says, I’m hoping to go to school and get a finance master’s with an accounting minor. Now, I’ll tell you this, for those that are pretty young listening to this, finance degree is good. You’re gonna learn some basic principles and stuff like that.

2:22
It might actually help. Yeah, I don’t think it’s gonna help you from a technical analysis standpoint, but, you know, reading balance sheets and income statements and cash flow statements. Yeah, that’ll that’ll help you out. But it’s not gonna make you a good trader. Accounting, I don’t know. I mean, I’ve, I’ve never, I’ve only taken like one basic accounting class.

2:38
I took, uh, economics in college. I thought that, you know, the basic economics classes is probably what I learned the most from and not not when I made it an emphasis of my studies. Honestly, if I was to go back to college and do it over again, I did political science. and economics, like I said, and, uh, political science has actually helped me some because it’s helped me understand the political system and understanding its effects or potential effects on the stock market as a whole.

3:01
But if I had to do it over again, I’d probably do something math related engineering, maybe just do mathematics, computer science. All those things are good because it’s gonna teach you a lot of different math concepts. That’s what I would focus on, knowing that I would be a full-time trader, I would go back and do uh something math oriented.

3:18
And before I get going with the rest of this email, keep it as simple tonight. Just going with some Jamieson Irish whiskey. Everybody’s had some Jamieson before, right? It’s not bad. It’s not the most wonderful thing in the world, but it’s very easy to drink by itself. It’s 40% alcohol, 80 proof, but it’s always got like a nice taste.

3:34
It’s usually like a good pre-game drink, really. But when you’re, when you’re rating Jamison, I mean, it, it’s pretty much, it is what it is. It’s, it’s like a 6.0. It’s a decent whiskey. It’s not going to disappoint you and it’s not gonna give you this like exhilaration for having drank it. So moving on with his email here, he says, I recently turned 18 in June and always knew investing was for me.

3:53
I did my best to read and watch as much YouTube videos and have a separate couch potato fund, which if you don’t know what a couch potato fund is, it’s kind of like a hands-off approach to investing, invest equally in two asset classes. Usually it’s like stocks and bonds, and you maintain a 50/50 split each year.

4:09
So, he has a couch potato fund, but he says when I get in Robin Hood, I let my emotions and FOMO get the best of me. So he’s got a little bit of knowledge, he’s got a little bit of experience that he’s starting to build upon, but he lets his emotions and he lets the fear of missing out get the best of them.

4:24
He says between options and stupid plays that I tried to get in when my Young investing friends, a group of about 10 people, bad idea. We’re having some success, but I lost around 30% of my portfolio. Fear not, once I reached this low point, I began to educate myself, getting up early to study and watch all the free courses I could online.

4:44
Now I feel as if I am actually very sufficient in analyzing a stock. And I’m on my way back up to get those losses back. My strategy is now to manage my risk and let my emotions calm down. The only thing I’m missing is my stock screening ability. I like looking at RSI and MacD and I use things like Finvis and stock charts and.

5:06
We will define and analyze, but I honestly don’t know what ways to set up my screeners to find stocks that I even tend to analyze. Sorry for the super long message. Never stop what you’re doing. Your podcast and strategy has really changed the way I focus and look at my portfolio.

5:22
Signed, po. All right, Po. We got some talking to do here. He talks about he’s gained a lot of knowledge and that he’s watched a lot of YouTube videos, but I gotta tell you guys, knowledge is not gonna overcome emotions. It’s just not.

5:37
The the emotions are such a huge part of the stock market. And I see it, whether it’s in the trading block, whether it’s in the emails that I get, or whether I see it on, on just basic social media websites like stock twits or Twitter, traders are largely guided by the.

5:52
And it’s weird, but I would almost say you almost have to like not give a rip anymore to really conquer those emotions. And it’s not that I don’t give a rip on my trade. Obviously, I do or I wouldn’t be managing the risk, but you just can’t let those day to day swings like get you worked up.

6:08
Once you have the parameters for the trade set up, that’s what you got to run with. You can’t go outside of those parameters and start, you know, getting all, all crazy and saying, oh my gosh, I gotta do this. And I gotta do that. I gotta sell this and I gotta buy this. Oh my gosh, did you see Tesla running up? I gotta go buy it right now. It’s gonna go from 800 to 900.

6:25
If I don’t get it now and I’m gonna miss all this. No, that’s where people get so much in trouble with the FOMO and with these group messages, right? Guys, if you’re, oh gosh, so many of these like group texts with friends and I got people that are in a whole bunches of them, they’re very dangerous because there’s usually not anybody in there that’s really got any experience.

6:42
It’s usually. A group of guys or gals that just recently started trading stocks together and they don’t really have any like edge or knowledge or anything. They just, they happen to get a couple of stocks right early on or they got like a, a rise out of buying and selling stocks early on and they got their friends into it. And now all of a sudden they’re, they’re searching out these trades and plays each and every day.

7:01
But guys, that, that’s really not trading. It’s so much more than just the stock pick. If you’re not going into the trade with the plan, I said this last episode, I I said at the episode before, you gotta know where you’re gonna get out before you even get in. You got to believe that you’re going to be wrong on every trade you ever make. You just do. And uh you can’t trade with an attachment to your money.

7:20
I know money is important. I don’t want to lose the money that’s in my portfolio, OK? But you’ve got to be able to compartmentalize those emotions. That’s why am I trading, I don’t, I don’t track myself over the course of the year. I just care about making good trades. I care about the emotions. I care about making sure I’m taking advantage of every edge to keep my emotions in check.

7:39
One of the things that I’ve put a huge emphasis on in the past year is exercising. Why is that? Because exercising helps me with My emotions. I am far less emotional in my everyday trading when I exercise 4 to 5 times a week.

7:56
And from a physique standpoint, it’s helped out tremendously as well. I’m not even doing it for that. I could care less about that part. All I want to do is make sure that I’m not doing anything to screw myself over on trading, and I feel like not exercising is a great way to screw yourself over. But about these group trades too, is that I, I’ve I’ve seen traders get into these group texts and they have this groupthink that automatically comes about.

8:20
And if one guy’s getting into it, they feel confident to get into it. If they see 6 or 7 of the guys in a 10 group texts get into a stock, they feel like, oh, it’s got to go up. We’re not all gonna lose, are we? No. Mark doesn’t care about that. And they all get into it and then they all lose. I have one of my good friends, he’s in one, he’s like telling me, he’s like, man, most of these people in this group text, they don’t have a clue to what they’re doing.

8:39
He says a couple of them got into these calls and options and they were up like over 400% of their portfolio, and then all of a sudden these calls just stopped printing and their portfolio dropped 50%. So now, instead of being up 400% in their portfolio, they’re only up 150%.

8:57
Am I doing the math right there? I think I am. In any case, it’s a dramatic sell-off, but you get another trade that does the same thing and you’re just gonna continue to eat away at your funds in an extraordinary fashion. And you can watch all the YouTube videos. I, I, I put some of the best YouTube videos out there, in my opinion, at least, because I try to talk about the risk and the reward on everything that I do, but you can watch all of those, and if you can’t get your emotions under control, they’re not gonna do any good for you.

9:24
There’s a kid in high school, kid could hit every 3 pointer in practice, and then he got into the games and he couldn’t hit a single 3 pointer in a game. He never hit one. I remember back in the NBA Finals back in the 90s, I was a big Orlando Magic fan growing up. Still I am a little bit. They’re just boring as anything to watch.

9:40
And so you had the Orlando Magic playing the Houston Rockets in the NBA Finals, and the first game of that finals, and some of you guys might remember it, Nick Anderson goes to the free throw line and all he has to do is make one shot at the free throw line and they’ll win the game one of the NBA Finals. Incredible three point shooter, one of the best players to ever play for the Orlando Magic in its history.

10:00
He misses both of them. And then they run back down the court again. He misses a shot, but he gets fouled on it, so he goes to the free throw line. He missed those two as well. Houston ends up winning the game. The reason why I brought that up is that he wasn’t a person that was incapable of making free throws.

10:15
He didn’t lack the skill in how to make a free throw, but it got into his head and he couldn’t make it at the time that it mattered the most. And what’s crazy is the year after the NBA Finals, his free throw percentage dropped from almost 70% the season prior down to 40% flat.

10:31
I kid you not. It was worse than Shaquille O’Neal’s. But that’s what happens though, when something gets into your head and when you can’t control the emotions, you get into a funk. You can have all the knowledge and skills, but if you can’t apply it because the emotions are getting the best of you, it doesn’t matter. That’s why there has to be a detachment from your trades and what that those trades represent in terms of real dollar amounts.

10:52
There’s so many things that I do to keep myself detached from the dollars that I’m trading, so that I’m only focused on the trades themselves, the charts that I’m trading. And yes, I see a chart going down. I can, I can at times feel it, but I got to make sure that I take a step back and just say, OK, what is the charts telling me?

11:08
What is Stock telling me, what is my trading plan telling me to do? And then I followed that. And along the lines of those emotions, when you’re in the group texts and when you’re in the group chats with your buddies and everything, you’re like, oh, we got to get into Tesla and everybody scrambles to get into it. That’s because it emboldens you. Shouldn’t be emboldened to buy a stock just because you’re seeing everybody else getting into it.

11:26
It should make sense to you. And that’s like why with swingtradingthestockmarket.com. And yes, I’m gonna do a shameless plug right here. But with swingtradingthestockmarket.com, I’m providing you guys every day with my market analysis. I’m providing you with analysis and updates on the most popular stocks like the Fang stocks, Microsoft, and Tesla, also giving you my daily trade setups and the most interesting charts each and every day. that I find.

11:49
On top of that, I’m also providing you with multiple updates to my master watch list each and every week. So you need to go check that out as well. Because my goal there is to provide you with unemotional information that can help you with your own trading development, to show you what it looks like to not be focused solely on the dollars, but to be focused on the charts instead.

12:09
Cause it’s the charts and it’s the market that’s gonna make you the money, not how much you’re trading, not how much you’re hoping to make, not how much money your friend’s making, or What are your buddies are getting into. It’s about the stock market, it’s about managing the risk. It’s about not letting the emotions get to you and it’s about making sure you don’t let profits turn into losses.

12:28
So a couple more points here that, that this guy makes and, and one of them is, and I’ll try to wrap it up here. But he says, you know, I’ve lost, I lost about 30% of my portfolio, but I’m on my way to making up my losses. That’s not a good thing, guys. When you’re trying to focus on making back your losses, don’t even worry about it.

12:43
Don’t even look at how much money you got to make back up. Just focus on making good trades. If you start doing that, then your position sizes are gonna be different. You’re not gonna be taking profits when you’re supposed to because you’ve got a hot hand that you think, OK, this thing’s gonna let me make back all my money and I’m just gonna keep riding this thing higher, even though it might be giving you clear signs to get the heck out of there.

13:02
OK? You don’t want that. Don’t even worry about how much money you got to make back up. In order to break even from a previous drawdown. That’s just not what you do. You, you focus on making good trades because then you start trying to swing for the fences instead of going for like singles and doubles, you’re just going for home runs every time because you’re impatience with getting back to break even is going to get the best of you because you want to get back to break even so that you can start making more money above and beyond what you actually lost.

13:29
And I get that, man. Nobody wants to. be digging themselves out of a hole, but once you get yourself into the hole, you’re in the hole, man. Just start focusing on ways to take a one good trade here, one good trade there, you managed the loss on that bad trade, but you’re just making that steady climb higher and you’re not paying any attention to how far in the hole you are because when you start doing that, that becomes your focus and not the stocks.

13:47
Just focus on making good trades. He also talked about screening abilities and RSI and MacD they’re popular and everything, but you don’t need Those indicators necessarily. My watchlists are pretty basic. I go through hundreds, sometimes in a single day I’ll go through 1000 charts, and the thing is, I’m not relying on a watchlist or a screener to give me the ideal trade setups.

14:08
I use it to basically filter out the stocks that I don’t want to be trading and to be able to organize the stocks that I want to be going through to see if there’s a trade set up there. But things like RSI and MacD, they’re just basically derivatives of price and volume. And so focus more on being good at price and volume.

14:25
And the other thing too is, is, dude, you’re, you’re trading options at 18 years old. Have you really gotten good at trading just equities? Good chance you haven’t. And so many people are getting into these options. Why? Cause they wanna make freaking money. And yes, I get that we all want to make money in the stock market.

14:40
I wouldn’t be doing it if, if I wasn’t wanting to make money from the stock market. But you don’t take shortcuts, man, and you don’t just think that, OK, I’ve, I’ve watched some YouTube videos and I’ve spent a couple of months learning about the stock market that some all of a sudden you’re a savvy trader or you know what you’re doing because more than likely you don’t.

14:57
You always have to be humble when it comes to the stock market. I always realize you’re a breath away from blowing up your portfolio. A breath away. I, I go into it every day realizing, if I’m not careful today, I’m blowing up my portfolio. If I don’t keep things under control, I will blow up my portfolio and I know I will.

15:13
But I don’t because I recognize my fallibility. But you guys got to stop trying to rush this process. I know that there’s money to be made out there each and every day. Sometimes I make it, sometimes I don’t. But you gotta go through the licks. You gotta go through the experiences. You gotta collect those experiences. What I’m trying to do is to keep you in the game, to give you some easy shortcuts along the way.

15:32
It’s like, hey, do this, hey, do that. It’ll help you out, and it does. But the stock market’s a journey. You’re not gonna like arrive at this destination. I oftentimes compare it to golf and I suck at golf. But the only time you’re ever going to be perfect at golf is when you’re shooting an 18, when you’re whole and wanting everything. Otherwise, there’s always room for improvement.

15:49
Tiger Woods still trying to get better. Every one of those guys are trying to get better. There’s no end in sight, and it’s the same thing with trading. You’re trying to constantly improve. I was going back through my 2020 performance. I was looking at areas that I can improve. I could see things all over the place, like, man, why I trade those two stocks back to back.

16:04
Why did I take profits that early? I disagree with it

16:21

But most people, I would say 99.9% of people have no business ever trading options. You just really don’t. I know there’s some that are very conservative. I’m just talking about like straight out buying YOLO calls or just buying calls in general. Like, I mean, 85% of these things expire worthless. I want you guys to succeed. I want Poe to succeed here, but you can’t take this. Shortcuts, you got to quit following the group herd mentality when you’re in like these group texts or whatever they are. Don’t get all wrapped up into the emotion and don’t try to make back all those losses.

16:38

Just say, hey, this is where I’m at now. This is where I’m at, this is where I’m going for it. Forget about the past. Learn from it, of course, but don’t try to say, OK, I was at A, I’m at B now. I need to get back to A. No, be like, hey, I was at A, I’m at B now. I’m trying to get to C. You guys enjoyed this podcast. Please make sure to Leave it a good review on your podcast platform of choice if it’s Apple, which for most of you, that is the case.

17:02

Make sure to leave a nice review. I always love those 5 star reviews and it encouraged me. I go and read them. It encourages me to keep doing what I’m doing, you know, you guys mean the world to me. This is the best thing I do each and every day. So, make sure to leave a review if you guys have any questions, make sure to send me an email, ryan@shareplanner.com, and I will answer your emails.

17:19

Uh, uh, just give me a good question that you’d like for me to answer, and I’ll put it on the air. Take care, guys, and God bless.