What Does A Trading Plan Look Like | Podcast Episode #154

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, you can succeed at the stock market and I’m ready to show you how, hey, everybody, this is Ryan Mallory with Swing Trading the Stock Market, and I got a really good episode.

0:35
Here to discuss with you today. You got an email from a guy and I’m using the name. Good Florida, red nickname, Big, Chuck. And Chuck is a new Trader here. And one of the things that is really overwhelming him as he doesn’t really know where to start. There’s so much information there, so many ideas in there, so many opinions, that he’s getting caught all up in it, and he’s not sure what to listen to who to listen to, and what to take Serious, what to apply to his trading, and what not to apply.

1:00
In. For today’s episode, I got a bourbon that I’m going to be drinking. It’s called Old Granddad. One 1414 proof is what that stands for. Let me tell you, it does not disappoint and the realm of hotness. I mean, it’s hot to the nose, it’s hot to the lips and when you drink it, it is.

1:18
All you taste is hotness. I mean, this sucker comes in hot the whole way through and it leaves hot. And I saw this bottle and I’ve seen a lot of people talk about it. It’s like a 31 dollar bottle and again, 57%, alcohol, 114 proof, but it doesn’t have a lot of substance to it.

1:34
And honestly, the way that I view it is, I think it works better as an old-fashioned mixer, use it with your old Fashions. Now, I make a pretty good old-fashioned and I’ve improved over the years. I really like it in the bourbon that I use in my old Fashions is the nine-year Knob Creek. I don’t like to drink Knob Creek by itself or at least that particular bourbon, but I love to put it in my old fashioned, it comes in hot to it.

1:55
I mean, it is really spicy. Very peppery. There’s not a lot of flavor to it. I won’t drink it by itself. I won’t even drink it on the Rocks, but what I do is I put it in my old fashioned. And so I said to myself, man, I really don’t like this. Granddad 114, maybe it’ll work in this old fashioned because the bourbon that I use for my old fashioned is very hot just like this, very similar profile.

2:13
So I used it. It was pretty good. I would probably say that it was better than what I was using when I put the Knob Creek nine year. And that’s what I always. So it’s pretty good. I think it’s a great bourbon to use for making old Fashions because you have that simple syrup. I use like 3/8 of an ounce of simple syrup and that will mellow it out a lot while still giving you a drink with a solid proof to it.

2:33
But my score for this This old Granddad by itself as a 4.3? Yes, it’s very low. I am not a fan of it. I would buy it again simply for the old Fashions, but I would never buy it. Unless I’m going to use it for a friend that I don’t want to give good bourbon to. So let’s get started with big Chuck’s email.

2:51
He says, I hope this email finds you. Well, I’m relatively new to trading jumped in last year after the covid crash. And I’m actively trying to learn and improve. I stumbled across your podcast a few months ago and have listened to every episode since anybody. Notice that almost everybody stumbles across it.

3:07
I don’t know what exactly that means. I guess it’s like it’s just like show up in your search engine or recommendations, I don’t know. I’m just always curious because a lot of people just stumble across it, which is good. I’m glad you guys find it one way or the other. But anyways, big Chuck continues with. I want to say first off that, I love it and appreciate the podcast and your desire to help others.

3:25
Now, on to my question, this far, I have found trading and the stock market in general to be a little overwhelming. Do I start by learning technical analysis or fundamental analysis? How do I begin to go? Oh, through the Sea of stocks to find an investment opportunity. Am I a day trader swing Trader or a long-term investor?

3:41
Should I YOLO on gme? Don’t worry, I didn’t. I’ve read some articles and some training videos through my broker started, listening to some podcasts such as yours, read some books, follow some legit. Investors on places, like stocked with yourself included, I have heard over and over again, that I need to manage risk and also have to have a plan and stick to it.

4:03
My question is, simply this, how does Develop a plan. What does that look like? I know that I need one. As I am not managing my risk very well. For instance, I have been in rocket rkt since shortly after the IPO came out and was up nearly eight thousand dollars on March 2nd.

4:19
No margin whatsoever being used but I kept wondering if it would go higher and I did not have a plan in place. So instead of walking away with eight thousand dollars, I got out the next day for 1200 or a seven percent gain. I know I should have been more disciplined and now I realize that I absolutely need a Plan, if I’m going to be successful, but I’m not sure how to develop one, any advice, thanks for all you do.

4:40
Big Chuck. We got a lot to talk about here. Big Chuck. First of all, he wants to know, do I go into fundamental analysis or do I start learning about technical analysis, let me just tell you a fundamental analysis. There’s very little edge in fundamental analysis, because all that information is public and most people, if there’s an edge to be found in it, there are already writing about it. Blogging about it. It’s not like the 60s and 70s, where sometimes you could find these hidden gems that nobody else was talking about. Because back then, there wasn’t really a big medium to put your opinions out there on somebody’s probably already written about it. So I’m not a huge fan of fundamental analysis and we tend to fall in love with stocks that we do the fundamental analysis on and then we just start seeing what we really want to see and I could be true as well with technical analysis and you got to guard against that as well.

5:22
But I mean think about it I don’t even have to look at the fundamentals. Is Apple got good fundamentals? Yeah they got good fundamentals because Microsoft have good fundamentals. Yeah sure they get good fundamentals. So it is NVIDIA. So I mean you got all these companies out there. They have good fundamentals. But does that necessarily make them a company worth buying right now?

5:38
Does that make it a good setup from a technical standpoint? At this moment of this podcast, Apple kind of looks sick. Looks like it might be rolling over. It’s breaking some trend lines. So no I’m not a huge fan of fundamental analysis. Don’t even think you really need to learn it. I mean I took the accounting classes, I got a MBA and all that stuff.

5:55
I don’t use fundamental analysis for anything. I always view fundamental analysis for the most part is something that your financial advisors like to point to and talk about what? Yeah, they’ve got a good balance. She got a lot of cash on hand. The future is looking really bright. That’s kind of like what a financial advisor will tell you if you go into their office.

6:11
I mean it’s just people talk about it but very few people actually do it or even use it in a successful way. So for me, I always feel like to that you got like Goldman Sachs out there. You’ve got Bank of America Merrill Lynch and you got all these big firms. They got teams of people pouring through the financial.

6:27
So it’s gonna be very hard to outperform people who are being trained to go through it on a regular basis and there’s like teams dedicated to the stock like, Capel. But you also got to know your Trader type to, I mean, are you going to be a swing Trader? You’re going to be a long-term investor because they’re very different things, and if you’re trying to get into day trading, how tell, most people don’t even bother with it.

6:46
Here’s the thing about day trading, it sounds sexy people, like, to throw it around. Hey, I’m a day trader. You say, you’re a swing Trader people like, huh, what does that? Always have to tell people what it is? I always simplify it for him. I’m like, hey, it’s kind of like in between a day trader and a long-term investor right in between there. You got your swing Trader. Now it’s a little bit more descriptive than that, but that’s usually what I use for the layman terms.

7:05
Day trading. The reason why I don’t really encourage people to do that is because you’re usually getting very small gains, right? You’re not holding overnight for those overnight gains, which can also be overnight losses to, and yes. I know the risk is off the table at that point, but so much of the markets movement happens after hours.

7:21
So, when regular Market hours are closed, you’re missing out on the other 17, half hours that the market is not open. And with day trading, it only takes one trade to wipe out just scores of good successful traits. And the reason I say that is because we get these likes, Steady, gains. Hey, we made five percent on this tray, three percent on this trade for percent on this straight.

7:39
Then you have that one trade on that one bad day that goes down. 10%. You’re like I’m not selling this. It’ll come right back up. You get lacks a days of cool. And you have one bad tree and then all of a sudden you’re down 20% on that stock and it just throws everything off. So not a huge fan of date range, especially for people starting out just completely do away that.

7:56
Now long-term investing. That’s going to be something that you don’t do a lot of. I don’t know why people would be making long-term Investments right now in the stock market. I’m not doing it. I’m waiting for A big pullback, why would I do it when the markets just trading at ridiculous all-time highs. Maybe it still keeps going higher but I would rather see a dramatic pullback at some point in the future where I’m afforded an opportunity to get long on some really cheap stocks right now.

8:17
We don’t have that. We’ve had like a nine percent correction or so in the NASDAQ, that’s not enough. But what is enough? swingtradingthestockmarket.com, you can go there, you get all my market research each and every day. What you’re going to get is multiple updates on the S&P 500 and NASDAQ 100 and the Russell 2000, you get those Those multiple times each week, also, you’re going to get updates on all the Fang, stocks Facebook, Apple, Amazon Netflix, Google Microsoft Tesla each week and you’re going to get my updated.

8:45
Watch lists, my master watch lists, the ones that are bullish on the stocks done bearish on, you’re going to get those updated twice a week and daily setups each and every day, the stocks that are looking at trading each and every day. Also, some of the more intriguing charts that I come across. Whether they be about a trade setup or whether it’s just like about a market development as a whole, I’m going to be Those out to you as well.

9:06
So go to swingtradingthestockmarket.com sign up there today. So big Chuck also wants to know, what does a trading plan look like? And so one of the things that I pride myself on with this podcast is trying to keep things simple and also feel that trading is done right when it’s kept simple.

9:22
And that’s probably this case for most things in life, when we start complicating it, when we start making it too difficult, or put a whole bunch of moving Parts in there, that’s when things get muddied up and the water gets murky. I want to keep it simple. I want to keep it pure. Sure. So, what does a trading plan look like? Well, it has a method for managing the profits and as a method for managing the risks particular, the losses, because we’re people get themselves in trouble is not for the lack of profits that they can make on a trade.

9:46
But it’s about how they manage those losses, because they go and they go and they go and they keep making profits, and they start thinking that this is easy. And there’s a lot of people out there that are starting to realize, hey, trading is not that easy heard. A lot of people throwing in the towel is this past week on their Discord chat rooms and everything else because it’s not easy, you go through these times like right now, Where your inclination is going to be to do something and really not doing anything.

10:10
Is the best course that you can take for yourself and the stock market when things are going really bad, or when things are getting ugly doing less is often times the best solution. So you got to have a method for managing the prophets. This guy he was in RK T. He was of eight thousand dollars without even using margin and he only walked away with 1,200 dollars or a seven percent gain.

10:29
Still on the surface, good trade you made twelve hundred dollars seven percent profit but also tell the guy to quit worrying about the dollars. Focus on the trade itself. Not how much more money? Do you think you can make or how much higher it might go if you’re not and the trade? I see people say hey I was up eight thousand dollars.

10:45
That tells me they’re dollar watching their personalizing, these trades. Big Chuck got up eight thousand dollars and while on a normal day he’d be thrilled being up eight thousand dollars. He started fantasizing saying to himself, what if our Katie goes to the moon? What if it goes up like Gia?

11:01
Meet us? Because our Katie, it went up like 71% in one day. And then it just completely crashed the following days and that’s what he got, himself caught in. So, what would have been the right way to manage a stock that just moves 71% up? Just going absolutely Bonkers. It would have been to take some profits along the way you’re up 30, 40 %.

11:18
Yeah. That might be a time to start taking some profits off usually before them, but this thing was gapping up quite a bit. So if you’re up 23%, that might be time to take a little bit off the table, protect the profits because you don’t know how high is stocks going to run, but you wanted to give it as much opportunity as you can, to let it run as high as it once.

11:34
Now, that’s kind of like Like what big Chuck was doing the problem was he wasn’t selling anything along the way. You don’t need to attempt to make Max profit on your entire position by taking profits along the way. It gives you the latitude to be able to stretch that stock out a little bit longer. And yes, you would have been stopped out the next day after it made that phenomenal 71% run.

11:52
But the day of of that run you probably were taking some profits. Hey, I’ll take a third off with a 30% profit here. I’ll take another third off when it kept going higher at maybe 60 percent higher on the day. Hey, let’s go take another third off there and then Up with a third of a position that starts a pullback but that night you should have sat down and said, okay, where’s the Line in the Sand?

12:10
Where is the stop loss that it’s such a big move that you’d have to use intraday charts? Probably like a 15 or a 10 minute chart to figure out. Where’s the Line in the Sand? Where will I cut my line and get out of the trade? That’s what big Chuck should have been doing so that all goes back to your trading plan managing, the prophets taking, partial profits along the way, managing the risk.

12:27
And look, we got free commission’s. It’s not like you’re going to be killing yourself with commissions by taking some profits off the table, even if you had three shares. Of our Katie, you could have sold and thirds. I’ve been 75 dollar position, but you could still manage the risk. Just like a person with a lot more money could be.

12:42
Now, part of that trading plan to would be whether you’re in rocket or something else, if the stock goes against you, where you getting out at why, would you be getting out? That’s another question. I don’t even really talked about that much on the podcast, but why are you getting out at that area? What is the reason for is there? A logical reason? If there’s not, that’s not a good place to put a stop loss for me, it’s usually okay, it’s breaking a key trend line break in a key level support to wear.

13:01
If it breaks out, level something is wrong on the stock and I don’t want to be a part of it. More. But that’s what big Chuck has got to be doing here. He’s got to be looking at these trade setups. Okay, how am I going to manage the risk? If I’m fortunate enough for it to go up, am I going to manage the risk? If the stock goes against me and just assume that it’s going to go against you, I assume everyone of my trades are going to be losers and you got to write and I said this before to I’m right, I’m lucky.

13:24
But if I’m wrong, I gotta be prepared for that. It’s probably my fault. Look, there’s there shouldn’t be anything to magical about a trading plan, stocks, go up stocks, go down, you’re basically managing the trade, the prophets. For when the stock goes up, this is how I’m going to manage it when the stock goes down, or when I’m in a trade that goes down, this is how I’m going to manage the loss.

13:41
That should be the key elements of your trading plan. Now yes, why are you getting into the trays of breaking out? Is a bouncing that’s also another important question. What are you going to be going after? So I’m trying to simplify this as much as possible. Nothing else. Not to necessarily map out a very detailed trading plan for you because I can’t it’s got to be unique to each person but to get you started in the right direction, asking the questions that you need to be asking yourself.

14:02
And again, don’t overwhelm yourself with a ton of information. Again, I’m hoping that this podcast episode is simplifying the process for you. Not making it more overwhelming for you, but what I want you to do, is to get rid of a lot of the noise. People were just telling you about their gains, and about their big Winners and stuff like that.

14:17
And are telling you stuff. After the fact, get rid of them. I was following a guy on Tick Tock this past had to just get rid of the dude was so tired of listening to him brag. He was like, bragging, this past week is like hey I got in the game stop at three dollars back in December and now he’s just now telling you about it’s like all of a sudden he wants to be like worshipped in there.

14:33
So many of those people out there that want to be Ripped on Twitter, because that’s how they think they can get massive amounts of followers by looking. Like, they got a crystal ball when they’re trading. So, eliminate a lot of that noise when people are just constantly spiking the football, just get rid of him, okay? But there are some good people to follow out there. There’s some good information that you can find out their online social media at SharePlanner and the memes are great to gotta follow a couple of good.

14:53
Mean, people have some memes on my Instagram account that I like to post because when you get a lot of information to, it’s going to overwhelm you to the point where you’re going to be paralyzed, make a trade, you’re never going to have confidence in your methodology because you put The indicators are too many oscillators are too many moving averages. There’s always going to be a reason not to get into the stock so you want to minimize your dependence on indicators in general mine price and volume.

15:13
That’s really all I look at, I have moving averages on my chart and I pay attention to the moving averages. When a stock chart pays attention to the moving averages by constantly, see it bouncing off the 20 or the 50-day moving average? Okay, I’ll pay attention to that. I’ll know that that’s some support there. It consistently buys. The dip off of a 20-day moving average?

15:29
Yeah, I’ll definitely take note of that. But overall, I’m not muddying up my charts with tons and tons of indicators all I’ll have a lot of drawings on there and stuff like that over the from over the years. Like, if you look at my Apple chart, I’ve got chart notes, going all the way back to 2006, but I don’t have a lot of indicators.

15:45
So to summarize. Hey, have a plan for managing your profits. Have a plan for managing the risk on your traits. Those are two important elements, right? Also don’t overwhelm yourself with too much information. Everybody’s got a different take on this Market. There’s a lot of good information out there but don’t be controlled by it.

16:00
You’ve got to be able to trade what’s going to make you comfortable. You got to trade the right style. Most But if they’re willing to trade, the market should be swing Traders, not day Traders. Because day trading is just a world of problems. When you have that one trade, that goes against you long-term investing, completely done other different animal.

16:15
That’s something that you really need to take advantage of when there’s really good, buying opportunities for the long run. There’s not a lot of those right now because everything’s trading. At insane valuations. So big Chuck. It gives me a good email today. I appreciate big Chuck and likewise. If you guys have any questions, feel free to send them to me.

16:31
ryan@shareplanner.com, I’m doing these twice a week. I’m always answering all those Emails and make sure to leave a five star review if you could those mean the world. To me, it also is like gold in the podcast world, so make sure to go to your preferred platform. Subscribe or leave a review whatever they offer if they offer both do boat and thank you in advance for doing that again, guys, I appreciate the emails to questions.

16:55
Keep them coming and God bless. Thanks for listening to my podcast. Swing trading the stock market. I like to encourage you to join me in the SharePlanner Trading Block, where I navigate the stock 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 and WhatsApp.

17:15
So go ahead, sign up by going to shareplanner.com trading block, 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 you have any questions, please feel free to email me at ryan@shareplanner.com.

17:35
Calm, all the best to you and I look forward to trading with you soon.