Breakout Frustration | Podcast Episode #158

0:03
Hey everybody, this is Swing Trading the Stock Market in today’s episode. I got a good one for you. I got a good email. This person comes from the other side of the pond over in the United Kingdom. Last week it was Scotland. This one comes from the United Kingdom.

0:19
This time we are from the UK. And the folks that are on the other side of the Atlantic, they have a lot more challenges that they have to deal with because they’re trading in completely different hours than what the people here in the United States have to trade in. So it’s like, for me, I wake up and I start trading at 9:30. I don’t wake up at 9:30. I usually wake up at like 6:30, 7. Start trading at 9:30. And then my day is over at 4. Well, folks over in the UK they’re just getting started in the middle of the afternoon.

0:55
So it’s a little bit more of a challenging like they’re, they’re having to make trading decisions at supper time. So for this episode, I’m gonna call this person Bitsy. Have you ever met a Bitsy before, you know that they can be a handful and that they can be a little bit on the intimidating side.

1:19
And down here in the South, the Bitsies are the ones that are wearing the pants and the. Down here in the South. The Bitsy are the ones that rule the roost. So Bitsy here says, I would love your advice on when to buy a little backstory.

1:35
I’m a stay at home mom. Trading has been the first thing that brings me joy professionally since I stopped working almost 8 years ago. I have been trading and learning for about a year now, but I do not get to solely focus on the market because I live in the UK and market hours are in the middle of the day, which it is also when I parent two toddlers, darn those babies distracted me.

1:57
I am extremely conservative. My biggest fault so much that when I see setups that I think will work out, I hesitate and ultimately miss the trade. For example, when WYNN, which is something that I just recently bought, I think it was last, which is a stock that I just bought last week.

2:18
She says, I have been watching it for a while. She says, I have been watching it like for a while now. And of course today it finally breaks out. I watched it at 1:38 and thought I should buy, but it had false breakouts in this flag before, so I had it.

2:37
But it has had false breakouts in this flag before, so I hesitated. Then got distracted with the toddlers. Now I see it up almost 5%. I feel like I have missed the move. So my question is, when do you trust the setup has been confirmed and pulled the trigger and buy?

2:56
On the flip side, when do you decide you have missed the move? Thank you so much for the podcast and all your knowledge. I am trying to protect my capital, trade what I see, and I always honor my stops. In fact, I have a tendency to have my stops too tight once I have a winning trade and end up leaving a lot on the table. I am working on placing my stops more strategically along the ride and not to a dollar watch.

3:15
I was 100% doing that and getting too emotional. Again, I appreciate all the knowledge. I am also a member of your Patreon account. That’s swingtradingthestockmarket.com. For those of you who do not know. I really appreciate your charts as a novice, it’s nice to see the patterns. You see, to help me recognize them on my own as well.

3:33
Kind regards, busy. All right. There’s a lot to unpack here on this email, and I love this email because she is asking some really tough questions and things that a lot of people might not ask or be able to come up with the words to ask, but she has put it so eloquently and put the problem in such fine detail that it makes it very easy on me actually to answer it.

3:57
So I’m really excited about this one. And for my bourbon of choice. I’m going with Eagle Rare. If you remember last week, I had a really, really crappy experience.

4:14
I, I used one of these sample bottles that I had in my cabinet it was called Ravens Lace. It was awful. Absolutely awful. I gave it like a 0.0015. So Eagle Rare is going to redeem us this week. It’s 45% alcohol, 90% proof.

4:30
Kentucky straight. Bourbon whiskey. Beautiful bottle. I mean, it’s got like a a. American Eagle etched on it. I mean, it’s just a beautiful bottle of bourbon. When I taste this, I mean, it’s got a nice caramel flavor to the nose.

4:47
I mean, the, the smell is unbelievable. I really like the smell. The notes are, I can taste the yolk, I can taste like this dark chocolate like flavor. And then the finish has this like delayed kick to it. It’s like, you think that the sip is over and then it just kind of kicks you a little bit with the the extra little spice there at the end.

5:04
So it’s really good. I like it. I’m gonna give it about an 85. I don’t think Buffalo Trace is all that far behind Eagle Rare. I know Eagle Rare is the one that everybody loves to talk about, and Buffalo Trace is starting to get hard to find too, but I, I think Buffalo Trace and Eagle Rare, they’re, they’re both quality bourbons.

5:19
Eagle Trace, 8.5. Now, about Bitsy’s breakout frustrations. I’m in the same boat as Bitsy. I, I have in the past struggled with sometimes following the breakouts.

5:37
Because I’m, I’m more of a conservative trader like Bitsy is here, and I don’t like to lose. And so I had to address some of the underlying problems that was creating that situation for me and a lot of those problems stem from trading with too much capital. You’re not comfortable with the capital that you’re trading, so you can’t trust your analysis because your fear is that if you’re wrong, you’re gonna lose too much money.

5:59
So, if you’re struggling with following those trades, cut down the trade size. Cut down the trade size so that you’re not living in fear of being wrong because that’s, that’s also a huge problem. It’s not a good thing that when you have good trade analysis and when you’ve put the charts together and you’ve put the technical analysis out there, and you’ve got your entry and you’ve got your target and you got a stop loss that provides a solid reward to risk ratio.

6:27
And then the trade actually plays out the way you planned it and you don’t take it. That’s a problem. So, if that’s a, if that’s what you’re struggling with, then cut down on the position size. Make it to where it’s less emotional for you because that’s an emotion that’s keeping you from making the trade. It’s fear.

6:42
It’s completely fear. And it’s so, and if it’s not because of the position size, it could be the fear of losing. And most of the time I noticed guys struggle that. Most of the time it’s the guys that struggle with losing more so than the women. For some reason with the guys, it’s a huge ego thing about losing on the stock trade.

6:59
I’m not trying to be controversial here by saying that. I’m just saying my observations has been, men are much more ego driven when it comes to stock trading, they have. They tend to hold on to losing stocks a lot longer than they should.

7:23
But one thing that I noticed that I don’t know if she picked up on this little trait that she has is that she sees it break out and then she starts to put the order in. And she thinks, OK, should I buy it now? Should I not buy it? I mean, so much of trading, the more you can automate the better. That’s why I don’t use mental stops because that requires you to see the stop loss take place and then put the stop loss in.

7:44
I don’t trust myself, and I don’t think most people should trust themselves honestly to put the stop loss in after the fact. Mental stops are very dangerous. So I always have my stop loss and put them in right after the market opens each and every day. I don’t do the good to cancel trades because you kind of risk getting stopped out there in that first millisecond of trading when they can manipulate the bid and the ask prices.

8:07
So I put them in within the first 2 minutes of trading every day. But Bitsy here, she’s not doing that. With her entries. And I do that too.

8:24
After the first 30 minutes of trading has come and gone, I put my orders in for, cause I don’t want to buy a stock in the first 30 minutes of trading. It’s too manipulative, it’s too emotional. I don’t trust the moves half the time because the moves in the first 30 minutes of trading should not be trusted.

8:42
So I put them in after 10 o’clock, and then it just becomes automated. If it hits it hits. And I think Bitsy, Bitsy would probably benefit by putting in her orders and then letting them automate themselves. They hit, they hit, they don’t, then the trade expires at the end of the day.

9:04
Also, I would tell you everybody that’s listening to this, get used to losing in the stock market. You’re going to lose a lot. I lose all the time. The longer and more that I trade, the bigger loser that I am, I guess, right? Because I’ve lost so many times in the stock market.

9:21
I lost twice last week. Wasn’t happy about it. If you’re a member of the Patreon account on swingtradingthestockmarket.com, you’ll know that I even sent a note. I was like, man, it just was an off week for me. I did not have a good week at all. My saving grace was that I was patient about how long I got on the market or and not piling in on the short side cause I had a couple of shorts that got squeezed.

9:43
Early on last week, the good thing is, is that I didn’t let those define my trading year. They were losses. I got out, I moved on. And you gotta get used to losing in the stock market because you will lose.

9:59
And so that’s why it’s important. First, you’re gonna have to acknowledge the fact that you’re gonna lose. And then when, when you lose, you gotta make sure you’re doing it with the amount of capital that you’re comfortable with. If you’re trading with $10,000 and the thought of taking like a 5% stop loss and losing $500 is too much for you, then you shouldn’t be trading with $10,000.

10:18
You should trade it down to $5000 and see if $250 is too much for you. And if that’s too much, then cut it down even further. Maybe it’s $2500 and you’re risking $125 loss on a 5% stop loss. That, that’s what I’m trying to say is like trade with an amount of capital that will make you comfortable.

10:36
Because if you start getting into these trades. Because when you start finding these trade setups and you start passing them by because you’re a little bit afraid of losing, that’s not a good thing. It’s, it’s, why are we even trading in the first place? You have to let the rubber meet the road at some point.

10:54
And so if, if I missed the move, do I chase after it? No, no, I, I don’t. Um, one of, one of the big things. Now, if I missed the move, do I go chasing after it? No, I don’t go chasing after it. And here’s, here’s the reason why if the stock.

11:12
Triggered at $100 and now I missed the move and I see it’s trading at $105. That’s too much of a move. Now, if it’s goes from like $100 to like $100.50 OK, I’ll consider it as long as the risk reward is not distorted. But once you start getting like these moves that are like 5 and 10% higher, your reward to risk is very much distorted at that point and you just got to move on.

11:32
There’s always another trade out there. So I don’t want you to beat yourself up if you’re struggling with this right now and you’re thinking, OK, there’s never going to be a trade like win or, or some other stock ever again. I’ve missed out on plenty of trades. I miss out on trades every day, quite honestly.

11:52
And a lot of it’s because the risk reward is not correct and it’s not in my favor, so I have to pass up on it. That’s just part of trading. You’re not gonna be able to make every trade that there is out there. But what I don’t want is when you have a good setup.

12:08
And you’ve defined the parameters of the trade and you have a plan in place. To completely ignore it because you’re afraid of losing because that usually means that there’s an underlying issue there. And if I had to guess, it’s probably too big a position. Too much capital and the fear of losing is too much to take on.

12:31
Because again, you’re going to be wrong in the stock market. You’re gonna lose a lot. The more you trade, the more you lose. But if you do it correctly, you’re gonna win a lot more too.

12:50
I had a trade today. MCD had just started breaking out at 2:17. And then it went up to 21,750 and I’m still watching, I’m still evaluating it really. I was trying to consider whether or not to buy it at. Whether to buy MCD or to buy Lockheed Martin, that was the two stocks that I was looking at.

13:07
And so I had to make a decision. What am I gonna buy? Well, McDonald’s was creeping higher and higher, and I think at 2:17.41 is where it was trading at, and I said, OK. Right here is good enough. It’s not quite at the breakout level. It’s about 30 or 40 cents above that breakout level.

13:33
Nonetheless, I said, that’s fine. I’m gonna go ahead and go with the trade. It didn’t distort the reward the risk at all. Everything was still in place. So it doesn’t have to be a perfect entry. Like you don’t have to get into the exact penny. If the breakout is at 1720. If the breakout was at 21721, and now it’s trading at 21741, that 20 cents, that’s not gonna kill you on that trade.

13:52
So it’s for me, it’s OK for me to go ahead and still get into it. In the end, you got to trust yourself, whether you’re going to be right or whether you’re gonna be wrong on the trade. You gotta trust your plan.

14:09
You gotta follow your plan. In the end, whether you’re right or whether you’re wrong, you have to trust your plan. You have to follow the plan that you put in place. Because that’s how you ultimately succeed in the stock market.

14:26
You don’t want to be doing this stuff on a whim. You don’t want to say, hey, what am I gonna trade today? Oh, look, GameStop, it’s up 400%. I’m gonna go ahead and buy that today. You can’t do that. That will get you into big trouble. What Bitsy is doing here, planning out her trade in advance is the right thing.

14:45
She just has to execute the plan. Now, I understand that she has some distractions at the house and that does make it harder. She has two toddlers. And I’ve been in that boat too. I mean, I have, I have a son, he’s 13 now, but, uh, there was a time when I was trading and he was like a little 4 year old.

15:01
In fact, one time. The kid goes on that little kid goes into my office and starts smacking a bunch of keys around and bought me a position in the Facebook. By the time I saw it, I was already up $100 on the trade.

15:18
I get out of the trade, to this day, he’s proud of himself. He’s like, Dad, I made you $100 on the Facebook trade. It’s like, yeah, for one, you got me into a way too big of a position. And two, you weren’t supposed to be doing that in 3. You didn’t plan out your trade.

15:34
Now, he didn’t get any of that stuff, but obviously, yeah, I was glad that it worked in my favor rather than like completely backfiring on me. It would have been horrendous if, like, for instance, if I didn’t even know I was in the trade. He goes in there and, uh, he gets me into some kind of like position where I’m putting like 75% of my capital at work and they’re reporting earnings after the bell. I mean, that would have been an absolute nightmare.

15:51
But yeah, it, it is a big distraction when you have toddlers, uh, at home and when you have kids at home. And, uh, right now for me, it’s like spring break. So, um, yeah, I’m having to be a little bit of a parent on the side as well. But you got a plan for that stuff too.

16:09
You gotta figure out your trading plan and how you’re going to trade with kids in the house. If you know that they’re gonna be taking a nap every day at a certain time, but maybe that’s when you can do some of your studying, or maybe at nighttime. When the markets are closed. And the kids are asleep, that’s when you start planning out your trades for the next day.

16:24
All these different little ideas can help you to prepare yourself for the stock market and to be able to find those right positions that will get you into the trades that you’re looking to get into. So, keep that in mind. If you have any questions, please make sure to be sending them to me.

16:50
ryan@shareplanner.com. I thrive off of your questions. I try to get as many of these things into an episode, and I think the good majority of them do find their way into these podcasts. So keep sending them my way. I don’t think that there’s any stupid question that you could possibly ask me. I’ve addressed almost there’s so there’s so many topics that I’ve addressed, and I know there’s still so many more topics out there that are still to be addressed.

17:08
So keep sending them my way. Everybody has their own unique situation. Obviously, Bitsy had a very unique situation here. She’s in the UK. She’s a mom, she’s staying at home. She’s got kids that are running around while she’s trying to look at the stock market, and it’s difficult. So I mean, very unique situation here and I love those unique situations.

17:26
So, send them my way, make sure also that you check out swingtradingthestockmarket.com. That’s gonna be my patron account tied to this podcast. With it, you’re going to get all of my market research each and every day.

17:41
That includes my daily trade setups that I give you from my watch lists, which I also give you each week. My bullish and bearish stocks. I’m going to provide those to you, and from those bullish and bearish watch lists, I’m going to give you my daily trade setups.

17:57
Top of that, I’m gonna give you analysis on all of the FA stocks plus Microsoft plus Tesla and multiple updates each week on the S&P 500, on the NASDAQ and the Russell 2000. So check that out, swingtradingthestockmarket.com. Make sure that you’re leaving some 5-star reviews if you can.

17:57
That really means the world to me when you guys do that. It continues to help this podcast thrive and grow. Thank you guys and God bless.