Narrow Your Trading Focus | Podcast Episode #160

0:06
Hey, everybody, this is Ryan Mallory with Swing Trading the Stock Market and tonight’s. And today’s episode, it’s gonna be a good one. I got an email from a feller that I’m going to call Gus. That’s not his real name. It’s my redneck appointed name for him.

0:23
We’re calling him Gus. And Gus has to say, hey, Ryan. I want to quickly say thank you for your work on the podcast. It has really helped me through my trading progression as I am sure it has helped so many others. I believe so.

0:38
I’m the feedback that I get is really uh heartwarming, so I always glad to hear that it’s helping everyone. He says, I have a question for you on strategy that might be useful to approach. I have a question for you on strategy that might be useful to approach.

0:54
It is something that I have been battling with for a while now in my trading career. I have been going back and forth on what strategy I want to stick with, as I know I should focus on only one. I have meddled with 1, long-term investing, 2, canceling methodology, which is kind of funny because canceling methodology is kind of like a subset of long-term investing, but anyways.

1:18
Number 3, mass accumulation, going net-free or planting a stock for the future. Number 4, which I kind of think planting a stock for the future. I’m not quite sure some of this uh terminology on that one, but planting a stock for the future sounds like. Long-term investing.

1:34
Number 4, swing trading. Number 5, day trading. Number 6, a little bit of everything. He says, I have He says I have a very good full-time job for the time being, but would love to trade full time eventually as it is my passion. I have been working as hard as possible over the last 6 months to soak up as much information as I can and really pin down a strategy that works for me.

1:58
But as of right now, I am kind of all across the board. I do a lot of mass accumulation, swing trading and long term. Investing and I try to use Canli as much as I can, especially for buy and sell rules. I know my best bet is to really focus and specialize on one of those things so I can learn everything about that one form of trading as well as read the necessary books, etc.

2:19
How long did it take you to determine your strategy? Did you do a lot of reflecting on your past trades to see what worked out best for you? Or did you just decide to commit to one strategy way back when and because you committed to the swing trading strategy, you were able to essentially zero in on the best stocks, buy, sell rules, literature, etc. for your strategy.

2:40
I have had a lot of success with swing trading from the start, considering I really started trading right after the election, and up until now, the market has done nothing but go up. But in some instances, it feels like I sold too early and in a lot of cases like BNGO was up over 100% and could have sold half my shares.

2:56
Take Taking my taking my original investment out and gone net-free on the stock. And then the stock can go up, down, sideways or whatever because it’s just technically house money at that point and you can take your original investment and do it again. In that case, all you really need is one Tesla or one Microsoft to change your life, but instead, I took all my profits and moved on.

3:18
Interested to hear what you have to say about this, whether you like free. Whether you like net-free mass accumulation strategy or not, I also know that this market is not a normal market and stocks moving up over 100% in the short time. And a short amount of time is not always going to happen.

3:36
Anyways, thanks again for all that you do. Sincerely, Cheers. Gus Well, that was a long email, but nonetheless.

3:53
He has a lot to say and I’m gonna. Go through it all here in this podcast, might be a long podcast here. I don’t know. I don’t know what the final time’s gonna be, but we’re gonna go ahead and get through it.

4:17
And for those wondering, my bourbon of choice is Yellowstone. I picked some of this up in the Blue Ridge Mountains. Haven’t been able to find any of this stuff down here, but I have been hearing that it’s a good one. So I’m excited to try this one. It is. Yellowstone select.

4:33
Kentucky Straight bourbon whiskey, it’s 46.5% alcohol, 93% proof. Made in Lebanon, Kentucky. There’s not a lot of smoothness about it.

4:54
It’s a uh. Got a lot of spice. It’s got a lot of corn flavors too. I don’t know what percentage of corn this whiskey is. But you can definitely taste it.

5:17
There’s a lot of history behind this particular whiskey, but it didn’t really get started back up again until 2015. It’s funny, it says on the back of the bottle, it says to the nose, it’s a leather. It says to the nose it’s leather with hints of citrus and oak on the tongue it’s spicy rye with soft cherries fading to smoked caramel.

5:43
In a memorable finish rich with brown sugar and Kentucky tradition.

5:59
When I smell it, I don’t, I don’t really smell any leather. I kind of smell cherries, couldn’t tell you one way or the other whether or not those cherries are soft, like they talk about with, with the, with the taste, like I said, spicy and I can taste that corn, strong corn flavor. No brown sugar though in that finish though, I can tell you that much.

6:23
Anyways, scale of 0 to 10, I give it a 6.6. Thought I was gonna be scoring this one higher. I thought it might get into like the mid to upper 7s, didn’t get there. But now, let’s get back to Gus here.

6:44
He’s talking about these 6 different strategies that he uses. First one, long-term investing, that kind of speaks for itself. It’s buy and hold strategy. You buy stocks that you want to hold for 5, 1015, 20 years. Number 2 is canceling. This is something that comes from Investor Business Daily’s William J.

7:15
O’Neill. Pretty good trader, well known. It’s basically a system for selecting growth stocks using fundamental and technical analysis. You’re not really going short, you’re just going bullish on.

7:32
You’re not going short, you’re just going long. And so C stands for current quarterly earnings per share. And I’m not gonna go through every one of these. It’s an acronym. It’s a long acronym. Essentially, you’re just trying to find these very aggressive growth stocks. That are undervalued and they have great products, they’re scarce products, they’re in a good industry, a good sector.

7:55
And they set up well technically. That’s the cancel. Now, can is more. Long-term investing than swing training. Maybe you could do like a long-term version of swing trading where you’re holding these things for 6 months to a year. I really doubt that it would be all that effective. Not to say that people haven’t done it successfully.

8:12
Everybody has different paths to success in the stock market. But I would definitely consider this more of a long-term investment strategy. Now, he also talks about mass accumulation, going net-free or planting a stock for the future. We’ll just talk about the net-free. That’s essentially where, let’s say you buy. $100 worth of stock and the stock goes from $100 to $150.

8:33
Well, you sell your $100 and then you’re playing with what he calls in the email, the house’s money, which I abhor that expression because I don’t like using that at all. It’s your money, it’s in your account, treat it like it’s your money. Then he talks about swing trading. That’s what I do primarily.

8:49
And then he talks about day trading, which very difficult if you’re working a full-time job to be able to do day trading and do it successfully. It’s very hard to be a full-time day trader as well. I would not want the pressure of being a full-time day trader. Number 6, a little bit of everything. Well, we’ll just scratch off 6 for now because we’re just gonna go through each of these in general.

9:10
He wants to go full time. He wants to develop this passion. It’s something that he really cares about, but he also has a very good full-time job. So my question would be, So, my thoughts on it would be this. Stay in your job as long as you possibly can.

9:26
I wouldn’t quit it until Mm I wouldn’t quit it if you like the job. The only way I would quit it is if you can’t do trading anymore. And it’s actually costing you money by working at your job.

9:43
I quit my job back a long, I quit my job a long time ago and Looking back, was it probably the smartest thing? No, I had SharePlanner that was in its infancy. I was just building this up and I wanted to take it full time. And so I did But man, let me tell you, if I knew how much of a struggle and a challenge it would have been.

10:06
How much of a tru I knew how much of a struggle and a challenge it would have been to be on my own to not get a paycheck, to have that pressure of Providing for yourself and for your family. I might have been scared out of the fact of doing it. I might have been scared out of the idea of quitting my job.

10:22
I might still be working for the man today. Nonetheless. Make sure that if you’re gonna quit your job to become a trader, that you’re a really good part-time trader because the emotions and the feelings that you take on when you start trading, and I’ve done a whole series of podcast episodes on this, so you can go back in time and look at some of them.

10:44
There’s a lot of pressure when you’re starting to trade for yourself. Much more so if you’re a successful part-time trader. It’s like going from paper trading to regular trading. That’s what it’s like going from part-time to full time. So if you can stay in your trade, So if you can stay in your job and you can stay trading, that’s the best case scenario.

11:03
It really is.

11:24
The emotions and part-time trading are so much different than the emotions that you experience as a full-time trader because you’re having to provide. This isn’t like retirement money, this isn’t rainy day money, this isn’t Trust fund money. This is money to survive day to day that you’re having to create.

11:42
That’s why I think it’s important to go into full-time trading with a hobby that you feel like you might be able to monetize, creating another expertise. For me it was SharePlanner. For me it was the idea of teaching people how to trade as well because I had gotten pretty good at part-time trading, and I wanted to show people how to do that for themselves whether they were part-time trading or full-time trading.

12:01
That’s what Sha planner was set up for. So that has also become my passion. So while I’m trading throughout the day, I’m also running SharePlanner too. So I couldn’t imagine really swing trading every day by myself without a community, without people to talk to and just doing that, I think, I think I’d start scratching at the wall.

12:21
So it’s good to really have something that keeps you occupied during the day when you’re not literally in. The act of placing a trade. So to wrap up that point, be good at a, at a part-time trader, be really good at part-time trading.

12:43
Before you make the leap into full-time trading. And by the way, make sure to check out, speaking of hobbies. Speaking of What interests me, check out swingtradingthestockmarket.com. It is my patron website that goes along with this podcast and you’re gonna get all my market research each and every day.

13:01
I put so much stuff out there all the time, all day long. Sometimes I’m sending this stuff out at like 9, 10 o’clock at night. Don’t worry, I don’t think I’m waking up anybody. I think it just kind of silently delivers it, but nonetheless. It’s out there. I’m providing you my Multiple updates each week on my watch list for bullish stocks and bear stocks.

13:24
I’m also providing you a list of the daily setups each and every day to be watching. And that includes long setups and short setups, and I’m gonna be giving you the most interesting charts that I come across each and every day. Furthermore, all the updates on the FA stocks each week, Facebook, Apple, Amazon, Netflix, Google, I’m also gonna throw in Microsoft and Tesla, and you’re gonna get multiple updates on the stock market indices that include the S&P 500, the NASDAQ 100, and the Russell 2000.

13:50
So, check out swingtradingthestockmarket.com. Now, Gus. He is reading a lot of books here. And you gotta remember, he said in his email, I’ve only been trading since the election. So we’re talking about 5 months here, not even 5 months.

14:08
So he doesn’t have a lot of experience. At the moment, he is learning on the fly and he is dabbling in everything. Now there’s no shortage of books out there to read about stock trading.

14:27
You can get books on swing trading, day trading, investing, and they’ll all tell you that they know the magical secret to success in the stock market and it entices you and it makes you wanna Buy the book Don’t fall for that stuff. I mean, there’s no book that’s gonna make you a great trader.

14:43
There just isn’t. Uh, the books will teach you a lot. I like some of the really dry and boring books. There’s books on technical analysis that just goes over patterns. There’s books on Candlesticks and different like charting plat. Different ways to read the charts.

15:00
I like the real dry and boring books because they take the sensation out of it and just make it very. X’s and O’s, to use a sports term. But it’s easy to get and it and it kind of sounds like with Gus here that he’s getting tossed around like.

15:18
Like a toy boat in the ocean, right? I, he’s, he’s reading all these books and he’s picking up all these great ideas and I did that too. I read a lot of books. I, I don’t really read much books anymore. I don’t really even care to read much books on trading. I get these books from people that want me to read it and then promote it or mention it.

15:37
I don’t read them. I just don’t care to. I don’t even have time to, quite honestly.

15:55
But again, I really think that one of the problems that Gus is having here is he’s meddling in too much stuff here. Be good at one strategy. Your your canceling methodology and your long-term investing. Those are completely different things from like swing trading day. I definitely wouldn’t get into day trading.

16:12
I just think that a lot of people messed themselves up with day trading. You break your rules one time and you’re looking at a horrendous situation with day trading, you’re usually dealing with a lot more volatile stocks because you’re trying to get a return in the same day that you bought the trade. On the same day that you bought the stock.

16:33
What I would tell you though is, is that over time, your strategy. is going to mold into your own. Your strategy is going to evolve into something that works for you. And that doesn’t mean you just create something out of thin air that doesn’t really have any logical sense. No, I mean, for me, my swing trading is very unique to me.

16:52
I’m trading breakouts, I’m trading pullbacks to the trend line, but I put a huge emphasis on the psychology of the trade. I really try to stay in tune with how I’m feeling about trades each and every day. How does this trade make me feel? Am I feeling anxious? Am I feeling nervous? Is, is this really a reason to sell the stock?

17:10
Should I be selling the stock right now? And I’m not perfect as a trader, not by any means. I’m a pretty good technician, I’m pretty good at charting, I’m pretty good at trading. But I’m not a perfect trader. But my strategy has evolved to such where I’m very much in tune with.

17:27
Why I do what I do. I, I’m very methodical about taking profits along the way. I’m not trying to shoot for these home runs or these massive, massive gains. I don’t care about making 100% on a trade. If I do, that’s great, but that’s not what I set out to do. If I make 3 to 1 reward the risk on my trade, that’s awesome.

17:48
But that kind of stuff evolves over time, really. The more that you watch the charts, the more that you understand your shortcomings as a trader, the things that you do that’s wrong, and the things that actually work for you, the things that keep the anxiety at a very low level, and that’s gonna come down to like the position sizes that you’re using.

18:05
I get questions every day in the trading block, people are saying, hey, how much money should I trade with I don’t, I don’t know. I, I, I can’t answer that for people. It’s really something that you have to answer for yourself because What is the amount of money that you can trade that’s not going to create a ton of emotions for you and that’s your answer.

18:23
The stuff that’s not gonna keep you up at night, that’s your answer. That’s what you should really be trading with. And a lot of people don’t like that because it’s not a lot of money at times. It’s not a lot of money to them in terms of what the profits they can make, but when you’re not even dealing with commissions. It’s better to be making a few bucks in the stock market than being than Then the trade with a big position.

18:45
And lose a whole lot. So how did I determine my trading strategy? Well, I wanted to be a swing trader. It made sense to me. I was working at the time. And It made sense to me and especially working while I was trading.

19:03
I didn’t have time for day trading. I tried to and it was just a mess. I’m surprised I didn’t get fired for trying to day trade at work because I literally was not working. I would basically stay well after the market closed just to try and make up for all the work that I didn’t do during the trading hours.

19:36
But yes, I, I do a lot of reflection on my trades. I still do. I like go, hey, what am I doing wrong here? Could I improve on what I’m doing? Hey, I just had 4 losing trades in a row. Is there something that I’m doing wrong here that’s creating that? And sometimes there is and sometimes there’s not.

19:51
It’s just sometimes the market like what we’re dealing with right now, as of this podcast episode, the market’s been in a sideways consolidation pattern and it’s maddening for about 2 months. There’s no conviction to the long side, to the short side. It’s just a mad. It’s just pure madness.

20:07
It’s, it really tires you out. And so sometimes when I’m taking losses and sometimes I’m taking gains in any, in both cases, it’s really. Nothing that I’m doing special. There’s nothing that I’m really doing that’s causing these losses.

20:24
It’s just more or less the market’s non-committal and doing less in the stock market is actually the best route going forward.

20:43
I’m gonna wrap this one up here. He, he talks about how one stock to change your life. He mentions that it only takes one stock to change your life. Well, that’s true. I mean, you can, you can hit some YOLO picks, you can jump in the GME with Option calls that expire the next day and you’re way out of the money and you get lucky and you just print massive amounts of money.

21:09
That’s very possible. More than likely you’re gonna lose when you’re trying to find that one trade that’ll change your life. Instead, what I always tell people is have a track record of making good trading decisions from one trade to the next, doing it time and time and time again, whether it’s a winner or whether it’s losing.

21:25
Whether it’s a winning trade or a losing trade, you’re managing the trade, you’re managing the risk, you’re capturing profits when that opportunity affords itself to you. But trying to find that one trade that’ll change your life, people search forever and most people never find it.

21:42
And he talks about the house money. I would get out of the idea of saying, hey, I’m using the house money at this point because That causes you to get pretty sloppy in how you manage the trade. You don’t want to get sloppy in your management of the trade. Instead, You want to always treat the money like it’s your own money.

22:00
Whether that means your strategy revolves around, OK, I’m up 15, 20%. I’m gonna take my original investment out and ride that 15, 20% of profits. Well, Make sure you’re not just saying, oh, that’s house money. I don’t care what happens to it because you want to manage your trades effectively from cradle to grave.

22:18
From cradle to grave, you want to be an effective manager of your trade regardless if it’s your original capital or the profits that you made off of that capital. I’m not gonna call it house money. I hate that term because you made a good trade, you brought in some profits, your investment went up.

22:35
That’s nobody’s money except for yours, so protect it. And whether I really like the net free thing? No, I really don’t because I think, like I said, I think it causes you to get sloppy in the management of the trade.

22:50
I’m not saying that it can’t work. For me, I just take, you know, a half or a third of a position depending on the kind of market that we’re in. Along the way, I want to continue to Make sure I’m capturing as much of the profits from that trade as possible and sometimes when I take profits. initially, like, let’s say I take that 1st 3 off, that does wonders for when this, that final 2/3s ends up falling back down and takes me out.

23:18
At a loss on those final 2/3. Sometimes that, that 1/3 is the difference between breaking even on a trade or actually losing. 4 or 5% on a trade. But again, narrow your focus on the trading.

23:39
You don’t have to be an expert at everything at once. Yes, dividend investing, long-term investing, canceling methodology, that all can come down the road. You don’t have to do all that stuff right now. And most people don’t even have the capital. To really dabble in multiple strategy at once.

23:55
If you’re dealing with like a portfolio of 50 or $10,000 it’s gonna be very hard, but you definitely can’t day trade with that because it’s not over $25,000. But it’s gonna be very hard to do long-term investing and swing trading and mass accumulation and net free and canceling methodology. I’m not even sure what mass accumulation is, quite honestly, but in any case.

24:13
Narrow the focus. You don’t have to be great at this right out of the gate. You’re trying to learn, especially if you’ve only been trading since November election. Of 2020. Learn, learn right now, OK? Develop those experiences, manage the risks so that when you do have a losing trade that education and that experience that you’re acquiring doesn’t come at a steep cost.

24:36
You want to stay in the game. If you have any questions like what Gus provided me with here today, make sure to send them to me, ryan@shareplanner.com. I’m gonna give you honest feedback. I love getting the emails from you guys. Also, make sure to leave a five-star review if you can. Those mean the world to me.

24:52
They really, really, really do. So, if you’re on the Apple platform, make sure to leave one there or Spotify. Anything that allows you to leave a review with some stars. The most amount of stars possible is is the best, and. Make sure to subscribe too, so you can be alerted when I do one of these new podcasts.

25:12
Thank you guys, and God bless.