The Secret Sauce | Podcast Episode #167

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?

0:30
Hey, everybody, this is Ryan Mallory with Swing Trading the Stock Market and we got a good episode here for you. Today or going to talk about the secret sauce of trading, is there such a thing, especially for those who are part-time, Traders and who can’t dedicate hours upon hours of their time each and every day to the stock market like somebody like myself. Does, I spend a ton of time in the stock market each and every day I’m constantly watching and making research notes and trading notes and making trades and closing out trades. So all sorts of stuff that I do. But for the part-time Trader, what’s that secret sauce? That allows them to balance work life and their passion for the stock market.

1:04
So, today’s email From a guy we’re going to call Leroy and I’m not using the name Leroy, Brown from Crocodile Dundee to that came out in like, what the 80s or 90s. I love that movie and I love that character downtown Leroy Brown, but he’s asked to be called Leroy and tribute to his late grandfather who passed he believes that it would be a perfect Alias for this podcast.

1:24
So Leroy, right me and says, hey Ryan, I have a Fidelity account since the day I turned 18, that’s awesome. It’s awesome parenting that encouraged you to go in that direction he says I traded Ox all through college took option, trading classes, and even competed in a stock market trading contest against other schools.

1:42
And the one thing I don’t remember learning is risk management which you preach on your podcast pretty much every episode. Sure, I could tell you what the iron Condor is but pre your podcast. I did not have the same respect for risk management as I do now, with the market raging in my limited knowledge of risk management in my trading, during this time, I realized with my trading, I could not beat the market, realizing this I reverted to an ETF sector.

2:05
Rotation strategy and I’ve been beating the market for some time now. But my love for trading has been revitalized after listening to your podcast and I opened a separate brokerage account utilizing, newly acquired risk management strategies. I have recently exited all my trades in this account and want to know, how do I find the next one?

2:22
I have two young kids and I work 40 plus hours a week. Is there a secret shortcut to finding good trade setups? Is there a filter criteria that can limit the time? Looking through the charts? When time is limited. Thanks again for the info. You provide. On your podcast regards Leroy.

2:39
All right before we start tackling Leroy’s email here, I got a four roses small batch. I love this bourbon. It’s just such a good sipper, right? It’s a weekday sipper. I love it. I usually always have a bottle of it and I don’t know, I’ve probably gone through six or seven bottles of it over the years, just a really good quality Bourbon and it’s very affordable.

2:58
I get it at like, Sam’s Club for 25 bucks or something like that. And to the nose, it has a nice fruity smell. It’s not overwhelming. I mean, it’s not intoxicating, it’s just there. When you take that first sip, it’s smooth. And then it goes a little bit more on the peppery site, which is not like what you get from a lot of Bourbons.

3:14
It goes smooth. And then at the Finish there, you get a nice little kick, but that smoothness has a very nice pleasant caramel flavor. It’s very balanced. And then when you get that little kick at the end, it’s not overwhelming. It’s not going to be too strong and remember, this is 45% alcohol, 90 Proof so it’s decent but it’s not like overwhelmingly strong.

3:35
And again that’s one of the reasons why I like it as a weekday sipper, it’s just a really good one. I’m not really crazy about it. On the weekends weekdays it’s a great one to have because it’s cheap portable and it’s easily accessible. You’re not going to have to go hunt for this one scale of 1 to 10. I’m going to give it a 71. I’m not disappointed any time.

3:51
I drink it but I wouldn’t say that I’m like in love with it but it’s solid. It’s a 71 solid. So back to Leroy. So this guy, he’s been in the market for a long time. He’s traded. He’s competed against people and contest and the one thing they need, Doesn’t ever remember is being taught about risk management on his trades?

4:09
That’s a crying shame. It really is because I don’t feel like it a lot of people preach it to anybody because they don’t understand it themselves and they don’t practice it themselves. I mean, think about it, if you have a financial advisor, you call them up. As anybody ever asked a financial advisor? How are you going to manage the risk on the trade?

4:24
There’s enough people listening to this podcast. That I know you whole bunch of you guys have financial. Advisors, I would encourage everyone of you guys, the call your financial advisor and say, hey, the stock Get kind of at all-time highs. It’s going a little frothy. Not sure how long we can hold up before, inflation starts to take, hold of this Market.

4:41
What is your risk management plan? Now I’ll tell you this for most financial advisors, they’re going to read you. Some kind of script old Fidelity or Morgan Stanley or at Goldman Sachs, they’re going to give you some kind of feel that they already have written out. But listen carefully to what they’re saying. Are they actually telling you anything actionable now?

4:58
They’re probably telling you how they have staff and how they have people that are constantly monitoring the state of the market in the state of the economy. And that They will be ready to act when need be any down shifts. In the market, it’s going to sound like you’re listening to the federal reserve’s fomc statement. It’s going to be rehearsed. It’s not going to be anything that will instill, confidence EU, but do that. And let me know if I get enough responses from you guys. I’ll read the responses of what you guys tell me. I would love to hear those responses that you get from your financial advisor.

5:30
About how are they managing the risk with the market at all-time highs? And how Are they protecting you from further downside? Because most of the guys, they don’t, they don’t really care. I’ve known a few financial advisors in my lifetime that are pretty good. I have one. That’s a friend right now. He’s pretty good, but I don’t put a lot of confidence in these people.

5:48
I really don’t for the most part, were one time. A guy told me. He says, I just try to provide the returns of the S&P 500 and match them. Exactly. And I said, well, why don’t you just tell everybody to invest in spy? Then he looked at me. Like I was weird or something. I was like, I can’t even figure these people out. Sometimes any case you never was taught anything about risk.

6:05
Management and yet somehow he survived over the years but he went into the sector rotation and that’s not a bad strategy either. Essentially if you don’t know what it is and ETS sector rotation, there’s ETS and those are exchange traded funds. And this particular instance, where these ETS mirror specific sectors, what you’re going to do is you’re going to have an ETF that mirrors, the Industrials and another mirrors technology and another at Staples or financials, they have one for every sector.

6:29
So like XLF would be your financials ETF Excel. I would be your Industrials ETF. And so what he’s doing here is he’s kind of right in the hot hand of these ETS maybe he shorting some to I’m not sure he doesn’t specify that in his email but he is involved in the rotation. When they start falling in favor, he’s getting long when they’re falling out of favor.

6:47
He starts selling those positions and it’s a good strategy, you can do that, you just got to stay on top of it. You’re following about eleven, sectors, and you’re just writing the hot ones. And I’m thrilled to that his love for the stock market has been revitalized listening to this podcast. I such a huge compliment to this podcast and what I’m trying to achieve with it and so he closes out all of his possessions.

7:04
And now he Wants to start trading again and he wants to know how do I find that next trade? But he gives me a caveat. He’s got two young kids and works 40 hours a week. So how does he do it? So a lot of times when I see an email like this, I’ll probably dismiss it outright, he’s wanting the Holy Grail of trading that does not exist, but yet I’m not going to dismiss it because I really do believe.

7:22
It’s a sincere question that this guy’s asking it’s not out of laziness. It’s like, man, I love trading. But I’m strapped here man, I’m providing for my family, I’ve got kids. And when you have two young kids, they take a lot of time and energy. I have a 13 Year old boy, love that boy to death, but man, he takes a lot of time and energy to and he’s not even young relatively speaking.

7:40
You know, he’s got about six years before, he’s graduated from high school and off on his own. So, I’m on the tail end of it per se where he’s on the beginning stages of it. And yeah, it takes a lot of time and there’s a lot of distraction there, so what can he do? And I’ve done a lot of podcasts on part-time trading, but I’ll use this moment here to talk a little bit, specific to his situation.

8:00
For one, what I would do is try to limit the stocks that you’re watching. So, it doesn’t take much to follow 50 stocks. Honestly, it really doesn’t and so you can create a list of stocks that you find that are the most interesting. For instance, for me, if I was doing it, the first seven that I would put on, there would be Facebook, Amazon Apple Netflix, Google, Microsoft Tesla, and then you can find some other ones that Intrigue, you, that give you a little bit of action.

8:24
So that you’re not just like sitting on your hands all the time. Like, Walmart wouldn’t be on the list because it doesn’t make huge moves Chipotle probably wouldn’t be on my list either because it spends a lot of time. Going sideways before it makes those eventual moves higher but I would probably put something like day to dog. I put some software stocks on there, some semiconductor stocks like Nvidia, AMD and UK Lacey from the software side like CRM.

8:48
No. Be the on the Industrials. You got like Caterpillar maybe throw in a couple chemical companies like CC got to have some health care. I would throw the biotech CTF on their IBB Gilead, maybe something like Pfizer, and these aren’t like set in stone. You can swap them out and put some new ones in there for And over the past year, K&G DraftKings and and pain have become very, very popular, stocks to trade.

9:11
I have those in my must watch list. I have a must watch list. I have about 75 to 80 stocks in that list, that continues to grow over the years. But every time I, you know, a stock starts to catch people’s attention and it gets heavily traded and provide some good trading opportunities. I will put that in my must watch list because I want to always know what those stocks are doing.

9:28
And that’s what really Leroy needs to do to needs to create, a must watch list. If you feel like 50s too much, then cut it down to 30. I mean, there’s no like, Absolute number. That’s right or wrong but I feel like the more that you can include in it, the more stocks that you can watch go through them once a week using technical analysis.

9:44
Look at the setups that are there come up with a list of about 10 to 15 stocks each week. That you think that might work for you? Maybe write out their trade parameters. I mean here’s the thing. I can’t completely make this an autopilot thing for you. One of the things that I do provide swingtradingthestockmarket.com and I know this is kind of a Shameless plug in, but I gotta say it anyways.

10:03
Because I do provide a ton Of market research. So that’s going to keep you in the know as it pertains to the S&P 500, the NASDAQ 100 and the Russell 2000. So, I’m providing you updates there on all the Fang stocks plus Microsoft Plus Tesla. And I’m giving you my watch list each and every week that you need to be following.

10:20
Usually there’s anywhere from 20 to 50, that sometimes 60 stocks on that list, on each list, ones, bullish ones, bearish and then you’re going to get my daily set. As these are usually somewhere in the realm of like, 69, stocks that I’m watching each and every day for trade setups. Yes.

10:35
And I usually give you a like a analysis on those stocks there and why I’m watching them. But why do I bring that up? Is because I’m providing a lot of the research for you. So that’s one shortcut, but if you insist on doing it on your own, then I would start with creating a must watch list, what are some of the stocks that have caught your attention?

10:50
That you like trading, or that you find the most intriguing and have a little bit of action to them? Like, when I say action, you don’t want like crazy volatility, okay? You don’t want GameStop kind of craziness but it has maybe like a beta of to or 1.5, that’s good. And for those who don’t know, Beta is, it’s essentially how much does a stock move relative to the market.

11:08
So the market moves at a beta of 1, but stock moves at a beta of to, then that means that it moves twice as much as the overall stock market. So, if the stock market goes up, one it on average goes up to and vice versa. If it goes down, so there’s that, you can’t avoid the charts. If you’re a technical analysis person, you need to be looking at those, especially if you’re trying to do this on your own.

11:28
I have the SharePlanner trading block, where actually put out all my individual trades and real-time alerts. So there’s that way to a lot of people mirror. Those trades. That’s what I would do. I used to, when I was in Corporate America, carry a little book around with me in the morning, I’d wake up like an hour before work. It’s been about 30 minutes looking at the stock market scene with the Futures did and of course I have my must watch list and I was always watching these stocks that I was following each and every day.

11:52
And then the morning I usually had about 15 to 20 minutes at work where I could go to the charts and say okay, I’m going to buy this stock if it hits there and I’ll put my orders in, I’ll put like two or three orders on. Some of them would hit some days. None of them would hit now. Little bit more risky and some ways because if there’s a big sell-off or there’s like a big cataclysmic event, you got to make sure you have those, stop losses and or you’re going to get burned.

12:13
But that gives you one way of playing it depending on what your work schedule is like and how much access you have to an actual computer. But I also found two on my trade setups that a lot of them would carry over to the next day and they still do like if I like DraftKings and pain and they were setting up nicely but they didn’t trigger that day.

12:30
The next day, they were still usually a valid trade setup in, that would be watching the following day as well. So a lot of times your homework will carry over to the next day as well. And you’ve got to look at your schedule to I mean, if you’re going home and watching Laverne and Shirley at night and spending a couple hours there, well that’s also time that you could be using hooning in your skills, learning developing your trading skills and you know, reading going through research, technical analysis, the charts.

12:54
Because in the end we all have 24 hours in our day. Now he has a 40-hour job, that’s non related to the financial market, so that does make it hard. Whereas my 40 hour plus job is looking at the But you still got to find where are you putting your priorities at obviously work, family. The kids that’s going to be your top priority but you guys start looking at that next tier of things that you’re doing. Are you always going out with your buddies at night? Or are you doing something that taken away from you being able to focus on your trading?

13:10
And so you got to prioritize and make it a hobby, make it something that you enjoy doing, when you have free time to do the stock market, and as a part-time Trader, you don’t have to trade every day. If you’re in a position, you still want to be using stop losses and all that stuff and making sure that you’re managing the trade each and every day. But let’s say you’re out of a trade and you don’t have anything else and you know that works going to be busy in the weeks ahead, you can always take a little bit of time off and also to the whole risk management thing.

13:29
And the fact that he wasn’t really taught that growing up. And when he was in these competitions is a real crying shame. Because what everybody wants to tell you about the stock market is how much money you’re going to make, but they never focus on what happens when you’re not making money. In the stock market goes against you and that’s where the risk management comes in.

13:45
It also helps you to make sure that you’re walking away as much profit as possible to That same risk management. Also rolls into other areas of life to take for instance, motorcycles. Now, I know there’s tons of you guys and gals that ride motorcycles, and I’m not knocking it at all. The reason why I don’t ride a motorcycle, not because I don’t think it would be fun.

14:01
I think would be a blast, but I don’t write it because of the whole risk to, it doesn’t mean I wouldn’t enjoy it but by lay down that motorcycle on the asphalt or somebody hits me good chance, that it’s lights out for me. And so I look at motorcycles as like, high risk, High reward. But I still feel like, you know, if it can possibly put you in your grave.

14:18
Wave with any accident that you’re in, it maybe even higher risk than the reward that you’re receiving from it. So again, not to make anybody upset because I know people are very passionate about their bikes. I got nothing against it. I’m just saying for me from a risk-reward standpoint and me not having the greatest faith in my ability to ride a bike.

14:35
It’s not for me. If you enjoyed this episode and encourage you to leave a five star review on the platform that you are listening to it on. If it’s Amazon, leave it on Amazon or Spotify or apple. I’m not all of them. Have the ability to leave a review. So if you’re listening to one that doesn’t have And I’d encourage you to look it up on one that does like, the Apple podcast app that would be a great way for me to continue to build my audience to get more Outreach and to provide you guys with constant good content.

15:16
So thank you guys. Thanks for listening. God bless you. 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 market. Each day with Traders from around the world with your membership.

15:32
You will get a 7-Day trial and access to my trading room. Including alerts via text email and WhatsApp. 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.

15:52
Every day you have any questions, please feel free to email me at ryan@shareplanner.com all the best to you and I look forward to chatting with you soon.