Time Zones & Trading Income | Podcast Episode #174

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.

0:25
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 today’s episode comes to you from Hawaii, not me. I wish it was me from Hawaii, but it’s not. The email that I’m gonna be responding to comes from a person in Hawaii and for this episode, he’s asked to be called Kavia.

0:47
I had to say that a couple of times just to make sure I got it right, but Kavika writes. I am a 28 year old teacher from Honolulu, Hawaii, and became more interested in the stock market only recently because of all the GameStop shenanigans in January. I knew at the time, that kind of hype trading was not the kind of trading that is sustainable for long-term gains, but I knew I wanted to enter the market to ideally supplement my household income, in addition to learn more about the stock market before I started seriously saving for retirement.

1:16
Thankfully, after listening to a few YouTubers that I ultimately felt weird about and quite frankly didn’t trust, I listened to your three-part series from 2007 and I was hooked. I’ve listened to all of your podcast episodes and then some again. I want to thank you for sharing your depth of knowledge and about swing trading the stock market.

1:33
Then I became way too confident about being up 10% on my portfolio in 10 days, thinking, I can do this, this is easy. And I broke almost every rule you taught me. This one stock I blew it on was Gogo, GOGO. I entered at the peak at $14.15 a share trading right after earnings, didn’t set a stop loss, had the FOMO, which is fear of missing out.

1:54
I didn’t make sure my position size was right. I didn’t even really study this stock or have a plan overall. Before I knew it, it was hurting and it got so much worse. My pride got to me and doubled down. Then I doubled down again thinking there’s no way that it can keep going lower.

2:10
I even dipped into the cash reserves that I typically use as a cover for my unsettled funds cash account so I can enter trades if need be, as of this writing, it’s still down, and I’m glad I exited when I did, even if I had lost a fair chunk of my account, I learned so quickly that I just need to accept those losses and move forward.

2:27
After reverting back to your teaching, now only 10% down from my original portfolio and I’m committed to keeping my head on straight. Needless to say, I’ve learned a lot in the last month from my major mistakes and even these wild market conditions. That being said, trading has been very difficult since the market opens at 3:30 a.m.

2:46
Hawaiian time and closes at 10:00 a.m. Most of my pre-market research has been done after school, so there’s no issues there. However, I am not sure about how to most effectively enter and exit my positions, especially in the fog of the early morning, and since I can’t be watching the markets from about 8:00 a.m. till 10:00 a.m., I typically wake up at 4:30 a.m.

3:06
Good grief. That sounds brutal. But only have about an hour or so to enter or exit positions. Do you have any suggestions on how I can best navigate the stock market from my time zone? What are the kinds of things that I should be looking for for my entries and exits? Is there a percentage of gains where I should start taking partial profits, or is it dependent on the trade?

3:26
And he signs it Mahalonoe, which means thank you very much. The only reason why I know that is because I googled it and even Googled the pronunciation for it, and it took me about five takes to say it actually right. So, Mahalanoi, and for the drink of choice.

3:42
I’m going north of the border to Canada to get enzyme red, fine Canadian whiskey. Never had it before, at least I don’t remember ever having it. It’s not as bad as I thought it would be. It’s 40% alcohol, 80 proof. The smell of it’s like a, it smells like rubbing alcohol, to be honest.

4:00
That’s what I pick up from it. Maybe a little bit of a pine flavor when you smell it. The taste has a little bit of a kick, a little bit of a sweetness to it, but it’s not like a defining flavor that I would pin to it. And the finish is very bitter. It just doesn’t sit well. I can get through the drink probably, but it’s not something that I would ever, ever go back and buy.

4:18
I just don’t. I think it’s good. I think maybe try, if you have a bottle of it at home and you’re not sure what to do with it, I’d probably be looking for some kind of cocktail that I can make with it, and I’m not even sure that would help much. Overall, I’m gonna give this a 48, 4.8. It’s just not good at all. So, Kavia has some problems here.

4:35
And the reason why I read the whole email is because a lot of times you can pick up, especially on the second or third time reading the email like I do. Things that are said that they’re not even really writing to you about, but you pick up on that you’re thinking, you know what, this could be a problem too, that the person has in their trading and doesn’t even realize it.

4:52
In fact, I always like finding something that they’re not even asking about that I can pinpoint. Now, one thing that I would say is, don’t put the pressure on yourself to supplement your income. If you remember in the first paragraph of this email, Kavia says, I wanted to enter the market to ideally supplement my household income in addition to learning more about the markets before I started seriously saving for retirement.

5:08
It all sounds great. Hey, we all want some supplemental income that we can make on the side. That’s fine. But to put the pressure on yourself in the stock market to make a supplemental income just creates more pressure and it also can infiltrate your trading decisions.

5:24
Look, when we get into the stock market, there’s always a reason why we get into the stock market. Almost every time, it’s not a good reason. For me, I started off pretty young, and then I took a little bit of a break during my college years and then I got back into it because I wanted to get rich. I didn’t like working for corporate America.

5:41
I wanted a way out. Now, those kinds of tendencies will make it to where I’m adding this additional pressure to my trading, and in the process, could be going for gains that are not there, ignoring stop losses along the way because I need to get rich now so I can get out of corporate America.

5:57
I didn’t like it. But those feelings and those thoughts are the last thing that I need to be thinking about when it comes to my trades because the market doesn’t care about those things and so oftentimes we get into the stock market and we try to put on the market what we’re feeling, what we’re wanting, what we’re needing out of the stock market and the stock market is gonna go up and down with no care in the world about what your goals are for trading.

6:20
So when you’re trying to put those goals on the market and the market doesn’t have those goals because you’re just an individual in a sea of many, many, many traders that are buying and selling. You’re just setting yourself up for failure. So, wanting to supplement your income, that’s great. But let that become as a result of you becoming a better trader, not because that’s what you want out of the market.

6:38
You can supplement your income because, hey, I applied myself to becoming a better trader to blocking out the noises, not putting the pressure of having to get income out of the market instead of just learning the craft. It’s like art. Nobody says I want to be an artist supplement my income and they’ve never drawn anything before.

6:55
Usually, there’s a passion there for drawing. Usually there’s a passion there for creating something on a canvas. And as they get better and better and better, they start to realize, hey, my art can supplement my income. I’m working here, but I can make some money on the side by doing these drawings and painting, and all of a sudden, they do have a side income.

7:12
But I don’t think I’ve ever met an artist that gets into painting to supplement an income. Usually there’s a talent or there’s something that they’ve developed over the years, and then when they get good enough, they say, hey, you know what, I can supplement my income, but you can’t get into it for that very reason. And so in trading, it’s the same thing.

7:28
You can’t get into it for that very reason because you’re putting this pressure on you that the market doesn’t care about. So that’s the little thing I picked up on Kavia’s email. But I’m glad that Kavia’s listening to the podcast that Kavia has listened to all the episodes and then some, and I’m not trying to just, you know, pat myself on the back, but these are really good episodes that are going to help you develop as a trader because so often what we’re looking at is stock picks and what should I buy now?

7:44
One of the main questions that people ask me is, is, hey, Ryan, give me a good stock pick I can make some money on, and that’s the wrong question. The real question should be is like, how do I become a sufficient self-sustaining trader that makes good decisions on the stock market over a long term period of time.

8:06
So then let’s get into Kvica’s next paragraph here where he talks about becoming very confident in the trading, up 10% in 10 days thinking this is too easy. And so many people fall in that trap. I fell in that trap too. When I had taken that little hiatus during my college years and I came back to trading.

8:24
I remember after like 4 or 5 trades, I thought it was easy again. And this is after I just experienced the blow up in 2000 when the NASDAQ.com bubble completely capitulated. And prior to the NASDAQ.com bubble, I was mainly investing and learning the tricks of investing, and now I’m going into trading here.

8:43
And I make 4% here, 10% there, 60% there, and all of a sudden, I know how to do this stuff. And then I become the very person that I preach against today where I’m creating a spreadsheet. It’s like, OK, if I do 200 trades a year and I make an average of 10% of every trade, not even accounting for losing trades. I’m gonna be a millionaire, I’ll be able to escape corporate America.

8:59
Well, what do you think happened? Nothing. I’ve lost money and thankfully at that time I was trading like hundreds of dollars and stuff like that so that it wasn’t something that I couldn’t recover from. But man, there was a lot of lessons that I learned from it. So Cavica is very common, up 10%, and that was the downfall.

9:14
Overconfidence, confidence will kill you in the stock market. It’s one thing to be confident in your skill set, to know that you’ve done this long enough to where you have the confidence of following your trading plan. It’s another thing when you’re just going into it like because I’ve made some money on these different trades. I know what I’m doing now, but you really don’t, you don’t have a basis to fall back on.

9:31
You’re just assuming because you get into the stock that it’s gonna go up and that’s not how it works. So Gvia gets into Gogo, very volatile stock, very crazy stock. I can’t recall a time that I’ve ever traded it. There’s a possibility I traded it years ago, but of late, no, I definitely haven’t traded it.

9:47
But I know people who have blown their accounts up on Gogo, and this is pretty much the same thing here, gets in, it starts going against them after getting in at 4:15, instead of having a trading plan that says, OK, if it crosses below $13 I’m out of the trade. No, instead, taking a loss wasn’t prepared for it, mentally wasn’t preparing for it because they were needing the gains to supplement a household income.

10:07
So what does that person do? Well, I need to get back to break even sooner. So I’d like to get out of this trade without taking a loss. So the person doubles down. The market keeps going down even lower, taking Gogo with it. They double down again thinking there’s no way this thing could go lower.

10:24
But let me tell you, when you think the market can’t go any lower, it goes lower. And then your emotions start to really hit you. And when you sell, that’s usually the bottom. Now that’s not a reason for never selling because the market will always get the upper hand on you when you think you can outsmart the market.

10:41
For me, the reason why I’m able to survive the stock market all these years is because I take what the market is willing to give me. I don’t try to force my will on it. I don’t force expectations on it. That’s one thing that I don’t like about target prices when it comes to trading is that people hold dear to target prices.

10:57
This is what you have to get out of it. I look at it as this is what the potential is. Will I get that? I sure do hope so. I hope I go beyond the target price, but I’m not going to say it’s mandated that the market gives me my target price or nothing. Look, my target price is 15 or 20% away and I can only get 5% on there and it’s struggling with some resistance that I didn’t foresee when I initially got into the trade.

11:20
I’ll take that 5%. I don’t want to take a loss, 5%’s way better. It’s way better. Let me tell you real quick too, before I continue. swingtradingthestockmarket.com, that’s the website that goes along with this podcast. With it, you’re going to get all my market research charts, that’s including the S&P 500, the Russell 2000, the NASDAQ 100.

11:37
I’m gonna update that for you each week, as well as my bullish and bearish watch lists that I’m following each and every week. On top of that, you’re gonna get updates on all of the fang stocks, and each and every day, I’m sending out my daily trade setups that I’m following and the most intriguing charts of the day. So check that out, swingtradingthestockmarket.com, you won’t be sorry.

11:55
Now, Kvica gets out and you know what, this thing has actually rallied since Kvica has gone out. And that’s also a problem because a lot of times people say, you know what, if I just wouldn’t have gone and out, I would have made all my money back. And so what do they do next time? They don’t get out. Stock just keeps on going down because they think that what happened in the last trade is and what they should have done in the last trade will help them in the next trade.

12:16
But look, when you get in a trade and when you get out of a trade and when you’re done with the trade completely. The stock’s still gonna go up or down. The stop losses are preventing you from one, doubling down and trying to add more to your position. It’s your exit out of a bad trade, and it prevents you from getting into a far worse trade like Gogo that you’re gonna be doubling down and doubling down again.

12:35
Stop losses also help you from getting into the trade like a GoPro that perpetually sells off over the years and you never get that bounce back to break even. Remember a long time ago when I did a podcast on Silas? A friend of mine, the dude has GoPro at 90 still.

12:51
He’s still hoping that that thing will get back to break even. Maybe it does. I hope it does for his sake. And if it does, I’ll probably never hear the end of it, but nonetheless, I told you I should have held on to that stock. No, but it was like $90 in like 2014. He’s still holding it, and it’s sitting at $11.55 right now.

13:09
That’s what stop losses help to prevent happening to you. Getting into a stock that wipes you out, gets you into a massive drawdown. So, we’ve talked a lot here, but we haven’t actually talked about the Hawaiian trading and dealing with these crazy time zones in relation to the market.

13:26
Just because you live in Hawaii doesn’t make it a crazy time zone, but how it relates to the stock market, yeah, trading in Hawaii is kind of crazy because it’s open from 3:30 to 10 for Kavia here. And when I’m talking about 3:30 to 10, I’m not talking about in the afternoon and evening, I’m talking about in the early morning AM.

13:43
So I try to look at that the same way I would look at if I was at work and I was trading and I couldn’t always be looking at my computer. Kvica wakes up at 4:30, about an hour into it. That’s OK because a lot of times the market needs a good 30 minutes to an hour to settle in before we really know the true direction of a stock market.

13:59
For me personally, I like to hold off buying any kind of a stock until after at least 30 minutes I’ve traded. So Kavia’s good right there. But now Kavia is not able to watch from 8 a.m. to 10:00 a.m. That’s about a two-hour stretch. That’s essentially the last two hours of trading.

14:14
So on the east coast of the United States, that would be like from 2:00 p.m. to 4 p.m. where the market closes at. Now, there’s a lot of volatility that can pop in around 2:30 to 4 p.m. or in Kavica’s case, from 8:30 to 10:00 a.m. So you gotta be aware of that. One of the things you want to make sure is that once you’re walking away from the computers, and every time that the market opens, you want to make sure that you’re putting your stop losses in after the market opens and that they’re in place throughout the entire day.

14:40
And if you’re not able to be there and you’re wanting to take partial profits along the way, which is something that I advocate for, know where on the chart you want to start taking profits at. For one trade, it might be 3%, another trade, it may be 4%. It also may be dependent on the type of market that we’re in.

14:59
Right now, I’m taking profits a little bit quicker because the markets had a lot of back and forth of late. So I’m looking more aggressively to take that first third off the table, which is around like 3 or 4%. And then after that, maybe it’s like 7 or 8% in a conservative market in a more aggressive market. I might be waiting till it’s like at 12%. And then I let the rest run.

15:14
I update my stop losses every night. Based off of what the charts are telling me, and then I apply those stop losses the very next day. When you’re in different kinds of time zones, it’s essential to do your research the night before. I do so much of my research the night before.

15:41
I draw a lot of charts during the day, but I’m looking at my trade setups the night before because I want to make sure that I have a grasp for what’s moving, and when I’m doing them the night before, I’m not feeling the pressure of a market that’s open, and maybe the market’s already open and it’s rallying and I feel this pressure to get into a new stock.

15:59
No, I when it the night before, I already know what stocks I’m looking to get long on. Yes, I still go through my watchlist every day and during the market session to make sure I’m not missing anything, but I still have done about 80% of my research the night before and I’ve come up with my stops, my setups, my entries, potential targets, what’s the risk reward on the trade, and so forth.

16:00
And Kavia needs to do that too, needs to be doing the majority of the work the night before so that the research that you’ve done the night before is being played out during market hours. And just because you can’t be in front of your computer when the market’s open, that’s not always a bad thing, especially for more emotional people. Depending on your circumstances, you can always formulate a trading strategy around it.

16:20
I did it when I was in corporate America. I think Kavia can do that there in Hawaii. And then you gotta find the silver lining that that trading strategy and your circumstances presents to you. I think for Kavia, not having to be feeling the pressure all day long and being able to step away from the computer because Kavia’s a teacher takes a little bit more of the emotion out.

16:39
Yes, there’s opportunity costs, maybe there’s some opportunities because Kavika is not in front of the computer that he misses out on, but overall, you have a set of cards that you’re dealing with in life. You want to become a trader, you got to figure out how to make it with the cards that you’ve been dealt. If you enjoyed this podcast, I highly encourage you to leave me a 5 star review on Apple or Spotify or whatever platform that you’re listening to.

17:02
Make sure you’re subscribed because every time I do one of these things, you’ll be notified when I do one. So it really helps me to continue to grow this podcast and provide you each and every week with these podcast episodes on swing trade in the stock market. Please send me your emails. I do get to them, almost all of them, ryan@shareplanner.com and let me know what’s on your mind, how I can help, and I’d be glad to do whatever I can to make trading a little bit easier for you.

17:25
Thank you guys, and God bless. Thanks for listening to my podcast Swing Trading the stock market. I’d 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, you will get a 7-day trial and access to my trading room, including alerts via text, and WhatsApp.

17:45
So go ahead, sign up by going to shareplanner.com/tradingblock. 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. If you have any questions, please feel free to email me at ryan@shareplanner.com.

18:06
All the best to you and I look forward to trading with you soon.