When Trading Sucks | Podcast Episode #208

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. In today’s episode, it’s not gonna be an email. We’re gonna talk about me a little bit here because this past week of trading has not been the easiest for me and the title of this podcast episode is going to be when trading sucks because this week it sucked.

0:48
So gonna get into that, but first, what am I drinking? I’m drinking. Old Forester, 1910. Now you might say to yourself, Ryan, you’ve had that on the show before. You’re right, I have a long time ago. But I never actually did ratings back then. So, with that being said, I feel like it’s only fair since this is actually one of my favorite bourbons to actually give it a rating.

1:09
Now, really nice color to it, very dark, very pretty to the eye. To the nose, man, it’s got some good smells of like a really nice vanilla type smell to the nose, to the taste. Pick it up like caramel and toffee, man. It’s like eating a Snickers, but then the burn comes in right at the end, but it’s not like an overwhelming burn where you feel like you’re drinking old Granddad 114.

1:31
It’s very refreshing. And so I would give this an 8.7. 8.7. Do I consider it an everyday sipper? Yeah, I think you can. I think it’s gonna be more based off a budget. I mean, if you’re more constrained by budget, you’re better off going with old scout or a 4 roses small batch.

1:49
This one’s gonna cost you close to $60 if not more. I still like the old scout for the money being spent and 4 rows of small batch is a great one too. But the taste, it’s smooth, it burns at the finish and it lingers pretty nice. So I’m gonna give it an 8.7, like I said, and The proof is 93%, the alcohol content’s 46.5%.

2:10
I still like them around 50%, but this isn’t too far off the mark. So, 8.7, strong score. It’s one of the best old Foresters outside of their birthday products. I like it a lot. So, 8.7% it is. Now, when trading sucks, that’s the best title I could give to it, because this week really did suck.

2:30
Two trades that I made, both of them crapped out on me. The first one was Take-Two Interactive and now I had just gotten out of it too. I had to get out because of earnings. And then I got back into it because it was a really fine looking trade set up in a market that wasn’t offering a lot of good trade setups at that particular time, still isn’t actually.

2:48
But for the purposes of that trade, that was one of the better trade setups out there. The second one was Tilray. It’s a cannabis stock, had a nice double bottom base, one of the best setups out there within that industry. Breaks out, pulls back to the support level. That’s where I get in at, man, I’m up like 4% at one point.

3:05
It then proceeds to sell off the next day for whatever reason, and then the third day, it gets coverage initiated on it by Barclay. And the stocks trading at $12 they come out and say it’s underweight and that they have a price target of $10. What do you think that’s going to do to the stock?

3:21
Of course, sends it down to the tens because these days, price target increase or decrease, everybody just thinks it’s supposed to hit their target that exact day. I mean, I kid you not, almost every stock that you see these days, they come up with a price target increase, ma’am. People just keep buying it until it hits that target, like it’s set in stone or something.

3:38
It’s just nuts. Also too, when you’re trading sucks, one of the best things that you can go to is, I’m not trying to laugh. I just thought this transition might be actually a little funny, but go to swingtradingthestockmarket.com because I actually do provide good market research. Each and every day, even when my trading does suck, I’m gonna give you my daily watchlist, my weekly master watchlist updates, updates on all the Fang stocks and all the market indices, as well as the most intriguing charts that I come by each and every day.

4:05
Check that out, swingtradingthestockmarket.com. Now, talking about TTWO first, Take Two Interactive, made 7% on it the first time. That swing trade was beautifully managed, and I’m not trying to toot my own home bro, but looking back on it, I did a pretty good job of managing that trade, walked away with the majority of the profits.

4:23
Has earnings, pops, and then comes back down to that breakout level and I really liked it there. There was a big strong support level that it was coming back down to and trying to bounce. And not only that, it wasn’t like I was getting in right after earnings reported. It was starting to consolidate some making a nice bull flag and I said, man, this thing sets up good.

4:41
So I got into it. I had a reward the risk ratio that I liked. It was pushing the envelope a little bit, but it was still something that I said, OK, I can probably net 12% off of this if it continues to go up in the market overall once it continue to rise. I couldn’t be more wrong. And believe it or not, the trade was actually doing fine until news broke on Monday, and it was a heck of a way to start the week that they were acquiring a company, I believe it was called Roll 7, R O L L 7.

5:08
They’re acquiring it and for those who are not familiar with acquisitions, usually the company that’s acquiring the other company, their stock price will drop because they’re doling out a lot of cash for that company and the company that’s being acquired will make this huge jump if they’re publicly traded, will make a huge jump in price, usually like 40, 50%.

5:27
So I don’t even know if Roll 7 was. Even publicly traded. I didn’t even look that up. I just know that TTWO was down like 1 or 2% in the pre-market and it shot lower as much as like 4 or 5%, stopping me out for like a 6% loss. I was bummed about it.

5:42
I got nailed by the headline risk. You go into a trade, you’re not gonna predict it. Oh, I’m not gonna get into the trade because they might be buying out a company this weekend. No, you don’t know what merger Monday is going to hold for you. But it stunk, and I tell you, I had to pull myself away from the market a little bit that day because one, I didn’t want to revenge.

5:59
I didn’t want to get back into a stock of any kind, just because I had been stopped out and I want to make that money back. So many traders make that mistake of thinking I gotta get back into something. I gotta put this capital at work. I can’t handle that kind of a loss. I’m getting back in. I will say this, that approach is at least better than getting back into the stock or shorting the stock, just because you think you got to make your money back from that particular stock that just cost you money.

6:23
A lot of people do that too. But revenge trading is revenge trading. If you jump into another stock to revenge trade a previous loss, that still isn’t a good approach and we’re all prone to it. We feel like some. was taken that was ours. We want to get it back. And revenge trading usually leads to more losses. So I had to be careful with that.

6:38
I had to make sure that I wasn’t making any dumb decision because that one just really bothered me. I mean, I’ve been on a good run and everything and then I have, you know, a news event take out my swing trade in TTWO like it’s nobody’s business, and it pissed me off. And then, you know, after that trade, somebody was asking me, hey, Ryan, why don’t you just avoid the headline risk altogether and just trade ETFs or ultras.

6:57
You can avoid these headline risks altogether and you not get stopped out. And it’s like, no, that’s not necessarily true either. And the reason why you take something like IBB that’s been hit hard by the cell of a Moderna. IBB had a huge exposure to Moderna, and when Moderna started selling off heavy, so did IBB.

7:14
The good thing is is I wasn’t in either when both of them decided to start selling off. And so a lot of times we make that mistake of thinking that we can avoid those pitfalls and ETS and then ultras are a whole other world, and I’ll be doing a podcast on that in the future. I’m not gonna get into it right now, but ultras can really cause havoc as well, not just with the volatility, but also the time decay element.

7:35
And I’m not saying that ETFs and ultras don’t have their place in certain times, they do, but you can’t just avoid the risk altogether. That risk, the headline risk is always gonna be there. The second trade was Tilray, T L R Y, pretty volatile stock, but I felt like, OK, hey, I can get into this thing with about a 5% stop loss.

7:54
This one sets up good because if it runs and we continue to get the good news that was coming out of South Carolina’s representative that wanted to introduce legislation in Congress about legalizing drugs, well, not drugs, but marijuana. That stock was gonna go through the roof.

8:11
And so I felt like there was enough to justify a 6% stop loss. I was OK with it from an emotional standpoint that I wasn’t gonna make bad decisions based off of the position size that I was using and so forth. So I went with it. The stock almost acted too good out of the gate and sometimes I get nervous when it acts almost too good.

8:26
I got into it, I think 1281. This thing immediately bounces. I mean, it goes up to like 1335 and you could say. Ryan, you’re up 4% Why did you not take some profits off the table? And, and that comes down to reward the risk too. If it was Home Depot that that was going on with, yeah, I probably would because then my stop loss would probably be like 2%.

8:44
I could go ahead and take some profits on that trade. But with Tillere, OK, I’m taking about a 5% stop offs. If I’m gonna start taking some partial profits, where I want to start doing that is where I can at least take partial profits out of 2 to 1. Reward to risk ratio of where I put the stop off at.

9:01
So, I’m taking a 5% risk on it. I want to come away with about 10% of profits before I start scaling out of it. And that’s very possible to tell Ray man that thing can move 10% in a day. Next day it pulled back, I wasn’t. Quite sure why it was doing that. It was a little bit frustrating, but the trade wasn’t dead necessarily.

9:17
It’s getting close, but it wasn’t dead. And then the next day, of course, Barclays decides to come out with a downgrade of the stock or it might as well be a downgrade. They came out and said it was underweight, said the price target was $10. It’s trading like in the 12s. Yeah, I’m gonna get hit, but good thing is is that I was able to get out at the open.

9:37
One of the things too, and I’m not saying that everybody should do this, but a lot of times, almost every time it pays to put your stock loss is then after the market opens, even if you know that you’re gonna get gapped out because what oftentimes happen is that when the stock sells off, you got a lot of shorts that are covering their position at the open and will cause it to go back up just temporarily, but long enough to give you a chance to get out at a better price.

10:00
So that was the case of Till. The other thing was stop losses, using stop losses or having that line in the sand, planning out your trade to know where you’re getting out at before you ever get in it, makes all the difference in the world because this stock didn’t just stop at my stop loss and go back higher.

10:15
This stock went below 11. So I could have been really beaten up bad on Thursday had I not used the stop loss. Yeah, it was actually trading below initially at the open. And so if I’m not planning out my trades and I’m not being disciplined.

10:32
That stock can easily have been a 12% loss for me, and that would have stunk. So using the stock losses was important. Now, like I said earlier, the reason why I got into it, it had formed a nice double bottom base. It was pulling back to it and it was bouncing. It didn’t do it. And if you remember, I did a video on the cannabis stocks this past weekend.

10:49
And I had mentioned, I said, hey, Trey sets up good, but like any trade, you’ve got to have an exit price because it may not work. The news may not be able to substantiate a move in the trade because it’s just like a one and done news piece that doesn’t have any follow-ons. As a result, the stock gives back its gains.

11:05
It did that and more because it got a negative news piece hit on it as well. And so two trades this week, bad. Now, what could I have done to make it worse by keep trying to trade when the trading wasn’t going well for me and so I pulled back, knowing that I needed to be a little bit more careful with my trades and not just get into it because I want to make that money back.

11:24
There’s plenty of time to make money back when you lose on a trade. You don’t have to get back in right away. You ever hear that old expression that says revenge is best when it’s served up cold? Again, I don’t believe in revenge trading, but some of the times your best trades are going to be best when you’re not emotional about it, when you’re cold, when you come to grips about the loss that you had.

11:45
And the good thing is because I do manage the risk on my trades, I’m not taking heavy losses that would propel me to say, I gotta make up this money right now. No, there’s gonna be other trades, there can be other winners. I’ll take them when I get them. But the market conditions were really poor this week and I could have tried to fight.

12:02
These market conditions add to my losses over those two trades and created more misery for myself, but I didn’t. Instead, I was looking at the market conditions. OK. Tilray TTWO had unique situations that led to them being stopped out. One was a downgrade, the other was an acquisition.

12:20
OK, I can’t do nothing about that. I can’t stop Barclays from coming out of it, nor are they gonna tell me that they’re about to come out with one to help me not get into the trade in the first place. No, it’s not happening. But what I can do is when I see that the trades are not going in my favor, it doesn’t help to just add new positions just because you’re mad and you want to get that money back.

12:37
I looked at the market conditions. I said, look, almost every day this week, the breadth has been -2 to 1 in favor of declining stocks or advancing stocks. Market breadth gives you a good idea of how strong the market is. So when you’re seeing the NASDAQ and the S&P rally, almost each and every day, but you’re seeing the majority of stocks going lower or even worse, create new lows for themselves.

12:57
That’s your sign that, hey, may not be a good day to be really trying to press the issue with a whole bunch of new long positions. So you gotta slow down, avoid trading against the tide, and don’t seek revenge. And in the case on Thursday when I got stopped out of Tilray, I took a step back.

13:15
I could tell after TTWO and the Tillray, it just really stunk and I needed to step back and I did that and it was good for me. And it, it’s good for you too when you’re going through a struggle to make sure you take the time to step back and make sure you’re not going to make far worse decisions by trying to get back at the market or get that money back.

13:35
If you enjoyed this podcast, please make sure to leave me a 5 star review. Those things mean the world to me and to keep sending your questions. I know I took a break from them this week, but I felt like it was good. It’s kind of self therapy for me to be able to talk to you guys about this stuff because you guys have me to talk to and I use a lot of your emails, but sometimes it’s.

13:53
Good for me to be able to tell you guys about the kind of week that I had. And in this case, it actually was. It was pretty helpful to be able to explain to you why I had some bad trades this week. It wasn’t from a lack of discipline. It was just the trades didn’t go my way and I needed somebody to talk to about it. So thank you for being the listening ear that I needed this week.

14:11
Make sure to send me your questions. Make sure to send them to me, ryan@shareplanner.com, and to support this podcast by signing up at swingtradingthestockmarket.com. Thank you guys. God bless, and God bless my trading rep too.

14:28
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14:46
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15:06
All the best to you and I look forward to trading with you soon.