Stop Loss Hunting | Podcast Episode #209

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, hey, everybody, this is Ryan Mallory with Swing Trading the Stock Market.

0:33
In today’s episode, we’re going to talk About stop-loss hunting. There is this belief out there above long, a lot of traders that the big money is out there to hunt out your stop losses and take your shares only to reverse the stock and send it back to all-time highs. We’re going to be talking about whether that’s something you should be worried about whether or not that’s something you should be considering in your trading and whether or not it even really exist. So we’ll talk about that and more for this email, we’re going to call this guy Walker, walkers from Canada, he asked me specifically for a good Florida redneck name and walk A pretty good one. He writes. Hey Ryan, love the podcast, been a loyal listener over the years.

1:09
I love how you break it all down into smaller subjects and keep each episode short and simple. Well, you know, with things like Twitter and Facebook got to kind of keep it short these days. You can’t do these three our podcast, unless you have something really good to talk about. And I think this is pretty good stuff to talk about, but I’m not always, so sure it would be good to talk about over two or three hours.

1:29
So I do keep it short. He says my question to you and what I like to hear is how do Traders use different styles and forms of risk management. I have made a watch list of stocks that I feel are the strongest in the respective group growth versus value. I manage risk and controlled position sizing and only buying on pullbacks.

1:45
I’m not comfortable with stop losses unless they are major supports, or there has been a major story change in the stock. And there is a lot of stop loss hunting from market makers. And people get stopped out way too much. I feel more than comfortable, keeping a core position and trading around it here in Canada, we have tfsa, and tax savings account where the income is not taxable.

2:05
So, the strategy can be very advantageous with an account like this, I keep flipping from investor to Trader and it makes for a lot of lost gains. I’m realizing that there are times to go long and times the trade, I believe. Now, Marcus too high and needs a sizable. Pull back before I can go along into my favorite stocks.

2:21
I’ll end this here is I don’t want to go off too much more and take away from the main topic, all the best and keep the good work coming Walker. All right. Thank you. Walker for that email. I know I took a little while to get back to this one. It kind of got lost in the shuffle which I try not to do.

2:37
But the bourbon that I’m drinking today is McKenna Henry, it’s been aged 10 years, which is really good for a bourbon and it’s 50%. Alcohol, 100 proof and it’s a small batch and McKenna Henry. This stuff used to be cheap. You could probably get it for like 30, 40 dollars, a bottle about five, six years ago, but now you’re probably going to pay over $100 for this bottle and it’s pretty hard to find.

2:59
Usually got to find it on the secondary Market, but it’s a bottled and bond bourbon whiskey. And that’s pretty cool too. Because Is that goes all the way back to the prohibition days and the government regulations that came out of prohibition and how to make a bottle of bourbon without killing the person.

3:15
Because a lot of people were dying from people who are trying to make bourbon over the course of a couple of days, really crazy stuff. But this stuff aged 10 years and it’s bottled in bond. 50% alcohol. Let me tell you. This stuff is fierce to the nose. It burns a little bit, but it’s not a bad burn.

3:32
It’s gonna wake you up, that’s for sure. But it’s not like repugnant or anything like that. Really good flavor has like a solid dust type flavor. Little bit of an Oaky flavor. It’s almost like you’re drinking this stuff in the middle of a sawmill while you’re supposed to be working. I mean, it’s good stuff.

3:48
I like it a lot. Little bit of a bite at the end. It lingers some to I’m going to give this thing an 8.0. I think it’s a pretty good bourbon. I wouldn’t call it an everyday sipper, unless you can get it at retail price, which is very hard to do. Oh, these days. That’s usually something that’s been allocated to stores. And very small numbers get on the secondary Market probably going to be paying over $100 for it, so 8.0, pretty good.

4:11
Maybe a little bit on the overhyped site because a lot of people act like this stuff is up there with Blanton’s or Pappy’s and it’s not, but it’s a good solid, a point at 0. So this stop-loss hunting exist. Walker wants to know and I’m sure it does to some degree. I’m sure when you hear about the stories of the old days about people cornering, the silver market.

4:29
Or a specific Commodities Market. They would try to squeeze a person out of a large short position or try to push a guy out of a big long position. Those kinds of things happen, do you? I think that the market makers are saying, hey, look at Ryan and his number of shares and the Apple stock.

4:49
Oh, and look, he’s got a stop loss at 100. Well, first of all, they don’t know who I am sure. They might be able to see the stuff on level 2 or other tools that they’re looking at. But are they really looking at At small-time retail Traders, not really unless there’s just a ton of Traders there and it’s not really a level support.

5:05
Maybe they could stop loss hunt, you there and, and take you out, but then to what gain? So they can get your shares at a cheap price. Possibly. I mean, I don’t think necessarily that they’re always doing it just to get it. Your particular shares. They’re just trying to get any shares at a lower price and so, yeah, they may do some things that are a bit of trickery or whatever to get those chairs.

5:26
But on the whole are they really going after you? I don’t really feel like Alright, guys, I know that a lot of times when we get stopped out of a trade, there’s this natural tendency to want to say. Oh man, they hunted, my shares and especially when we get stopped out of a stock only for it to go back up and remember a stock.

5:42
And I’ve said this plenty of times in past episodes, I might even said it in the last episode. Stock knocks you out, it’s gonna go up or down, okay? And it may really disappoint you to see you get stopped out only for it to go right back up and it would have been a profitable position that does happen. But there’s also plenty of time Times.

6:00
And I was talking about my previous episode about, when my trading sucks in and I used two examples, ttwo and tilray tlr, why? And what happened with both of those stocks as they continued to sell off afterwards? I’m glad I’m out of them things. It would have been much bigger losses.

6:15
Had I not now, when I originally got stopped out, could I have blamed market makers? Sure. But really what happened was, is a stock broke support. It broke a key level support across the Line in the Sand that says, hey, the Is why I put these stop losses out there to begin with is because I know that there’s the potential for the stock to go against me and in this case it did.

6:38
So what do I do? I have a stoploss there in place in case it does and when it triggers triggers because my thesis or my reasoning for getting into the stock is no longer valid. It’s not because a market maker knock me out is because the trade is not a valid trade setup anymore for me and I think we got to really work on that kind of a mentality of.

6:58
Okay, the reason why I got stopped out. It is because the trade crossed the red line that it was not supposed to cross. And that’s why I got out. There’s got to be a reason for why you want to get out at that level if it hits that level, we don’t want it to but if it does you’re going to have a good reason for why you’re getting out at that level before I forget, make sure to check out swingtradingthestockmarket.com.

7:18
It is my Patron website that supports this podcast swingtradingthestockmarket.com will give you all of my market research each and every day from my daily and weekly watch lists to the most intriguing. The day that I come across for your benefit and updates on all the Fang stocks each week plus updates and all the indices.

7:36
So, check that out. swingtradingthestockmarket.com, and you can also get more information there. Now, about these stop losses and stop-loss hunting. A lot of people in order to avoid the stop-loss hunting. They are afraid that everybody sees their stop losses. So the what do they do? They start using mental, stop losses and that’s not good either because oftentimes we kind of go mental about wanting to use them.

7:56
And what I mean by that is that the stock you get in To let’s say you get into it at $100 and you have a stop loss at $95. You have this mental stop, okay? If it goes down below $95, I’m going to get out with the very reason that you’re using a mental stop. Pause is because you’re afraid it’s going to get to that point.

8:12
It’s going to reverse back. And if you have a hard stop loss out there, it’s going to be because somebody hunted out your stop losses but you’re using a mental stop loss instead and it still hits the $95 level. What’s the natural propensity there once it hits 95? You can say well let me just see if it reverses I need to see what it does here because I’m going to be so mad if this thing reverses Ami and goes right back up to all-time highs or to the highs of the day or finishes green.

8:39
So what do you do at 95? You’re waiting and say, okay, I’m gonna wait and see if it bounces and then it doesn’t bounce. It goes down to 94. Like, oh, man. I only wanted to take a 5% loss. I can’t take another six percent loss. I’m just going to let it get back to where it was before and then I’ll get out, then it gets back to where it was before.

8:56
That’s a goes right back to 95. What are you thinking now? He crapped us things. Reversing I’m staying in it’s going right back up to 100 where I got in at maybe even goes to 110 over the coming days so you stay in it. So it goes back up to 95. Maybe gets up to 96 near think. Oh yeah, I’m glad I didn’t sell this thing.

9:11
This thing’s going right back up, just like I knew it would do. But it goes back down again down to 94 in the 93. And you’re thinking, oh, crap. I know, I should have sold it at 95, man. I could have sold that thing at 96 and got a, not only at a four percent stop-lossed. Now I’m looking at a seven or an eight percent stop loss.

9:28
And guys, it just keeps getting worse and worse than what happened to your becoming a long-term bag. Holder your become an investor, your swing trades turning into investment. That’s why I don’t like using mental, stop losses. It’s a slippery slope into bad decisions. I’d like to think that I could use Mental, stop losses, but I don’t think I can.

9:44
So what do I do? I use hard. Stop losses. And that’s not me admitting weakness. It’s just me. Admitting reality. The Human Condition. We don’t like getting stopped out. You always got to be forced out of it. So I like to put my stop losses in one. Doesn’t look like I’m going to get stopped out because at that point, it’s kind of easy to put the stop losses.

10:03
At that point, it doesn’t feel like it takes as much discipline, but then when the stock does go against you, you got to leave those stop losses in If you go ahead and pull it because you’re getting ready to get stopped out. Why even have a stop loss in the first place. And I know a lot of you guys do it.

10:27
Trust me, I’ve seen plenty of emails come from you guys over the years about how you guys will put a stop loss out there, but then you ignore the stop loss. So I know you guys do it and you know who you are, but we can’t worry about like there being some Boogie manner, there is being some kind of, like, Bigfoot out there.

10:43
That’s going to take us out of our stop loss, is reason why I say Bigfoot is because yeah, we’ve all seen some of those Infamous pictures of Bigfoot. Foot. But have we ever seen one? No, I’ll be heard people talk about it. Yeah, they’ve got documentaries about it. People like to get all excited when they talk about it.

10:59
Insisting that it exists, but do we know one. No, seen one. No, could it exists? I don’t know. I mean there’s a lot of woods in the United States. There’s a lot of woods across the world, it might exist in those, I don’t know, I don’t know all the species that are left to still be discovered in this world.

11:16
So who knows? But it’s kind of the same thing with stop-loss honey. Have I ever been Victimized by a person hunting out, my stop losses. Maybe did they tell me that? They were hunting out. My stop loss is no. Do I know that they were not at all? Could they have? Maybe you see the theme here? It’s all maybes.

11:35
I don’t know. Nobody really knows. So I think a lot of times when we start talking about, oh, I was taken out by the market makers. They hunted out my stop losses as his. Why don’t you stop losses? It’s really an excuse for our bad traits, but I’m being honest, that’s what I think it is.

11:52
I mean, let’s be honest, if we’re using stop losses in our swing train, we’re going to be consistent. Swing Traders, we’re not letting swing trades turned a long-term Investments because we don’t like the outcome of the swing trade. So we’re going to see if we hold it longer, whether or not it’ll become a good long-term investment, we’re not doing that.

12:13
Let’s say we’re taking our hits every time, our stop loss is being triggered, your Probably looking at, if you’re a good Trader being stopped out of 40 percent of your trades. And I know some of you guys think that sounds awful. There’s gotta be better ways to trade than that. No, I mean, your trading 50% success. I mean that’s pretty good too guys.

12:39
So you can’t get so worked up about your stop-loss getting hit because it’s going to be hit. I got one of my stop loss is hit today and let me tell you I had every reason to believe that it was a result of my stop-loss being hunted if I’m to consider popular belief. It was with psq. I had a one-to-one inverse ETF on the cues, went down to 1064, I got stopped out it goes down to 1063 and it reverses and goes all the way back up finishes green on the day.

12:57
Well into the green kind of a bummer. Now, would it be easy to say, man? They knew exactly where my stop loss was and I got stopped out. Yeah, that would be very easy to say but it’s not the right answer. Look, I’m not that important. And neither are you to think that the market makers are really care about our stop losses?

13:13
They don’t accuse are much bigger than our position, your trading. Apple Apple is much bigger. The volume is much bigger than what we are trading in Apple. So we can’t have these lofty, beliefs about what the street might think about our positions and where we’re putting our stop loss is because in the grand scheme of things, it’s probably not even worth the effort.

13:33
So, to wrap this up, what are we talking about here? Well, for one sure, stop-loss hunting might exist. I think it’s probably going to be more with the big-time firms in the banks and the big whales on Wall Street. That might be more of an attractive Target for somebody to go stop off Hunting to don’t hold a high lofty beliefs about yourself that everybody’s out to get your stop losses.

13:55
Oftentimes, this is just an excuse for bad trading or if for the fact that one cannot accept that they had their stop-loss legitimately hit, it’s like they need to blame somebody three. And actually, we haven’t even talked about This. But I’m going to bring it up. Anyways, he talked about how he lets a lot of his Investments turn into trades.

14:13
Well, you got to have a reason for getting in as a trade, just as much, you got to have a reason for getting in as an investment. That’s why oftentimes to, I like to separate my different strategies into different accounts. Like if I have a long-term account, I’m going to keep it in a long-term account. It dividends in a dividend account, swing trading in a swing trading account.

14:30
Because when you mix the two, it kind of gets a little bit weird there and just as much you don’t want your long-term. Traits become trades. You don’t want your trades become long-term Investments. So you don’t have the discipline there, you got to have a plan. That’s why I’m always talking about. Mapping out why you’re getting in, what is it from a trade standpoint that makes this an attractive move because really you’re usually capitalizing on one specific thing.

14:51
It’s getting ready to break out. It’s getting ready to bounce, you can’t let what was a bull flag, breakout Place, suddenly becoming a long-term investment and vice versa. So if you enjoyed this podcast episode, I encourage you to leave a five star review. That is the bread and butter for For me and this podcast existence, your ability to continue to leave positive reviews and to support this podcast through swingtradingthestockmarket.com is what allows me to do a couple of these episodes each and every week, for those here in this, on its initial release, it’s Thanksgiving week.

15:24
So, I hope you guys have a wonderful, wonderful Thanksgiving with your family. Don’t forget, keep sending me those questions. ryan@shareplanner.com. I love hearing from you guys and hear. And what As you and cause you partake and all sorts of questions in your mind, keep sending those to me.

15:41
ryan@shareplanner.com, I do read them. Thank you guys. And God bless. 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, you will get a 7 day trial and access to my trading room including alerts via text email and WhatsApp.

16:04
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. 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 trading with you soon.