Living Off Profits | Podcast Episode #211

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 Trade in the stock market, and today’s episode is gonna be a good one. And it’s gonna be about living off of profits. I’ve done a number of podcasts about becoming a full-time trader, and a lot of people have questions about a lot of people want to do it, and especially in a market right now where over the last couple of years, there’s been some incredible profits that a lot of people have made, some by luck.

0:53
Some by skill. Nonetheless, a lot of people’s confidence has shot through the roof, making them believe that they can become a full-time trader and maybe they can. I’m not trying to impugn anybody’s abilities to trade full time, but I do think that there is a plethora of people, and I’m not really trying to use a lot of big words.

1:12
It’s just some of the high school vocabulary tests coming back to help me, sounding a little bit more eloquent than what I actually am. Nonetheless. There’s a lot of interest in full-time trading, so I’m getting a lot of emails about that and I like tackling it because there’s a lot of people that do become full-time traders in this life.

1:29
I’m one of them. I became a full-time trader on one of the more difficult environments that you could probably become a full-time trader. It was during the Great Recession and I remember my boss telling me, Ryan, it’s not a bull market to become a full-time trader. I was like, I know that’s why you short stocks in a bear market.

1:48
But it’s made a lot of people scratch their heads because back then a lot of people didn’t even know you could short stocks. That wasn’t even really a thing that people talked about back then. I remember getting excited, in fact, when the 2008 crisis was happening, the Great Recession, they called it, and stocks were selling off and people were losing their minds in the office and I was like, oh yeah, I’m making some massive amounts of money.

2:12
And people are like, how are you doing that? Short in the stock market. It’s like, what the heck is that? So stocks and financial education has actually come a long ways and with $0 trading, it’s opened the door to a lot of younger people being interested in the stock market. So for today’s episode, I’m going to use the Florida redneck name of WE.

2:32
WE writes, Ryan, I really enjoy the podcast and often listen to it on the way to work. I’m looking at transitioning into a full-time trader next month and No, I will be required to reduce my lifestyle expenses. Well, that’s a good start. He says, I’d like to know how you budget living expenses?

2:48
Do you pay yourself a certain amount of money each month and keep the remaining profits to grow your portfolio? How do you manage dry spells? Do you sell positions each month to pay living expenses or simply allocate 50% to keep in your portfolio and 50% to your living expenses?

3:03
Thanks for taking the time to do this podcast. It’s been The major push for me to finally follow my dreams. Well, thank you for the kind words. I’m glad that you’re able to follow your dreams. And he also gives us a little additional tidbit here which does provide a little bit of perspective.

3:19
He says, if it helps at all, I’m trading with about $200,000 right now. Sincerely, Wally. And before I start answering all of WE’s questions here and I’ll add some thoughts of my own, as it pertains to full-time trading. What am I drinking?

3:34
I’m drinking American Mctors and what surprises me is that I’ve never actually reviewed this. I’ve been drinking this for years. It’s good. It’s American Mor small batch, Kentucky straight bourbon, 45.7% alcohol, and 91.4% proof. And I like it.

3:50
I think it’s an everyday sipper. It’s got a good taste to it. And what I like too about it, and, and this is one of the things that I always think that, OK, it’s gonna be a decent bourbon at least if it’s not murky. I’ve done a lot of reviews on this podcast where I poured the stuff in and it looks like there’s like little particles floating around in the bourbon itself and if it doesn’t have it, those particles or like little things swimming in it, I don’t know what you call them.

4:21
It’s a good sign that it’s probably a decent bourbon. So I, I would say that if it doesn’t have anything, it’s at least a 4.9. So most of the time it’s gonna be over a 5. But most of the ones that stink, it’s very cloudy or it’s got like particles swimming around in there.

4:37
I don’t have other way to put it and call it like little particles. But nonetheless, this does not have particles in it. And it tastes good. I mean, it’s not gonna blow your socks off, OK? It’s not gonna be one of those things that make you Step back and say, wow, this is an amazing bourbon, but it is a good bourbon.

4:53
And oftentimes if you can just have a good bourbon, that’s a good thing. This is one of those bourbons that I would say that you could sit around a campfire with some buddies, you could drink the whole bottle and have a good memorable night talking about the good old days or memories that you guys might have shared.

5:10
They use a recipe going back to like the 1700s, the American Revolution. And it kind of tastes like it too. When I taste this, I taste the oak caskets, I taste the corn that they made with it. I don’t taste a lot of other things to the nose, it’s got a little bit of a fruity smell to it, which is a little bit surprising, but overall, I give it a 7.7.

5:30
I think it’s good. There’s nothing that really lingers for a long time. There’s a little bit of spice, there’s a little bit of smoothness. Overall, it’s a good decent bourbon, 7.7. If I could summarize what this bourbon tastes like I’d say it’s authentic. It’s what you would expect a bourbon to taste if you travel back in time 100, 200 years ago.

5:51
That’s what it would taste like. It’s a good authentic bourbon. It’s nothing but a good solid quality bourbon. Now, questions about full-time trading. Couple of things I would ask, well, he’s got $200,000 right now. That’s a nice chunk of change that he’s working with.

6:06
He can do a lot with $200,000 especially as it pertains to swing trading. For one, he’s gonna want to make sure that position sizes are such that they don’t create tons of emotion for him. And remember, when you go from part-time trading to full-time trading, it’s like going from paper trading to trading with money.

6:24
That’s the best way to explain it. It was a lot of stress for me too. In fact, I often think to myself, and I’ve told others this before, if I knew how difficult it was going from working for somebody else to working for myself and trading full time, I probably would never have done it.

6:40
There was a lot of challenges to it. I thought I knew a lot about trading until I started trading full time. You see more of the market when you trade full time because you’re looking at the screens all day long. And so expect the emotions to be much greater. Expect there to be some nervousness, because all of a sudden you realize I’m hunting for my own food.

6:59
I get to eat what I kill. And while he’s asking the right questions here, he says, I’d like to know how you budget your living expenses. Do you pay yourself a certain amount of money each month? And while I’ve done that for many years in the past. I also think too that with how important and how integral and how different life has become because of the internet and because of the tools that are at our disposal.

7:21
I think it’s also important that when you’re becoming a full-time trader that you ask yourself, what are some things that I can do if I’m gonna be swing trading the stock market or if I’m going to be doing positional trading. What are some things that I can also do on a side gig?

7:36
And now you’re not gonna see a lot of that from people in the FinTwit world. They’re gonna tell you like, oh, I just live solely off of my profits. We’re living in a world where you don’t have to do that anymore. And so I would encourage the person. Yes, you gotta make trading your primary function, you gotta make that your sole focus.

7:52
I do that absolutely, but it’s OK to have a side hustle. It’s OK to have a Thing that you’re very passionate about alongside of trading that you can make money off of. For me, that was SharePlanner. I started off, it was more of like a journey, uh, a blog that documented my trades and told people of my experiences and then it has turned into the day where You know, I have a pretty decent following on YouTube and a podcast that’s listened to all around the world.

8:21
I think just in this past year alone, I think there’s been 1.2 million downloads. So it’s definitely become a lot more than I ever imagined it becoming. And of course, there’s other things too that comes with SharePlanner, but there’s so many other things too that you can do. I mean, if you’re in the gaming, I mean, there’s so many avenues for you to be a gamer on the side.

8:40
I mean, I know not everybody plays video games. But I watched my kids play them and they love it and they always talk about doing that and then you see a lot of adults being professional gamers. You also have so many things that you can start up with, you know, websites focused on sports or crypto.

8:56
Crypto trade 7 days a week, which actually allows you more opportunity to trade the markets if you’re looking to go beyond just 5 days a week to 7 days a week. Podcasting is one of those things that I think that’s very much in the early going, kind of like what YouTube was back in. 2003, 2004 where I don’t think a lot of people have tapped into the power of podcasts yet.

9:19
A lot of people don’t even know what the difference between a a podcast is and a YouTube video. So there’s a lot of potential there as well. And one of the cool things about podcasts, if you have a knowledge about something, if you have a skill in something, it doesn’t have to be trading. You can benefit off of podcasting because there’s an audience out there that will want to hear about your expertise in whatever field that may be.

9:41
So, the reason why I bring that all up is, is that people in the past, including myself, when I went from part-time trading to full-time trading, it was all about what I made off of my trades. That’s what I lived off of. But now that’s not the case.

9:57
You can in fact do so much more, especially with the internet and with so many things able to be done from the comforts of your home. You can have side hustles and you can have other interests besides just trading. And let’s face it, swing trading can be actually a very, very boring profession.

10:12
Yes, it’s fun when you have a big gain and when you have a very profitable trade, but there’s also gonna be times if you’re being disciplined where you shouldn’t trade at all. This month alone has been a very quiet month for me on the trading front. I haven’t made a lot of trades doing this podcast right now. I’ll come up with tons of trade setups, but I haven’t actually made a trade for myself in over a week.

10:32
And it’s not because I’m not watching the market. I’m watching it every day. There just hasn’t been the opportunities and look what the market’s done during that time. Massive sell-offs, a major rally, another massive sell-off. And if you don’t know what time period I’m talking about, I’m talking about late November 2021 here, because a lot of you guys will go back and listen to my old podcast.

10:52
But it’s been pretty crazy. And so I’ve sat out a lot of those moves just because I don’t want to get stuck in that chop where I’m Getting in at the highs and, and getting out at the lows and, and just getting chopped to pieces in my portfolio. So when it comes to trading, when it comes to expenses, one of the best things you can do for your trading is to lessen the stress on yourself by creating side hustle.

11:15
I know that’s not what you’re going to hear a lot of people tell you they’re gonna say, oh, you know, you need to develop your craft to become an even better trader, and that’s true. You should become a better trader each and every day, become a more disciplined trader, less emotional trader. But that doesn’t mean that there’s no opportunities for you to develop side gigs or side hustles, whatever you wanna call them.

11:35
As mentioned before, SharePlanner has become a huge passion of mine, and it’s in conjunction with my swing trading. So Wy in his question to me, he’s asking, you know, how much do you allocate to your expenses? I mean, I trade in such a way that if I didn’t make a profit for the next 6 months, I’d be OK. And you want your portfolio to grow every month.

11:52
You don’t want to be taking out more than what you’re making. So yes, you do want to live off of the profits, but you also want there to be some profits left over to where you can compound that money. I’d also ask Wally this, how long? Have you been trading? Have you experienced downturns in the market?

12:08
And I’m not talking about the downturns that we saw. Back in 2020 with the COVID selloff. I mean, yes, that was an extreme sell off and if you had some stop losses in place, you got out probably towards the highs. If you didn’t and you were undisciplined, well, you were forgiven by an epic bounce that has only continued to push higher.

12:29
But there’s going to be times where the stock market really struggles for an extended period of time. The last time we really had one was 2018 quarter four. And that was where Jerome Powell, where he attempted to start tapering. He tried to raise the interest rates some and it completely backfired and he decided, oh no, now we need to go ahead and start cutting interest rates again.

12:52
But that period there, that lasted for about 3 months and yeah, it was a nasty downturn. If I remember correctly, I think it was somewhere around 25% to 30% that the market dropped during just that 3 month period. A lot of people forget about that, but that was pretty significant. One of the more significant downturns that we’ve seen over the last 5 years.

13:12
You also had a very difficult market in 2015 where it finished lower, but it was also a very sideways market for most of the year. Not offering a lot of opportunities. You go back further than that, you had the great recession that lasted more than an entire year.

13:28
All of 2008, and it didn’t bottom until March 9th of 2009. So you have to ask yourself, do you have a plan in place to profit off of the market when the market turns south? Shorting the market is difficult because while the gains can happen very fast, they can also fade away very quickly as well when the market bounces.

13:47
If you have to stay patient. With your trading for a month or two where you’re not making hardly any trades. Yeah, maybe you make one trade here and a trade there, but let’s just say in general, you’re not as active in the market as you’d like. Are you gonna be able to stand by? or are you gonna start forcing trades in order to make it happen to where you’re bringing in some new profits?

14:07
So this is important for WE to consider all of these questions. We have to let ourselves be held at the mercy of the market because if we don’t hold ourselves to the mercy of the market, meaning that we trade what the market’s willing to give us. We’re likely to make some really bad trading decisions because when we flip it and we hold the market to our own mercies, the market’s usually not going to comply.

14:30
The market’s not usually going to give us what we wish for. Instead, the market’s usually going to cause us to make some really bad decisions when we try to force our expectations and our desires on the market. I posted a chart the other day about Lucid and it’s currently trading in the 50s.

14:46
And I said, OK, you know what, if it can break out here, there’s a good chance that it moves up to the 60s here. But a lot of people got mad about it because I wasn’t bullish enough on the stock. Well, they were like say, oh no, this is going to 100, you don’t know what you’re talking about. No, I’m just saying let’s see what it does if it wants to go to 601 before we start talking about 70s, 80s, 90s, and even a triple digits at 100.

15:08
But I can tell you, somebody who’s looking at lucid. 53 it’s like, no, it’s going to 100. No, that’s their expectation. That’s what they want to get out of it. That’s what they’ve calculated in their mind that holy cow, if it goes to 100, I will have made $5000 off of this stock or $10,000. That’s forcing your will upon the market.

15:23
That’s trying to hold the market to your mercies rather than being held to the mercy in the market. And speaking of something that will really help you in the stock market, swingtradingthestockmarket.com. Check it out. It’s my patron website that goes along with this podcast. You’re gonna get all my research each and every day from my master watch lists that I send out each week to my daily.

15:43
Watch lists of stocks that I’m watching each and every day, plus you’re going to get regular updates on all the Fang stocks, including Microsoft and Tesla, plus all of the information you need for the S&P 500, the Nasdaq, and the Russell 2000.

15:58
So check that out, swingtradingthestockmarket.com. You’re also going to get some of the most intriguing charts that I come across each and every day to act upon. So what’s the takeaway here? Well, for one, when we want to go from part-time trading or from being a hobby to a career, it doesn’t necessarily have to be a zero-sum game to where all of your income has to come from trading.

16:22
For one, there’s plenty of dull moments in trading, where you can’t look at a watchlist. It’s not gonna be all that much of a benefit. You’re not going to be trading, you’re not really having to manage any positions, and it affords you the opportunity to perhaps create some side hustles that you can also profit from and let’s face it, if you’re able to make some money off of a side hustle, and I, I really think almost anything nowadays you can make money off of, if you’re able to do that, then it actually alleviates some of the stress of having to trade full time and having to make X amount of dollars or having to trade in order to pay the bills.

16:58
Because when you have to trade in order to pay the bills, it can more times than not lead to some really bad trading decisions where you’re trying to hold out for hope because, hey, I just bought stock ABC at $100 it’s gone to $110 but I really need to go to $120 so that I can pay the mortgage.

17:13
The market doesn’t care about your mortgage, market doesn’t care what your needs are. So the more stress that you can take off of your shoulders and put it on a side gig or a side hustle, the better you will be. So to Wally, great questions. But I would implore WE to look outside the box to yes, be a good trader, to use that $200,000 that he has and to be able to be a good trader to make good trading decisions, but also look at other opportunities too that that can coexist with your trading lifestyle that can also help provide an additional income.

17:49
If you enjoyed this podcast, I’d encourage you to leave me a 5 star review. That’s what I thrive off of. Also, check out swingtradingthestockmarket.com, but your 5 star reviews do mean the world to me. I read them all, I check out the reviews, and it gives me a lot of encouragement to continue to keep doing the thing that I’m doing here and that’s providing you with my thoughts on the swing trading the stock market.

18:10
So for everyone listening, I hope you guys have a great day, great week, 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.

18:29
With your membership, you will get a seven-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/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.

18:51
If 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.