Trying to Trade | Podcast Episode #218

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 is about a person who is ready to give trading a try and whether he should or should not.

0:42
And the reason why I like to highlight a lot of these is that we’re at a point in the stock market where it’s been rallying for years on end in the last couple of years it’s just been absolutely phenomenal for a lot of traders because A lot of their trading sins have been forgiven by the market by the constant V-shape bounces following every trading sell off.

1:00
There is, in fact, the time of this podcast recording, there was a V-shape bounce today. So, I wanna highlight that. I also want to bring some people down to earth just so that they’re not living in fantasy lane about the realities of trading. So I have been spending a lot more time on this of late, but I also think it applies to a lot of the listeners out there in the sense that they can benefit.

1:22
From a podcast episode like this, so. This individual, and I’m gonna call him Bud. Because I don’t use people’s real names unless they are absolutely adamant that I do, right? Hi, Ryan.

1:37
I started listening to your podcast this morning. This is my 4th episode and I wanted to ask, what is your advice for a beginner like myself? I am an international student in Canada and I want to try out this career because I have tried many labor jobs already. I really wanted to try this out.

1:54
I appreciate and thank you for your time, but. All right, bud, pretty short and to the point, and what am I drinking? Well, I’m drinking one of my old fashioned, but it’s a little bit different this time. For those who’ve been listening to the podcast episode for a while, I know that I use Knob Creek 9-year as my bourbon of choice for my old fashion.

2:18
But the problem is is that I can’t find the 9 year. Knob Creek in many places anymore and they’ve hiked the prices on it, something crazy. It used to be like 48 to $49 for a full handle, like 1.75 L. And now people are charging astronomical prices for it.

2:36
It’s like $68 if I want one of these things. And then if you can find it, like I can’t find it at total one. I used to go there all the time and I could find it. I can’t. So I’ve been on the search for something that one is a little bit more friendly from a price standpoint, and two, will pretty much replicate the taste in an old fashion that Knob Creek 9-year didn’t.

2:53
Now, I don’t actually like Knob Creek 9-year neat or on the rocks or anything. I think it comes in way too hot. It’s just. Pure hotness, very little flavor, but for an old fashion, it works great, so I was trying to find something that might replicate that at a cheaper price, and I came across Evan Williams bottled and Bond 100 proof, same proof as Knob Creek 9 Year, Kentucky Straight bourbon whiskey.

3:15
I love the fact that it’s bottled and bond too. I always like those. And pour it in there, I kid you not, it’s pretty much the same exact taste. And again, Evan Williams, I’ll do a podcast episode just drinking Eva Williams neat. Let me tell you, I don’t think I’m gonna like Evan Williams’ knee, but I do like it in my old fashion.

3:36
A scale of 1 to 10, I’m gonna give it like a 95. Now when it comes to bourbons and old fashion, I’ve got 3 of them now that I know that I can go to. And you don’t want to just choose any because it does distort the flavor if it doesn’t have the right amount of heat. Cheapest alternative is Evan Williams.

3:53
Like I said, 9.5 out of 10 when it comes to old fashioned. If I go with Knob Creek, it’s like a 9.75, still really, really good, slightly better than Evan Williams, but not much. Most people won’t even be able to tell the difference. But if you really want the good stuff, put some bookers in it, man.

4:11
I’m telling you, Booker really makes it good. Oh, there’s another one too. Old Granddad, Old granddad’s pretty good too. It’s like up there. It’s actually probably better than the Knob Creek 9 year, but the proof is like 114, so you gotta be really careful about how much of it you drink. Any case, now that we got that behind us, let’s get back to Bud’s question here about wanting to become a traitor.

4:33
Now, I’m trying to not give like the same canned response for every episode. What I wanna do is try to make each one of these unique and try to come at it from a different angle. And one of the things that kind of stuck out to me about his question is is that he said he wants to give it a try.

4:50
He also said too that he is a beginner, so he’s asking what’s my advice for a beginner like himself. He wants to give it a try. And I’m thinking about Yoda from Star Wars. Where he says, do or do not. There is no try.

5:07
Remember that quote? I don’t know how good that’s gonna sound on the podcast, you know, but that was my best attempt at trying to sound like him, but It’s very true. When it comes to trading, don’t just try to be good, do it or don’t do it. If you just try, it’s not gonna work.

5:23
I remember when I quit my job to become a full-time trader and then I started share planner and I remember referring to SharePlanner to my accountant as a hobby, and he’s like, Ryan, this is not a hobby. This is something that you need to take serious. Like this is not just a blog, this is something that you want to see work long term.

5:41
He’s like, It’s just a hobby, stop doing it, you know, and I took it serious, you know, he’s like, go back to work. And that, that was some of the best advice that anybody ever told me after I quit my job. He says, don’t treat it as a hobby. It’s not a hobby. If you’re trying to give trading a try, as from a full-time standpoint, Don’t act like it’s a hobby.

6:02
Don’t act like it’s just something that you try out. Do it, you know, and, and if you’re gonna do it, it’s going to take a lot of time, it’s gonna take a lot of effort. It’s gonna be more work than working a labor job. I know it’s crazy because they read so many different people’s takes on full-time trading about how they’re sitting on the beach, how they have a margarita in one hand and their iPhone in the other, making trades on the Robin Hood app, and it just isn’t like that.

6:28
It’s very difficult, it’s very challenging, it’s taxing on the mind too, but with all that said, you’re gonna learn more about yourself as a trader than you ever have in your entire life when it comes to money, fear, and greed. You’re gonna learn a lot about your emotions.

6:45
And unless you have something going on crazy at the home front, and I’ve lived through that before in my life, I mean, trading is going to be one of the toughest things emotionally that you’ve ever gone through. It’s great to like it. But it’s not something you just try and you quit if it doesn’t work out for you or it’s something that.

7:02
OK, let’s see if I’m good at this. Well, there’s one way to be good at something, that’s to dedicate yourself to being good at it when you’re not actually good at it. And when you’re starting off, you’re not gonna be a good trader. That’s just a Matter of fact, in fact, when you’ve been doing it for 30 years like myself, you’re gonna still find there’s times where you wonder if you’re really good at this because I have those moments myself.

7:26
But what I wanna do with this podcast is I want to break it down into 5 points. 5 things that I want you to do before you decide to try this out as a career because you don’t like your labor job. 5 points. The first one being quit making trading about money.

7:43
A lot of people think about how much money can I make from the stock market? How much money can I make from this trade? Can I get 50%? A lot of people think that every trade they make, they should double their money off of it and that’s just like foolhardy to think that you’re going to do that with every trade. Sometimes you should be excited if you make 2% off of a trade.

8:01
I was short The Russell 2000 index through TWM, which was a 2 to 1 inverse ETF, made like 4 or 5% on the trade. I scaled out half position at a time, thrilled that I did, made probably about 4 or 5%, really good.

8:17
I tell you what, I wouldn’t be holding on to 4 or 5% in gains right now had I not showing a little bit of smarts and gotten out before the market bounce like it had in the past couple of days. So. Look at it more from managing trades, like I managed TWM based off of what I was seeing in the market conditions, not about how much money I wanted to extract out of the trade.

8:36
I don’t think about the dollars associated with the trade. I can’t even tell you how much money I made on that trade because I don’t care. What I care about is making good decisions, good trades when it comes to the stock market, and that’s what you gotta focus on for yourself. Don’t make it about money, make it about successfully executing your trades.

8:57
Don’t look at the profits because when you start looking at the profits, you’re going to start personalizing what those profits mean. You’re gonna start personalizing what those losses might mean and so instead of following your trading plan, you might double down because you can’t handle taking a loss of that size because you’re watching the profits, you’re watching the losses, you’re watching the dollar amount.

9:19
And when you start doing that. You’re going to go away from the ability to successfully manage your trades. If I’m up 5% on the day in the portfolio, if I’m up 1% in the portfolio, I make sure that I don’t even try to relate what that means from a dollar standpoint because I am only concerned with trying to successfully manage trades.

9:41
Number 2, we’re going from quit making it about money to go a full year using stops on all of your trades. Why is that important? Because that’s what keeps you in the game. Over the course of my career, there’s hundreds of trades that if I did not use a stop loss on, it would have wiped me out.

9:59
Now, there’s also some trades too that because I was early on in my trading career, I didn’t use discipline. I was very fortunate that it didn’t wipe me out. Let me just tell you though. Stop losses are everything, and I harp on it probably in every episode that I do. You have to use stops on all of your trades if you’re going to manage the risk.

10:19
Now people will say, OK, there’s different ways that you can manage the risk, it doesn’t all come down to stop losses. OK, that might be, but you need to make sure that whatever method you’re using to manage risk, that thing is not going to come back and bite you in the butt. For a full year using stops.

10:34
If you’re swing trading stocks, that’s one of the best ways to manage risk. If you can’t go a full year using stop losses on every one of your trades, and that means planning out where you’re going to put the stop loss at before you ever get into the trade. Know where you’re going to get out before you ever get in if the trade doesn’t go in your favor, and then Make sure you’re practicing raising those stop losses along the way as the trade does become more profitable.

10:56
If it doesn’t become profitable and it goes down, make sure you follow that original stop loss. Don’t start dropping that stop loss even further because you’re afraid that it’s going to stop you out and go back up. That’s the reality of trading, that’s going to happen all the time. Number 1, quit making it about money, #2, go a full year using stops.

11:14
Now what can number 3 be? We got to develop a strategy that works for you. And the key part is works for you. That comes down to knowing how much money can you put on an individual position on a regular basis. That doesn’t mean you go doubling down, tripling down.

11:32
It means developing a strategy that keeps risk in mind, that works for you. How long are you going to trade for? What is the duration of your trades? Are you a day trader? Probably shouldn’t start off doing that because that is far more difficult than swing trading because swing trading can actually hold a stock overnight and hold a stock and let it run for a long time.

11:50
Day trading, you can only hold it for 6.5 hours, and that’s assuming that you get in right at the market open. So you’re very limited in how long you can hold a trade for when it comes to day trading, which makes it very difficult because sometimes with swing trading. I might hold a stock for as long as 2 months, maybe 2.5 months.

12:06
I don’t hold a stock beyond 3 months because stocks have earnings every 3 months. But make sure you have a strategy that works for you. That means, what is your average stop loss going to look like? Is it something that’s gonna be like 8 or 9% if that’s the case, then you need to make sure that you’re chasing after setups.

12:22
They give you a 2 to 1 return and that you can actually stomach 8 or 9% stop losses. So if you’re taking a 9% stop loss, you need to make sure that the average trade setup has the opportunity to yield 18%. And if you’re not gonna win 50% of the time, then it needs to be a lot more than 18%.

12:38
You need to start gunning after things that are gonna yield you 27% or a 3 to 1 return on a 9% stop loss. Number 1, quit making about money and I’m gonna keep repeating these cause I want you to remember them. Number 2, go a full year using a stop losses on all your trades.

12:54
Number 3, develop a strategy that works for you. Number 4, dive into technical analysis, and candlesticks and charting patterns. This is going to give you a good understanding of the technical analysis of trades. It’s also going to help you better understand, support, understand resistance.

13:10
What does each individual candle mean? What are the patterns out there that helps you understand what a basing pattern looks like? What do topping patterns look like? And you have that, then you have the ability to start managing the risk far better. It helps you to develop a better trading plan.

13:27
Dive in the technical analysis, candlesticks, and charting patterns. Spend some money on getting a good charting pattern. I use TC 2000. You can find the link in my episode notes. It works great, let me tell you. And you need to spend the time to get familiar with the charting platform with the education that comes with technical analysis.

13:47
There’s a lot of books out there. Previous podcasts, I’ve mentioned a lot of them. Because it’s not just enough to want to be a trader, you’ve got to build the knowledge base as well. Number 5, develop a track record of profits. This should be over many years.

14:04
You should be able to consistently extract money out of the stock market because you want to do something doesn’t mean that you can do it without putting in the work and effort. You also need to build up a portfolio that will allow you to trade stocks full time. That means you’re gonna have to have the capital on hand to be able to do it.

14:20
You can’t do it with $5000. You can’t do it with probably $25,000. You’re gonna need probably 6 figures to become a full-time trader at least. So that means you gotta get the saving or you gotta get some really good returns under your belt to where you can get it up to that number. It’s so important to develop the disciplines that comes with trading.

14:39
It’s like going to college, right? If you go to college, you’re studying to become something. If you’re going to college to be a doctor, you’re gonna take a ton of different classes, you’re going to experience a lot of different situations like if you’re a brain surgeon, you’re gonna sit in on brain surgeries. You’re going to learn a lot of what it means to become a brain surgeon.

14:54
You’re going to learn and spend a lot of time in books. And you gotta look at technical analysis and training in the same. Way that you’re going to have to take the time to become a good trader. Also tell people too, if you’re going to become a full-time trader, it doesn’t hurt to have a side hustle.

15:10
I know that’s not what a lot of people talk about, but I’m just telling you, if you have a family or if you have a mortgage or if you have rent that’s due, it helps to have something that you can develop on the site because there’s so much about swing trading that can be very boring on a day to day basis. You’re not just constantly trading around the clock, so there’s going to be some downtime and I recommend to people, it’s like, hey, have a side hustle where You can develop it, so have like two passions.

15:33
That’s OK to do that. Like I say, going back to number 1, quit making about profits. Look at it more from executing the technique about your strategy that you hammered out with number 3 and the time that you spent on #4 diving in the technical analysis and candlesticks and charting patterns and see your work in action.

15:52
Have the confidence to know that you can do that. If you’re a beginner, take the time to learn. Make sure that you’re setting yourself up for success because the worst thing in the world is that you quit your job and you realize that you’re no good at it. You don’t want that. You want to put yourself in a position to succeed knowing that you can do this, but until you get to that point to where you can actually see tangible profits, you’re not gonna be ready for this.

16:13
And before I forget. Make sure to check out swingtradingthestockmarket.com for the people who are wanting to become full-time traders, that is one of the best things that you can do cause you’re gonna get my market research each and every day. So check that out. swingtradingthestockmarket.com, you’re going to get my watchlist, you’re gonna get my Weekly master Watch list updates, you’re going to get all the thing stock updates plus you’re going to get updates on all the indices and the most intriguing charts of the day that I come across swingtradingthestockmarket.com, and make sure that you’re sending me your questions.

16:44
I thrive on your questions. I need your questions. Sometimes I go out and you’d be surprised. A lot of people don’t send questions in for long stretches of time. So make sure you’re sending in questions. I wanna hear what you guys have to say and I wanna be able to answer them on the podcast. And make sure too that you’re leaving 5-star reviews for this podcast because it goes a long way to helping me continue to provide this excellent content twice a week.

17:05
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 share planner trading block where I navigate the stock market each day with traders from around the world. With your membership, you will get a seven-day trial and access to my trading room, including alerts via text, email.

17:25
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.

17:41
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.