Scanning Stocks and Trading Less | Podcast Episode #230

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?

0:30
Hey, everybody, this is Ryan Mallory with Swing Trading the Stock Market and I have a good episode. Good for you guys. Today, I have an email from a guy that I’m going to call bare Bears. My Florida red nickname for this individual because I don’t use their real names on this podcast.

0:47
And to say, the least, I have met my share of bears in my lifetime. Not just the animal that people actually named bear, people name, their kids bear, Believe It or Not bear rights. Ryan my man love your podcast, I’m your typical Noob, I’ll spare you the repeated Noob story.

1:03
However, as a new guy, Love your encouragement to stick with it and not quit after a bad trade, this is refreshing. Given the negativity in the world today. Your guidance on risk management has saved me a ton of cash like a lot. Having a plan to get in stop that loss.

1:20
Take profits along the way etcetera. Amazing. My problem and my first question has a new. I don’t know how to scan for stocks that sounds horrible. No it’s not really that horrible man. Most people don’t perhaps it’s a basic skill but somehow I’ve skipped over that Learning lesson. You can you give me a brief overview of how you scan appreciate you being gentle on me but I do appreciate a good roasting, so hit me in the podcast.

1:42
If you like, it’s funny. The emails that you get you can actually kind of tell their age based off of how they write, not like the exact age, but their age range I’m going to guess that bear is a millennial no offense to Millennials. I was verge of being one, maybe even gen Z, I don’t know.

1:59
He says my trading plan on my second question. Once I look into finding a stock that shows decent positive trend, clear resistance. Or and fits my trade size, I’ll open a position. Using a good Osio trading plan. IE entry on a confirmed, bounce off of support. Stop losses at supporters 3 to 6% below and tapered limits for one third position for games along the way final limit.

2:20
Being just under my resistance trendline getting stopped out a lot though. Question is, is there a better way to determine the stop loss? I’m getting stopped out a lot due to volatility, p.s., I only treat like one position at a time, usually equities between 10. Dollars fifty dollars so I can have reasonable size to the positions that allow me to take profits along the way.

2:40
Any suggestions on that play, my bourbon recommendations are Branch by wild turkey and Breckenridge, sincerely Bear. All right, before I get to answering Bears, link the email good email to what am I drinking? I am drinking actually something.

2:57
By Walter gets Wild Turkey, 101, that makes it 101 proof, so that’s 50 and a half percent alcohol, which I always like to. Ones that are about 50 and a half percent. Now I got this one because I’m trying to find out already a replacement for Evan Williams bottled and bond. That was my go-to for old Fashions.

3:13
After Knob Creek became obsolete. Nine-year not crease, you know, in the handle size almost impossible to find, and if you do find it there, like jacking it up to 60 or $70. Now, and I’m just not willing to pay that much for it. So that Evan Williams was my next one.

3:28
You can get a handle on that for like twenty eight dollars. Now, I can’t find that even more so I’m doing a Full of Wild Turkey 101. And my next podcast, I’ll actually do a review on wild turkey as being used in an old-fashioned, but for today, I’m just drinking it.

3:46
Straight all Turkey 101. It’s got some Pine taste to it, but it just comes in Hot and Hot which is good for the old fashioned. That’s what I want. But when you’re drinking it by itself man it’s hard to swallow man. I’ll just say that that’s what she said but I shouldn’t say that.

4:04
Okay, any case it’s very hot. There’s no Like sweet taste smooth taste or, you know, unique taste to it. You drink it hot and then when that finish is hot too, so there’s just no relief. When you’re drinking now?

4:20
Is it necessarily bad? Know, a lot of people are into that stuff. They like that fireball tasting, whiskey in. This definitely has some heat to it scale of 1 to 10. I’m probably going to just say, like a 58. That’s about right? So 58 for Wild Turkey, 101. Mainly bought for making old Fashions.

4:37
We’ll do that one of the next podcast episode. So going back to bear and his questions. He talks about his problem, being how to scan for stocks. Now I actually have a course that I detail that And which I provide many hours worth of tutorials, but I will give you a little bit of a general understanding Fort for the sake of this podcast.

4:54
And one thing that I would say is, as a traitor, if you’re going to do technical analysis, you’re going to have to go through a lot of charge regardless of regardless, if you have really good scans, you need to put eyes on charts. You can’t just rely on the scans. The scans are really good but it’s important to put eyeballs on charts.

5:12
I mean, if you think about it like from a war standpoint, right? And most cases. Yeah, you can do a lot of With the technology and you can do a lot of work with you know, drones and Air Raids and everything else, right? But eventually if you’re really going to make some progress in a war that you’re fighting, you got to put boots on the ground, right?

5:29
So that’s kind of, I don’t know, maybe not the best comparison but in essence, if you’re going to make progress in your trading, you got to look at the charts man. You got to get eyeballs on those charts. So when it comes to scanning, one of the first things that I like to really do and I think this always helps out a lot of Traders is to make sure that you’re putting Ting parameters in for stocks that you don’t want to trade.

5:50
So for me, I don’t want to trade penny stocks. I don’t want to trade stocks under $10 really. Also don’t want to trade stocks that have low volume, don’t like to trade individual biotech names. So all of these are factors that include a my scans, I don’t want to trade stocks that have a beta less than 1 because there’s just not that much price action if I’m going to include those in my scans or consider them, I might as well just straight spy anyways because it’ll have a better return of more volatility to it.

6:17
Scanning for the stocks that you’re willing to trade, meaning, putting parameters into your scans that will exclude, the stocks that you would never want to trade under any condition. Also, I think it’s important to have a must watch list. That’s what I call it on. My TC 2000 trading platform.

6:34
I have a tab that says must watch and and there’s about 150 to 200 stocks at. I’m regularly watching on a daily basis at the stocks are moving. I want to know what those 150 to 200 stocks are all doing. I can’t remember the exact number. Amount that I have in there.

6:56
But those are going to be stocks like your fangs, stocks stocks like Tesla and DraftKings, or Boeing Bank of America. JP, a lot of the stuff you’re probably going to find on the S&P 500, but there’s a good representation of all the different sectors of some energy companies that I enjoy trading like Halliburton or Slumber, GE and Hess. A lot of tech stocks software companies, like Splunk Adobe square and stocks, that are just very popular.

7:17
For the moment here, that might be like a GameStop or an AMC. So having that list to to go back on because those are very big names that oftentimes provide some really nice trade setups and stocks that I’m actually familiar with just trading with over the years and most of your platforms have built-in scanners and them you know you have fenves that a lot of people use I hear a lot of good things about fenves.

7:38
They’re really good at providing scans for you. TC 2000 have scans. I know that thinkorswim has scans on it so there’s a lot of platforms. And a lot of your brokerage is that already have scanners for you, some are better than others but they do have scans on them. So they’re worth checking out to see if it’s something that meets your needs.

7:56
If not, maybe going out and buying it, you know, software that you pay, like, maybe 50 bucks a month for maybe less. Maybe you can get them for like, 20 bucks, depending on what kind of system it is. But it doesn’t hurt if you’re going to do this long-term to invest in a good scanning system.

8:11
But like I said, most of your charting platforms have that built-in. Now you go on a second paragraph. Talk about is trading plan where he’s getting stopped out a lot. Is there a better way to determine a stop loss? Well, he mentions that he put stop losses at support. I don’t think you want to put them necessarily as support, but below a key support level.

8:28
So, you got a lot of support at $100. It doesn’t do any good to put the stop loss right at $100. Better to put it at, like, 99 75 or below it to wear, okay, if it breaks the support level, I know there’s a clear break there and that the stock is trying to take the next leg lower, but you also don’t want to do is just say I like this tree.

8:47
It set up a lot. There’s not a good stop-loss nearby, but I’m just going to place my stop loss for percent below wherever I get in at. So you can get it on. 100, put your stop loss at 96 and think that, okay, at least I’m keeping the risk tight, but it’s not a good trade setup because there’s no nearby support that you’re trading off of in the other.

9:03
Good thing about trading with support nearby, if it’s a breakout, if it’s a bounce play, you’re also making sure that you’re getting in, in the beginning of a trade move instead of in the middle, or towards the end. And where the trade is less likely to do well, like, you take impp of late, the stock is gone from my a buck up to, I don’t know.

9:25
It was like nine dollars or something crazy a share and then it came crashing, right back down. Now you can trade with a tight stop loss on that you could get in at eight dollars and put a stop loss. 3% below it and think that that’s going to be good but there’s no nearby support. It’s a crazy trade to try to take with a 3%.

9:42
Stop loss in the more than likely outcome is that you’re going to get stopped out. So you want to make sure that you’re getting into a trade with nearby support underneath because you’re also making sure that you’re anticipating that bigger move, rather than waiting for the bigger move to happen.

9:58
And then you’re getting in and putting a stop loss at a place that doesn’t make sense. But thinking that’s okay, because it’s only a three or four percent stop loss and it’s not, okay? And there has to be a justification for where you’re putting the stop loss at now, he talks about how he takes it, you know, a third of a position here and there, as a stock.

10:17
Increases in value, that’s good. I like to, oftentimes try to get my profits as close to that 2 to 1 return, for what I’m risking. That’s where I like to start taking profits. And this market right now, I’ve been a little bit more aggressive just because the market so unpredictable.

10:38
So at the end of the day, if I’m short the market and the market has been selling off for multiple days at a time. And it’s really struggling to push much lower than I’ll start taking some of the profits off the table. Right then and there because I know that oftentimes an eminent balance is right. Right around the corner.

10:53
And that’s exactly what happened with me just the other day. I mean, qid didn’t really want to take some profits off of it. I wanted to let it run a little bit longer, but I also know to the market was down four straight days. It was struggling to establish a new lower low on The Daily charts for the NASDAQ.

11:11
So, on qid, which I was long on, hopefully, I’m not making this too confusing, but I was long on Q ID which is a 2 to 1 inverse of QQQ. So when the queues go down qid, goes up by twice that amount. So, I started, okay, I wasn’t like That point I was like, 5% up but I started taking profits right away.

11:26
Now, this is a question to that. I’m getting a lot about being stopped out a lot in this market. That’s not surprising, considering the market that we’re in a very difficult market right now. The market selling off on a regular basis and they’re still the surgeon, a lot of Traders. Right now to continue to try to buy the dip, or if they see a good trade setup to buy that trade stuff.

11:46
Even though the market is very difficult to trade to the long side on right now, yes, we’ve had some good rallies. In fact, while I’m recording. Boarding this the market at its best day since June of 2020. So there is some amazing rallies. The problem is markets having a difficult time holding on to those rallies.

12:02
So between June, because this will help people who are listening to this like many years in the future. So, for right now, between January of 2022, and March 20 22, very difficult Market to trade in very difficult and if you’re taking long positions, you’re taking positions against the markets, overall trending Direction.

12:18
So you can play the bounces a little bit. You got to be very, very aggressive with it because those bounces aren’t lasting long. But any longer osition over this period has been against the overall tide of the market so you’re like a fish going Upstream at that point and it’s worth mentioning as well. I’ve passed up on a lot of good trade setups every single day.

12:36
I am passing up on trade setups, some of them. I’m glad that I passed up on them because they didn’t work out that well, others might have wished, I would have actually pulled the trigger on them but that’s in hindsight like some of the Energy plays. I wish I would have taken a stronger position on but I didn’t, but overall, I’m passing up on a lot of good traits UPS.

12:53
You can have good trade setup but it’s not the right trade for the type of Market that we are currently in. It’s like when you have a market that’s doing really well, and you got your tech stocks trending higher and you got your financials and your discretionary trending higher. A lot of people might not be looking at utility stocks, so even if a utility stock is setting up really well, that might not be the best time to be taking advantage of that trade when the market has a risk on.

13:17
Mindset and another point to trade Less in this market trade less make these setups that you’re taken as close to perfect as possible. Make sure you’re trading in the overall direction of the market. I know, not, everybody likes to play the short side, and if that’s the case, sometimes you have to sit out for a period of time and wait for the market to provide better opportunities down the road.

13:35
We also have to get out of the mindset of thinking that we have to time Market bottoms, or by an every single rally most rallies. I have not participated in this year. I’ve participated in probably the majority of the sell-offs but Avoided most of the rallies to the upside. I have made some trades to the long side but most of them I have set out on because I don’t want to fight the market.

13:54
Yes, the trade could be good, the day that I get into it, but the next day, can it follow through to the upside? There’s a good chance that it won’t because the market has struggled. So many times to hold the gains from the day before. So, being cognizant of the market that you are in is important. If you were employing, the trading strategy in 2020 that you are right now, would probably be a lot more successful because the market was so forgiving.

14:17
And there was such a impetus to continue to Trend, higher day after day after day that you would experience a lot more success. As a result also, focus on the sectors that you’re trading in. For most the 2022 energy has been a really good sectors of trying to play the pullbacks there. And the setups that are presented to you from the sector pool and back and individual stocks.

14:37
Look for those opportunities. Materials is another good one. But tag has been a disaster. Discretionary has been a disaster. So you want to avoid those finally. He says, I like to only trade one position at a time. Usually equities between $10 and $50. So I can have reasonable size to the position that allows me to take profits along the way.

14:56
Any suggestions on that. Well, I mean, I don’t like to put all my eggs in one basket so I can’t get completely in line with what you’re doing there. Now I would say this that if you’re trading like in thirds basically, all you need is three shares of a stock in order to To get out and third.

15:11
So I know that doesn’t sound sexy or exciting when you only have three shares of a stock, but in a zero commission environment. That’s okay. You can get away with doing that. So don’t worry about how many shares that you have a stock. I mean, as of today, Amazon has announced at 12:40 stock.

15:28
Split everybody is excited about it, I could care less, I could care less if I have 20 times the amount of shares or if I have shares that are priced at three thousand dollars a share. I just don’t care because I do not trying to sound mean. This, what I’m trying to say is that the number of shares you have doesn’t amount to additional gains where you get your gains is based on from a dollar amount as how much money you have in that stock, how much Capital you have allocated to that position Vis Berkshire Hathaway or a square or a ten cent penny stock.

15:59
It doesn’t really matter if whatever amount of money you put in that stock, if it’s a fractional one, it even 5% is 5%. So don’t get caught up in how many shares that you’re able to buy. If you can buy. Three of one stock and three of another stock. I don’t know how much money bear is trading with here, but just because it’s a small amount of money that you might be trading with, doesn’t mean that you can’t manage the risk, all the same.

16:22
And so I don’t like the idea of putting all your eggs in one basket because in the end you want to be trading even if it’s a small amount of money like it’s a lot of money you want to grow that Capital, no matter what the amount is. So the takeaway in all of this number one, when you’re trying to do scans make sure that you’re keeping a Just watch list, okay?

16:42
This can be like anywhere from like 50 to 100 or even 200 stocks can be Commodities and be Futures, whatever, whatever your trading. Make sure you have a list of stocks that you feel like, okay. These are the ones I want to keep up with on a daily basis. Second thing is to make sure that you’re incorporating into your scans to stocks that you would never want to trade, no matter what.

17:00
Okay, for me, I like I said, it’s stocks under $10. I don’t have much use for those low volume stocks. I don’t want those. I usually want stocks are trading, like, for 500,000 shares each day at least. East the more, the merrier and finally trade lesson, this kind of a market, don’t think that the stop losses will be just as frequent in terms of how often they’re being triggered and a volatile Market versus a very bullish market.

17:23
So in a very volatile Market, you are going to have more stop losses being hit so you got to trade less and trade more precise and look for the best opportunities possible. If you enjoyed this podcast, make sure to leave me a five star review. I greatly appreciate those and shoot me your emails.

17:39
I don’t get enough emails from you guys. ryan@shareplanner.com. I will read them, and I will put them on the podcast. So, keep sending them to me. I love to hear from you guys, see what you guys are struggling with. And make sure check out swingtradingthestockmarket.com, where you can get all of my stock market research each and every day, man.

17:56
This stuff is awesome. It’s the best that you can get, you’re going to get my watch list. You’re going to get my market updates updates on all the Fang stocks in the charts and trade setups that I find the most interesting. So, check that out. swingtradingthestockmarket.com. Thank you guys. God bless. Thanks for listening to my podcast.

18:13
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18:29
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