Trading Through Tough Times | Podcast Episode #241

0:30
Hey everybody, this is Ryan Mallory with swing trading in the stock market. And today’s episode, we’re gonna talk about trading through tough times. Maybe you’re new to trading and you’re just realizing that, you know what, this market is really volatile. It’s really insane. It doesn’t make any sense to me.

0:46
I’m just gonna step back and I’ll let the market bottom out or figure out what it wants to do, and then then I’ll start when it’s a very bullish market. We’re gonna talk about that today. We’re gonna talk about that because I think a lot of traders have that. On their mind, they’re thinking to themselves, man, this is an impossible market, I’m just going to quit for a while and then come back later when times seem better.

1:04
And that’s what this person is asking today. This person’s asking to be called Lola after their sweet dog that died last year. So Lola writes, Hey, Ryan, first, let me say thank you for the great content you provide trading and bourbon tasting included. If you feel inclined to use this email on your podcast, you may call me Lola after our sweet dog that died a year ago.

1:25
I am a fellow Floridian from Tampa Bay and have my own investment account for about 15 years. So I guess that’s about what, 2007? I started initially with Sharebuilder, which has changed hands a couple of times now. At that time, I mostly purchased ETS with good long-term up trends, and Sharebuilder offered partial shares, so I had pieces of a few top large caps, Apple, etc.

1:46
I have since had to take money out of that account a couple of times to pay bills due to changing careers late in life and having periods where I was looking for a job. When the COVID dip happened, I used that opportunity to purchase relatively cheap shares of several good companies and rode them back up to their pre-dip levels, replenishing that account.

2:03
It was the first time I had ever looked at purchasing shares with a decent upside with the intent to only hold them for a short period of time. I then found out about swing trading, found your podcast, and started learning everything I could about technical analysis, risk management, etc. I’ve been waiting to email you with a good question.

2:20
Well, it was a good question, so that’s why we have it on the air. I opened a small swing trading account less than a year ago. I used small sizes. I have made some good trades and some not so good trades, but have mostly broke even in the process. I do work full time, which can make it tricky to stay on top of the news, earnings, dates, etc.

2:39
Those things I am working on. My question for you is this is this a good time in the market to be learning and trying to figure out a trading strategy that works for me? I want to gain experience dealing with a difficult market for sure, but is it helpful for anything other than becoming overly cautious? It seems right now that even large companies have the same headline risk as biotechs.

2:59
Due to war, the Fed and COVID still a little. So if I can’t always stay on top of current news, is it the best idea to be working towards developing a swing trading plan? My profitable trades have recently been on news pops, where I have happened to catch the news like INDO, PTON, and VERU.

3:16
I haven’t held them for a very long time due to the fear of a quick reversal. I’ve also been caught on the wrong side in some other trades, and good thing I used those stop losses. Thanks for all you do. Lola, PS, I am looking to join Sha planner, but I need to wait until I can commit to the necessary time to make it worth the investment.

3:34
All right, Lola, so some really good stuff there to work with. And besides the question that she asked, there’s also some really good points that she made for better and worse, that we need to address. But first, what am I drinking? Well, I’m drinking. Woodenville straight bourbon whiskey.

3:51
It’s a bourbon whiskey finished in port casks. It’s 45% alcohol, 90 proof, and it’s made in Washington. Now this one’s actually had some awards. It’s like 2020 best straight bourbon and double gold from the San Francisco rolled Spirits competition and then I guess 2016’s Kraft whiskey of the year.

4:09
So, kind of excited about this one. It runs you about $35 to $36. And you know, when I smell it, I’m, I guess there’s a little bit of like a, a berry type flavor. It’s pretty sweet. Now to the taste, it’s kind of like a dark chocolate candy bar.

4:25
You can definitely, because it’s finished in those port casks, you can pick up on some of that wine flavors, as well as a little bit of spice too. So, I think it could be an everyday sipper cause it’s not a bad price, like $35 to $36. It’s hard to find anything anymore that’s a quality that you can get for that price.

4:41
And I would probably say it’s most similar to like a Thomas Moore bourbon, which is a little bit more expensive. So this one here from a price standpoint is pretty decent. I’m gonna give it a 7.3. I don’t think I can go any higher than that. I think it’s solid, but not necessarily something I’m gonna go out of my way to get. 7.3 Woodenville Street bourbon whiskey.

5:02
All right, so back to Lola and everything that she has to talk about here. But one thing I want to talk about real quick is that, and this kind of goes a little bit off script, cause usually I just like to focus on the email, but I know there’s a lot of traders out there, whether you’re long or whether you’re short, and it is a really hard market out there.

5:19
So if you find yourself struggling in this market, don’t beat yourself up too much. God knows I beat myself up some probably more than I should at times, but nonetheless, it’s easier for me to, uh, say it to you guys than it is for me to implement it on myself. And I’m saying that from a standpoint of I’m actually profitable on the year and I still get upset at myself even in a very difficult market environment.

5:38
So, What I would just say is is that make sure, you know, you’re following your trading plan, make sure you’re taking account for risk on every single trade. And even if you’re doing all the right things, there’s gonna be times where it just doesn’t work for various periods of time, and sometimes you just got to fight through that.

5:54
And it’s so easy when you’re going through some of the hard times of trading to just throw your hands up in the air and say I quit, never doing this again, the market’s rigged, yada yada yada. And what I would encourage you to do is not take the easy way out if you’re controlling the risk, and if you’re doing everything you can to put yourself in a position for success, sometimes you just gotta fight through those difficult times.

6:13
Don’t put yourself in the stupid situations where you’re gonna lose tons of money. Definitely don’t do that. But if you’re doing everything right and you’re not seeing the returns that you want, sometimes it’s just growing moments for you as a trader and you gotta fight through those because the worst thing you can do is just bail out and never come back to the market again.

6:31
It’s worth it to fight through these times and then seize the success on the other end. OK, so I’m actually gonna get to Lola here. She has a lot to say. She’s been trading for about 15 years. That goes back to 2007 when she was really passive investing. She was opening up a share builder account.

6:47
I actually had a share builder account probably like 20 years ago, I wanna say. I think I was in college and when I was adding stuff to my share builder account. I had one stock that went up like 60%, and I thought, oh, I’m a long term investor, I’m gonna stay in this one and I ended up taking a loss on it just because I actually thought I was like Warren Buffett at the time thinking that I had.

7:06
Found a gold mine in a stock that was just gonna go up to a million dollars a share. It was a biotech company. I didn’t even know what a biotech company was at that time, and I lost my head on it. So I know a little bit about ShareBuilder. I think my first stock that I ever bought in ShareBuilder was Walmart, and it was like the most boring thing of all time.

7:22
You could like come back and like a year later, it’s still like trading a 0.5% higher or lower from where you got in at. But anyways, start an account with ShareBuilder. Made some money in it, used it to pay your dues. Look, sometimes you do have to dip into your accounts. I mean, if you gotta survive and you got to eat and you gotta be able to pay the bills, sometimes you might have to dip into your trading account.

7:41
It’s not preferred, but if you have to, you have to. But I also find it interesting that the goal here was, and I think it was the wrong approach to it, even though Lolo was very successful in her approach, and that was buying stocks. At the COVID lows, that was great, but selling it just because it got back up to pre-dip levels really left a lot on the table because it was this notion of like, a lot of people saying, OK, I’ll just write it back to where it was and then I’ll get out.

8:07
But why? Do you think the market’s gonna be like the same thing saying, oh, we got back to pre-market levels, we’re gonna go ahead and dip out and sell off again. No, I mean, the market blew right through the pre-market levels and so had Lola held and let the winners run wild from an investment standpoint and methodically raised the stop loss.

8:25
As it continued to improve in value, there’s a good chance that she could have gone 2 X. I don’t know what the positions were, but let’s say if like she was buying Apple and some square and everything else, she could have maybe like 2X to her account instead of just selling out at the pre-d levels. But still, I mean, if you’re new to trading, you’re not gonna really know that.

8:43
You’re gonna use a lot of what seems like logic to you, but not necessarily to the market. And while it might hurt you from a long term standpoint, at least she was able to still do well with the trades by at least running them back up to their pre-COVID levels. So now that experience has kind of shifted her focus towards swing trade, and she’s trading with small position sizes, and that’s good, especially as you’re just trying to learn the craft because so many people.

9:06
They’re not interested in learning the craft as much as they are about making money, and it really needs to be reversed. You need to worry less about making money and trying to learn the craft of swing trading because by learning it, you ultimately set yourself up to actually make money swing trading. But if you just go into it with, I just want to make money, I want some stock picks, I want to just get in, get out, whatever. Then you’re not really teaching yourself, you’re not learning, and as a result, you’re not building a foundation. You’re just randomly throwing money at stocks and hoping that they go up, and when they don’t go up, you don’t even know why. You don’t even have an exit plan to get out. So it really sets up as a recipe for disaster.

9:41
If you’re gonna do swing trading, don’t do it for the money, do it to learn how to do the craft itself and eventually as you gain the experience and as you become better at it, you’re gonna see those profits come to fruition. I thought it was kind of interesting where Lola says that she’s not able to stay on top of the news, the earning dates, etc.

9:59
Earning dates, you gotta know when those things are reporting. You have to, and if you don’t know, you’re setting yourself up for a disaster, especially if you’re trading like a biotech stock or a very thinly traded company or really anything. I mean, just look at what happened in Netflix the other day for Pete’s sake, the thing is down like 40% following its earnings.

10:18
You gotta stay on top of the earnings or you really shouldn’t be trading. At all, because earnings is one of the worst things that you can be caught in when it doesn’t go your way. And I’ve been there, I know what that’s like, that’s why I don’t trade earnings, because I realized I could be right on the estimates.

10:35
I could be right on the forecast and the stock still sells off and vice versa. I could be wrong on everything and the stock goes up. But then there’s also this part about not being able to stay up on the news. A lot of times the news will make you do the wrong things, believe it or not, I mean, you’ll say, OK, well, if this is happening in the economy and that’s happening in the economy, there’s no way the stock market can go up, or you might say, well, this is very bullish, we’re adding jobs, we’re lowering interest rates.

11:00
There’s no way the stock market could be going down in the short term. In fact, it does. It maybe had run up too much and it goes back through a 5% correction. So sometimes the news, while it’s interesting, you know, from a curiosity standpoint, doesn’t always lead you to profits like you think it will.

11:16
And if it’s a really good news piece, then it’s gonna be almost instantly priced into the stock, or at least a big move will happen right out of the gate and you’ll have very little reaction time. Lila talked about how some of our best gains came from stocks like INDO, Peloton and VERU.

11:33
They had big pops. On news and they were probably instantaneous. Yes, they may have run a little bit thereafter, but I bet you the big chunk of it almost happened simultaneously to where it was too late to even jump in, even if you wanted to from a reward or risk standpoint. So the news pieces can be good.

11:49
I mean, if you’re in a trade and you get a big news piece, yeah, it doesn’t hurt to take some profits off the table because that might not have been part of your original trade. You might have been like, OK, if I can make 10, 15% off of this trade and the news piece comes out and it goes up 15, 20%, yeah, take some profits off the table. You’re well exceeding what you had expected for that trade.

12:06
But the big question here is, is, is it a good time to start trading? And finding a strategy that works for Lola, despite the fact that the market seems very difficult with a lot of pitfalls, a lot of headline risk. Is it a good time to start? Well, I would say yes.

12:23
If you go back to 2020 when a lot of people got involved in the stock market, I would say that was probably one of the worst times because people created for themselves some really, really bad habits, and it lasted for almost two years. And so then 2021 comes to a close and they’ve been making all this money from buying the dip.

12:39
They’re paying their capital gains taxes in 2020 and then 2021, they owe more capital gains taxes. But guess what? They lost all their capital in 2022 when the market started taking a dip and the buyers tried to buy in, but it kept dipping. So now they’re sitting at major losses, but they still owe capital gains taxes from 2021.

12:58
How are they going to afford them if they don’t even have the capital to pay those taxes? You can’t. So I think 2020. And the people who started in 2020 following the big COVID sell-off, really have a false impression of what the market is. I mean, you can look at, OK, well, I can see on the chart we had a big sell-off, so big selloffs happen, but if you’ve never actually experienced it, it’s a whole other animal.

13:21
It’s a whole other animal to start questioning yourself, am I gonna make it through this major sell off? Is the market gonna survive? Are we limiting down tomorrow? Am I gonna be able to sleep tonight knowing that um. Loaded to the gills and long positions in a market that continues to drop every single day, am I going to get margin called?

13:37
Those are all things that you experience, especially as an unseasoned trader in a bear market. Now, for me, I’ve gone through some of these bad markets. I’ve gone through 2008. I’ve gone through 2000 and 2000 was brutal for me because I had never experienced one before. I all I knew is is trading in the 1990s, the stock market went up every single day.

13:56
And it took the dot-com bubble for me to realize, holy cow, I can lose all those profits in the blink of an eye, and that’s what happened. But it’s those events that shape my experiences. Now, if I had just started in 2020, I’d probably be looking at like the sell-off in 2018, the recession of 2008, the dot-com bubble as just kind of like points in history that really didn’t matter much to me.

14:18
Because the people who started in 2020, if they survived this market, and that’s a big question for most of them, if they survive this market, it will shape them going forward and how they tackle the market. In the future, they’re going to remember the moments of when dip buying didn’t work.

14:34
They’re going to remember when their trades went from being 50% up to 60% down. How many Netflix traders are there right now that might have bought in at $350 a share way back when, saw it go all the way up to $700 now they’re up 100% on the trade, only to see it drop back down to $218 a share.

14:58
Look, if you bought Netflix soon after the COVID bounce back in March, April of 2020, you could have gone in at 350, saw a 100% profit in your portfolio, then watch it within a matter of five or six months, go from 100% profit down to a 38% loss currently, and there’s no sign that it’s even done yet.

15:19
But I bet you those people who experienced it and are able to survive it and continue trading in the future, they will learn some valuable lessons just like I did from the 2000.com bubble, just like I learned lessons from 2008 and 2018.

15:36
Every time there’s a sell-off, I learned something. 2020, when the economy shut down, I was learning from that as well. You’re always going to be learning and it’s going to continue to shape you as a trader going forward. I actually consider myself very blessed and fortunate that I have been through so many corrections and so many recessions in just the last 20 years.

15:59
The dot-com bubble that blew up in 2000 didn’t really bottom out till 2003. Then you had the Great Recession that started late 2007, didn’t stop until 2009, March 9th, I believe it was 2009. Then you had the European banking crisis.

16:14
I think that was like 2012. Then you had the sideways market of 2015. I mean, I could keep going on. 2018, the market sold off really bad in quarter four. A lot of people forget about that one. But I don’t cause I, I experienced that I traded and I actually traded it really good too.

16:31
And then of course you had the COVID shutdown in 2020, where the market for three weeks was just an absolute disaster, dumpster fire even. So no, Lola, I think it’s a great time to start to learn to trade because it’s gonna be an experience.

16:48
Yes, don’t try to necessarily just like lose money for the sake of it, but try to develop your plan because your plan needs to be good in both a good market and a bad market. You need to always ask yourself if this is a good plan for me to trade off of, how is it going to do in a bad market, and I guess there’s probably no better time to learn than right now because it’s a menacing market right now to be trading.

17:08
But it doesn’t mean that it’s not something that you can’t learn from and benefit from from an educational standpoint, because it’s those experiences that will really shape you as a trader in the years to follow. I find it interesting too that Lola mentions how she’s not able to keep up with news and everything else and that she needs to work on it.

17:25
She needs to create a system that she can successfully do as a swing trader, but one of the most important parts of developing your own system is creating a system that is beneficial to your lifestyle. If you don’t have the time or flexibility to be a day trader. Then don’t trade like a day trader or a scalper.

17:42
That’s why you don’t really see full-time employees at corporations also day trading. I mean some of them probably do, but it’s probably very difficult to do so because you could have an employee come into your office or you could have your boss walk into the office and if you’re day trading, you might be missing out on signals or you might be needing to get out while he’s talking to you and you can’t do a thing about it because that’s your boss talking to you.

18:01
I remember I was trading futures when I was in corporate America. I was like on TradeStation, and I remember, man, holy cow. I thought I was gonna lose it at times because I’d have these signals go off and I’d get long on S&P contracts. And all of a sudden the boss man would walk in and I can actually see the market working against me.

18:19
He can’t see it because I have my monitor turned away from him, but he’s talking to me and I hadn’t even had time to set my stop boss yeah I had just gotten into it. As soon as I got into it, man, and things went right against me. It’s tanking. My boss is talking to me. I can’t get out of it because he’s talking to me and I don’t really want to lose my job either.

18:36
So me trading futures when I was in corporate America clearly was not a good lifestyle choice for me from a trading standpoint. And so it’s important for Lola when she creates her swing trading strategy to make it to where it revolves around her lifestyle.

18:52
If it’s not, then it’s gonna be very difficult to succeed. And speaking of trading around your lifestyle, one of the things that will help you out quite a bit is by signing up for swingtradingthestockmarket.com. You’re gonna get all my stock market research each and every day, and yes, I’m plugging it right now. Guys, it’s going to give you the stocks that I’m looking to trade each and every day.

19:11
The most intriguing charts that I come across, weekly watch lists, updates on the fangs and updates on the indices, all sent to you and you’re supporting this podcast as well. swingtradingthestockmarket.com, you got to check it out. Now I’d also say that while Lola was able to be profitable when she decided to trade off of those COVID lows is because the trading strategy that she implemented, whether or not she realized it, it was somewhat of a trading strategy, it suited her lifestyle, so she’s got to make sure when she implements this new swing trading strategy, whatever it may be, whatever form it comes in that it supports her lifestyle that she can actually execute it because right now it sounds like she’s had some misses, she’s had some wins, she needs to look at the risk rewards.

19:50
Situation, why is she selling out of fear? Does she need to be taking partial profits along the way? Is she able to let a stock run wild while steadily increasing the stock losses? She needs to be thinking about that stuff. And so the takeaway from all of this, there’s no better time than right now to start learning how to trade because if you’re not learning right now, then you’re not learning at all.

20:09
That doesn’t mean you throw caution to the wind and you just start yellowing all your life savings into some random stock that you heard might be going up or that you read on Wall Street bets. No, you wanna trade like that money means the world to you and that you’re going to take care of it. You wanna make sure you have your position sizes figured out.

20:25
Why are you getting into a stock? Where are you gonna get out before you ever get in? Simple questions like that that can go a long ways in helping you to find a good trading strategy. And if you enjoy this podcast, please make sure to leave me a 5 star review. Man, I really like those things. I read them all. It encourages me too.

20:41
So if it’s impacted you, this podcast, whether it’s this episode or some before, leave me a 5 star review. I do read them all and they mean the world to me, guys, it means a lot. And make sure to keep sending me your questions, ryan@shareplanner.com. I do read them all and I try to put every one of them into their own episode.

20:57
As long as it’s a good question, I can do that. 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 SharePlanner trading block where I navigate the stock market each day with traders from around the world.

21:13
With your membership, you will get a 7-day trial and access to my trading room, including alerts via text, 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.

21:35
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.