Profits in Patience | Podcast Episode #253

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. In today’s episode, we’re gonna talk about the profits that come with showing and exhibiting the characteristic of patience and your trading.

0:43
This doesn’t come from an email like most of my podcast episodes are derived from. Instead, this is just something that I feel like based on some of the observations that I’ve made with a lot of traders. Especially over the last couple of weeks and just over the course of 2022 in general, one of the big flaws in so many people’s trading is the inability to show patience for the right setups, for the right opportunities and to essentially admit at times that hey, I don’t know what the market’s going to do next.

1:12
I need to wait and see and let the market confirm it. So many times we have this need to be right and to be able to predict the market’s direction. So we’re gonna talk a lot about patience as it pertains to the stock market, as it pertains to trading and how it can lead to enhanced profits. But first, what am I drinking?

1:29
Well, I picked up a bottle and I thought I had already done this. My wife, she calls me from Costco and says, Ryan, they’ve got a big liter of Kirkland Signature, small batch. Kentucky straight bourbon whiskey and I was like, I think I’ve already done that, but the one I bought was like in a different bottle and it was small batch of premium, which I don’t know what the difference is.

1:50
I did notice that the proof was different. This one here is a 46% 92 proof. It’s batch 1124. They call it the small batch selection versus, I guess the previous bottle was like a small batch premium. I don’t, again, I don’t know what the difference is on it, but I feel like it’s warrants its own review, aside from the previous small batch that I did.

2:13
Color on it, it’s beautiful. I mean, it really is a nice dark amber brown, very clear and you’d be surprised how often I see whiskey sometimes where it almost looks like it has stuff floating in it. I kid you not, some of the real crappy ones, looks like it’s got like muck or something in it sometimes, but This one does not have that.

2:31
Smells pretty sweet. I’m not picking up a lot on the taste. I do notice there’s a little bit of an oaky finish. Maybe even a little bit of a hint of vanilla there at the end as well. It does come on strong towards the end with a little bit of spice, but it’s not overwhelming. I’d probably give this a 7-2, 7-2.

2:49
And the last podcast I talked about. Cal at 8 year and I think I gave it like a 64 and I, I actually feel bad about it because after the podcast, I actually drank a couple more glasses later that night and it really grew on me. It was a very good weekday sipper, like when you’re working and everything, you don’t want something too heavy.

3:06
That’s a good one. It’s nice, it’s light and it’s airy. And so, I won’t change the official score on it, but just off the record. Don’t say I said this, but it’s more like 7-1 probably. But yeah, no, this Costco one though, not trying to skip around between different bourbons, but this one here, definitely, I’d give it a 7/4.

3:24
It’s got some good flavor characteristics to it. I do like it. It’s strong on the proof side, 9246, and the finish really lingers. So, I mean. I think this bottle was like somewhere in the 20s, like $28. I mean, you can’t beat that for the price.

3:39
So if you go to Costco’s or if you have a membership, definitely check out getting a bottle of that. It’s a full liter too. You’re not talking about like 750 mL, you’re talking about a full liter. So it’s, it’s a good size bottle that’ll last you a while. So, Kirkland’s or Costco’s, whatever you wanna call it, small batch, I give it a 7.4.

3:59
Now back to patience. I’ve traded probably the least amount that I’ve traded in years. I, I honestly don’t even know if there’s a year where I’ve traded less than what I’ve traded this year. It doesn’t mean I have not trading at all. In fact, as I’m doing this recording today. I’ve made a trade in QID and it’s so far so good, but it took me what 9 days into the month before I could even make my first trade.

4:20
Now some people think, oh, that’s not for me. I can’t do that. And to a certain extent, that’s fine. I mean, everybody has different trading approaches as it pertains to the stock market. A day trader, that’s not gonna be something that they can, you know, put up with. But from swing trading, and that’s what this podcast is about, there’s gonna be times where you have to lay back and I feel like.

4:38
You can look at most traders, successful ones, and if you look at what they do beyond managing the risk and using stop losses and so forth, one of the big characteristics that they will exhibit is patience. But I would say that’s probably one of the biggest flaws in most traders.

4:55
Even if they’re managing the risk, they’re not showing patience and what they’re selecting in terms of what stocks they get into, why they’re getting into it. There’s this enhance. need to have to have the action. They have to have that adrenaline rushing. Let me tell you, I haven’t traded in 9 days. I haven’t made a new trade, a new position, opened up a new position in 9 days, and I could tell you, I could feel a little bit of excitement when I put on that trade.

5:17
And I’ve been doing this for 30 years, but that trade, I haven’t made a new trade since May, recording this on June 9th. Yeah, it felt pretty good. I wish I could have that feeling every day, but the market doesn’t always give us the opportunities. The trade and we have to recognize that.

5:32
So, over the last 9 days up until today, the 9th day, we have been, and this goes back to late May of 2022 on the spy and on the queue. So if you listen to this in the future, and you want to look at what I’m talking about. The market was trading in a consolidated pattern from like May 27th up until today, consolidating, you’d get these big candles to the upside and the next day we got down.

5:55
I came back from vacation where you had like 4 or 5 of these candles already and I wasn’t trading on vacation at all. So it was very obvious when I came back, OK, we’re in consolidation. I don’t know which direction it’s gonna break. Is it gonna break higher or lower? If you would have asked me two days ago, I would have said it’s gonna break higher.

6:10
If you would have asked me the day before that, I would have said lower. If you asked me yesterday, I would say lower. You go back to a week ago. Exactly a week ago, I would have said it would break it, it would break higher because we were on the verge of breaking out and it looked like we’d get the continuation, but no, we didn’t. So exhibiting patience in your trading can keep you and I know for a fact because I listened to what the people say in the trading block and there was a number of people that couldn’t hold off on some of the trades, and they would keep buying and selling inside that range and they were getting turned to pieces.

6:40
And so there was a lot of good trade set up during that time that I was coming across and I’m like, I like this trade up. I like the trade setup in Nvidia. I like this one in Ford. I like this one in Apple, AMD. I mean, there was good trade setups that were springing up, but I said I’m not gonna trade it because I’m a top down trader and what that means is I make sure that the market direction along with the sector and industry and.

7:01
Stock all line going in the same direction and so the stock market was stuck in the consolidation. I don’t care what the kind of trade set up I’m being presented with. If I’m not able to trade in the direction of the overall market, why am I going to take a trade when it goes against the market or the market’s just not providing the necessary boost to justify the trade?

7:18
Because so much of a stock’s price action comes from what the overall market’s doing. Yes, some stocks represent companies that are much better than others, like you take Apple for instance. It has held up much better than like SQ or PayPal over the course of 2022. Why? It’s a better company.

7:34
But I would say at least 50% of the stock’s move comes from the overall market direction. Then I would say 30% is sector related and industry related, and then the final 20% comes from the stock itself. So if you don’t have the sector industry in stock market direction all lined up with the trade setup that you’re taking, you’re hoping that 20% is gonna outweigh the influence of the 80%.

7:57
And that can become a pretty dangerous game. So while I found some good trade setups over the past two weeks, I held off on them. And I would get emails from, from some subscribers, you know, where they were new to the services like Ryan, been a member for a week and you’ve yet to make a trade. What the heck? You know, what am I paying for here?

8:13
Well, first, I can’t trade based off of what somebody needs. You know, when they subscribe, I’m gonna trade based off of what I think is best from a trading standpoint. And since May 27th, there has not been a good trade setup for me to take until today, and then the market broke down and I had a QID trade, and I got long on the QID and I probably got long on it within the like the last hour and a half of trading and I finished the day at 2.7%.

8:37
Now, the next day, tomorrow, And when you guys are probably listening to this, the CPI will have already been out. The market’s going to respond one way or another to the CPI report coming out because the market is very concerned about inflation and what the Fed’s going to do about it, and the CPI is gonna go a long ways in shaping the Fed’s views and the overall market impact of high inflationary environment.

8:58
So, yeah, I could still lose on the trade and I wouldn’t be surprised if I did, but I’m avoiding a number of bad trades by not getting sucked in when the market was consolidating and going up and down and up and down and it couldn’t pick a direction. It was just making big moves within a tight range.

9:14
At least now if I get stopped out, OK, I was at least following my trading strategy. I was playing the breakdown and the market, it broke down out of consolidation. I have a stop off in place in case I’m wrong, and if I’m wrong, then I move on to the next trade. But the one thing that I could say that I did is I didn’t get caught up in all the sideways consolidation and trying to make something that wasn’t there.

9:33
So I’m avoiding unnecessary losses. If I’m wrong on this one, it’s actually a necessary loss because I was playing the breakdown, the breakdown happened, it just didn’t work. Now, hopefully it does work, and I could say, hey, I made a good chunk of change off of this trade. But I also realized too, and I think this is another concept that a lot of people struggle with is they think they’re never supposed to be wrong.

9:53
They’re like, I gotta be right. I got to win at all costs, and that win at all costs mentality is what costs a lot of traders from ever seeing true success in the stock market because for instance, I post my past performance on my website. You can go back to 2011 and see all the trades that I’ve made in the trading block, and I take a lot of pride in that.

10:10
But what I take pride in is not the winners, it’s the losers, because if you look at year after year after year of trades that I’ve made, you’ll hardly find anything that’s like 8 or 9% of a loss. Most of them are 0.5%, 1%, 2%, 3%, 4% in that range.

10:29
And it’s consistent. What does that tell you? It tells you that I’m consistently managing the risk on every one of the trades that I take. Most people can’t say that, and I’m not using this podcast to just toot my own horn. But what I’m trying to say there is is that I guess I can’t be tooting my own horn if I’m talking about my losers.

10:47
But my losing trades is what really defines how profitable I become as a trader. And I’m getting a little bit sidetracked here because really the emphasis on this podcast is about patience, but along with patience though is avoiding unnecessary losses that being impatient brings you, and then this need to have to win at all costs.

11:06
And you know what’s gonna actually help you with your trading? swingtradingthestockmarket.com. That’s right. swingtradingthestockmarket.com does support the podcast. You’re going to get all my stock market research each and every day. That’s going to include things like my weekly watch lists, both bullish and bear stocks that I am following along with like daily setups, man, the, the daily setups I’m looking at, you know, each morning I send out a list of stocks that I’m following, give you some notes on the market, as well as the most intriguing charts of the day that I come up.

11:33
And then on top of that, you get all the Fang stock updates. I don’t know if it’s called Fang anymore or MG. M M A N G because Facebook changed their stock symbol to meta. So it’s like MG stocks plus Tesla and Microsoft. And I also provide you with updates on the broader market.

11:49
So check that out. swingtradingthestockmarket.com. It’s a really, really good service and you’re supporting this podcast in the process because there is some cost that goes along with producing this podcast. So we talked about the 9 days of consolidation, finally the breakdown today. Being impatient doesn’t mean you’re gonna be right every time.

12:04
Being impatient just means you’re avoiding a lot of unnecessary losses. And yes, you may be impatient and have some winning trades along the way, but in general, when you’re being impatient, it shows that you’re not actually trading with an edge, so ultimately that’s going to hurt you in the long run.

12:20
And I got guys, they email me and they tell me about how hard it is for them to just sit in cash. I got guys that tell me how being even 90% long, that means they only have 10% cash that they can’t get their mind off the fact that they have 10% of their money on the sidelines.

12:37
I have spent most of this year probably 80% to 90% cash, and oftentimes 100% cash. I mean, up until today, I was like 97% cash because I actually got stopped out of my final third of a position and spy when I got long on QID because the market was breaking down. I closed up the last chunk of capital that I had in Spy and then I got long on QID.

12:54
So being in cash is not a bad thing. And here’s the other thing too to remember about these declining markets when the volatility is really high, it doesn’t require that you have a huge exposure to the market. I mean, you can make really good gains with the amount of volatility that we’re seeing in the market right now.

13:11
You can see a lot of really solid gains just by trading like one or two positions in this market. And in another area where a lot of people are getting themselves into trouble is where. They’re not differentiating between a nice steady bull market where, OK, you may, you know, a few times a month see a move to the upside in excess of 1% or a sell-off when you do get them, it’s maybe like a 0.5%.

13:35
Yeah, you can get away with having, you know, 90, 100% of your capital allocated. But in this market, I mean, what’s 2% down today is up 2% tomorrow. And what’s up 2% tomorrow, the following day, it’s down 2%. And there’s a lot of volatility, there’s a lot of choppiness.

13:52
So it doesn’t behoove you to really just go full tilt to the long side or to the short side because the volatility is so much that it’s gonna wreck havoc on your emotions. And being in cash and showing patience, it’s strategic. Because oftentimes we think that we have to know what the market’s gonna do next.

14:09
One of the big reasons why I didn’t get along was outside the fact that it was just stuck in consolidation is because I didn’t know what it was gonna do next. Oh my gosh, it’s like you got a guy who talks about stocks and does it for a living and he’s openly admitting he doesn’t know what it’s gonna do next. No, I don’t know what the market’s going to do the next day.

14:26
I never know, but I can follow what the market’s telling me and we’re, I think there’s. An edge and where the the odds are likely for it to go up or for it to go down and then act accordingly. I don’t need the market to be bullish or to be bearish to suit my needs. I just need it to have a direction and then respond to it accordingly.

14:44
But if you’re needing it to go up or if you’re needing it to go down, that may be a sign that you have too much capital allocated and that you’re getting emotionally charged from the amount of capital that you have in play. You know, I, I guess one of the things I would probably want to leave you with. Is to accept the fact that one, you don’t have to predict the market direction.

15:04
And if you can’t predict the market direction, then you have to have patience when the market’s consolidating and not showing you any clear edge or a clear probability of where it’s likely to go, aside from whatever opinion you might have in the market, what is the market trying to tell you? Because the market doesn’t care about your opinion, it cares about what it wants to do, and then you got to follow that.

15:22
It’s not about being a leader and guessing up front, where is it ultimately gonna go. It’s about following the leader, following the market’s lead. And in doing so, that’s gonna require a lot of patience. Patience at times when the market’s not showing you what it’s true intentions are, recognizing that and say, OK, I’m gonna hold off, I’m not gonna trade it, and I’m just gonna wait for the market to give me a little bit of a clearer sign whether or not to go long or short, like today.

15:45
Market started to break down, broke out of that consolidation pattern of almost 2 weeks. I got short on it. Now, tomorrow, there could be some volatility from the CPI report that sends it straight back up. I don’t have any control over that, so then I just need to respond to what the market ultimately does with the CPI report.

16:01
Maybe it’s a horrible CPI report and the market tanks and, and I continue to increase the profits. Then I’m gonna start taking some profits off the table, move my stock loss up, and let the remaining capital continue to run and start eventually taking some profits out of that as well. So, I hope you enjoyed today’s episode.

16:17
Hope you learned something from it. I just really wanted to talk to you guys about the need for being patient in the market and how it can lead to enhanced profits, especially in the times that we’re trading in right now with the inability to really predict a true direction from a day to day standpoint. Also, make sure that you’re still sending me your emails ryan@shareplanner.com.

16:35
I do read them all and we’re gonna keep putting them on the air. Those things are fantastic. I love. Getting your emails and check out swingtradingthestockmarket.com, plus leave a 5-star review because that really helps me out as well. And I do listen to your reviews. Some of them are kind of brutal, but I really appreciate it if you want to be brutal, I still try to keep you 5 star.

16:56
Any case, I appreciate you guys always listening. You guys do mean the world to me. 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.

17:14
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.

17:35
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.