When To Quit Trading | Podcast Episode #270

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 when should you just quit trading? For some of those that have been stuck on the short side while the market’s been rallying, that’s probably gone through your mind a little bit.

0:43
For those who were long, when the market was selling off for the. Majority of this year, you probably wanted to quit. In fact, some of you guys listening probably did quit and trying to find a reason to get back into the market now that you see it rallying. So when should you quit? When should you just give up? That’s what we’re gonna talk about today.

0:59
And today’s email comes from a guy, we’re gonna call him Liam. He’s from Ireland. So, Ireland needs a good Irish name. Now I’m actually Irish myself, but I don’t know if my name is necessarily Irish, but at least not my first name. My last name is pretty Irish considering it’s Mallory, but gotta give this guy a good first name.

1:18
We’re gonna give him the name Liam after Liam Neeson, one of the most famous Irishmen from the country of. Liam writes, Hello, Ryan. I hope you’re keeping well. I’m 42 with a young family, and I run a successful food business in Ireland, so I’m not stupid and I have treated trading as another business and took it very seriously.

1:37
I’m, I’m glad he’s told us right out of the gate, look, I’m not being stupid with this stuff. He goes on to write. I started learning around the end of January 2022. And I have wasted a lot of money making stupid trades. Only for listening to you and joining SharePlanner I eased up and made some better decisions.

1:54
I love your recent podcast where you talk about the length of time it took to learn to trade stocks, and that did give me perspective, but I have had the worst 3 weeks ever, and I have Three separate accounts, one for stock trading, one for crypto trading, and another for long-term investing. The latter is doing pretty good.

2:10
My crypto trading account has gone from $5000 though to $150. Actually, he writes €5000 to €150. I blame losing half of that to joining a Discord group and getting FOMO. So now I do realize that crypto trading is not for me.

2:26
My trading account has gone from €27,000 to €250,060 and I said, if it goes less than €25,000 that I will call it quits as I hate losing hard earned money, but I really don’t want to give up. I felt that I had a real passion for trading, but the last few terrible weeks of trading has made me ask myself a lot of hard questions.

2:46
Well, that’s a lot to unpack right there, folks. But he goes on to write even further. Apart from losing all of your money, at what point should someone just give up and realize that trading is not for them? I know this is a difficult question. It would be different for so many people. Is a lot of the losing a part of the learning how to trade?

3:04
Could you speak about your biggest winning trades and your worst losing trades or your longest losing streaks? Any advice would be much appreciated. PS I’d love to send you some good Irish whiskey someday. Thanks for everything, Liam. Well, I will take you up on your offer on some good old Irish whiskey.

3:22
Now, before we get into that though, what am I drinking? I am drinking some stuff that I got at Total Wine the other day. Over this past weekend it was Oregon Spir single barrel bottled and bond bourbon whiskey. That’s a mouthful, but yeah, Oregon Spirit distillers.

3:38
Really good. I’ve only done one of theirs in the past. It was their Oregon Spirit straight American bourbon, basically their standard bourbon. I gave it a 7.1, which was really good. This one though is a little bit higher class. This thing is like single barrel, bottled and bond, which I love the bottled and bonds in general.

3:54
They make really good for old fashion too, but this is not something that I plan to use for an old fashion. So because it’s bottle and bond, it’s 100 proof, it’s 50% alcohol. It’s in the nose, you pick up some tobacco flavors, that’s really pleasant, man. It doesn’t burn your nose at all when you smell it, a little bit of a leathery smell to it as well, but not to the taste, taste is really good.

4:14
One of the stronger tastes that I’ve seen lately in the bourbons that I’ve tested, you pick a put on a little bit of vanilla, but what’s really cool about it. Is the kettle corn flavors. Now I had my wife try it. She’s crazy about this one. She loves it. She loves the kettle corn flavor cause it’s so unique.

4:31
And then on the finish, it doesn’t come in too hot. It’s like a box of red hots hot. You remember those little tiny red hots there are little red dots. That you would eat as a kid. Maybe we did that in the 80s and 90s. I don’t even know that those things are still around, but it’s that kind of hot. So it doesn’t chase you down your throat and just burns your insides to pieces.

4:48
Good spice, good finish, good taste. I’m going with an 84. On the bottled and bond Oregon Spirits single barrel. Now, I wasn’t even planning on using this as a review this week. Met these guys at Total Wine, they were giving out a whole bunch of samples and I got to this one.

5:06
I was like, whoa, this one stands out, man, above and beyond anything else that I’ve tried from their product line, and their product line is really good. They all have good bourbons there, but this one was like way over the top good. So, I give it an 84. Very good stuff, guys. And it comes in at like $69 which it’s starting to get up there a little bit, but it’s still very affordable for most people and very tasty.

5:28
I probably wouldn’t say it’s an everyday sipper because it’s probably more like a weekend sipper, special occasion sipper cause it’s that good. I wouldn’t want to get used to drinking this stuff every single day. I’ve become spoiled. So there you have it, 8.4 for the bottle and bond single barrel organ spirits.

5:44
Now, let’s get back to Liam’s questions here. The guy’s struggling. He did something that I do like. I do believe that the different trading strategy should have different accounts. Like, I don’t want my long-term investments in the same account as my swing trading. I don’t want my swing trading in the same account as my dividends.

6:01
And so he broke it up between swing trading dividends and crypto, which is a good place to start because it allows you kind of to see where you’re doing good at and where you’re not doing good at. In this case, he’s not doing good at crypto at all. Let me tell you, crypto is not easy. I think in the early days, people were getting into it and they made, you know, bank off of it, you know, the the handful that got in at the early stages and they wrote it up to like $19,000 and it came crashing back down to like 2 or $3000.

6:25
And those people who got back in at those those levels, they were able to write it back up again. But those people are few and far between. Yes, I know there’s some people listening to us like, well, Ryan, I was one of those, but I’m still saying it’s few and far between. Most people really struggle with the cryptos. It’s not easy. It’s not that. Great when you’re trying to get fills on them, the bid and the ass can be all hokey and people are quoting different prices on different brokerages.

6:46
So it’s definitely a different experience. I’ve tried it. I’m not overly crazy about it just yet. I think maybe down the road there could be opportunities for it, but if I were to buy it at this point, it would be more for long term and I would just not even check the account probably, not saying that’s the right approach, but that’s why I’m not doing it because I don’t want to have an account where I’m not checking.

7:06
But here is something worth remembering. He’s 42, he just started trading in January 2022. So, as the date of this email being July 28th, we’re talking like seven months that he has under his belt. seven months. We go to college here in the United States, at least for 2 years just to get what they call an AA degree basically. a basic education degree at the college level.

7:27
And then you spend another 2 years getting a gender studies degree or a political science or criminal justice. And then if you’re doing like engineering, that can be a, you know, 3 or 4 years on top of that. If you want to get a master’s in your degree, that’s another 1 or 2 years. So what I’m trying to say here is, is that trading is far more complicated than a political science degree, and I know that because that’s what my degree was in.

7:48
Trading is far more difficult than an economics degree because I have one of those too. Trading is extremely difficult, yet those degrees I spent a couple of years getting on top of my AA. So to. doing it for 7 months and to become frustrated to a point, it would kind of like, OK, getting through a semester of classes and being like, you know what, I suck at this stuff.

8:05
I’m not gonna do it. But you may not even realize that the next 3 semesters that you’re going to be undergoing are going to make it so much worth it. And so for him to be 7 months into inane. I’m no good at this or I have a passion for it, but I’m not going to just keep on losing money. I mean, goodness, look at a college education.

8:21
What are we dumping now into a college education? Like 100,000 at least. So he’s lost €2000. Yes, it’s a lot of money, but he is also probably learning if he’s taken advantage of these losses by documenting what went wrong, what he should have done in hindsight, and I know hindsight isn’t necessarily foresight, but you can still learn from your past trades.

8:40
And here’s the thing too, is I would tell this to Liam. If going from 27,000 to 25,000 is giving you a lot of problems, trade much, much smaller because at this moment and you’re trading, you’re not necessarily trying to make, or you shouldn’t be at least trying to be making like millions of dollars or hundreds of thousands or even just thousands of dollars.

8:58
You should be looking at trying to execute and make really good trades. Now, it’s much easier to do that when you’re trading in a paper account because you have no money on the line. But if you can just at least do it with a smaller amount, you still have money on the line and you’re still learning from it, but, but those losses will be much more easier to digest when they come about.

9:16
Yes, your winning trades aren’t going to be as significant from a dollar standpoint, but will we be looking at the percentages? How did you manage the trade? Were you systematic in taking profits along the way? Did you adhere to your stop losses? Did you plan out your trades before you ever got into them? That’s really what you should be focused on.

9:33
Yes, losing trades stink and you’re going to have them. I have had more losing trades in the past couple of months than I have had over this whole year combined probably. And still, it’s not a ton of losing trades and it’s not a big drawdown, but it’s been a very difficult market while it’s been running up over the last few weeks to really get a good feel for this market.

9:50
And every time it looks like it’s gonna top out, it just keeps going higher. But I’ve been doing it long enough to where, OK, I can have a few losing trades in a row and know that. I’ll eventually come out of those losing trades and be better for it. I’m still trying to learn what I’m doing wrong on some of these trades.

10:05
What could I have done better? What could I have done better with the timing? What could I have done better with the setups? And I’m learning from it. And while I’m learning from it, I’m keeping the losses small from a percentage standpoint. And so for you as a trader, if you can keep the losses small from a losing standpoint and from a dollar standpoint, at least maybe your emotions will be in check because maybe right now.

10:23
You’re not ready from an emotional standpoint to be putting more money on the line and you need to scale it back some so that you’re trading at a position size that you are better able. To handle because a lot of people, they get into trading. In this case, he’s trading with €27,000 and they’ll see €27,000 and they’re like, I’m gonna go TQQQ and go €27,000 long on TQQQ.

10:47
That’s the 3X leverage of the NASDAQ 100. And then you get into January and the market, you know, tanks and all of a sudden you’ve seen your account go from like €27,000 down to. €135,000. That’s not what happened necessarily here to Liam, obviously, but there’s people out there that do that.

11:03
They think that because they have that money in their account, that all of it needs to be traded at this very moment in time. For me, I’m trading like 10% of my account right now. I’m trying to feel my way around. I’m keeping the loss of small until I’m on the right side of the market. And then when I do, and the gains start to pile up, I’ll start to be more aggressive with adding more exposure to the market.

11:22
But right now I’m not gonna do that because if I did that, I would just be losing. More. So I want to keep the losses tight. I want to keep the losses small, and I want to be patient enough to wait for myself to be in the right alignment with the overall market. I think we kind of come to a really cool place in our trading journey when we start to realize that there is no 100% certain trade.

11:42
And I get caught up in that sometimes too. It’s like, man, this trade is amazing looking. There’s like no way you can lose on this trade. But thankfully, I still stick to my position sizes to where if, if when it usually does go wrong in those particular cases. I don’t lose more than what I set out to lose. And so it’s easy to get caught up in a trade like, man, this is like a surefire trade, it has to work, and then it just completely blows up in your face and you get stopped out.

12:05
But once you can get to the place where you can understand and accept that you’re going to have losing trades, that is a huge shift in the mindset of a trader and one from a trader that can’t figure out how to win consistently to one that can. I go into every trade expecting to lose, and how am I going to protect myself when I do lose?

12:24
And then when I do actually win, then I’m taking profits along the way to make sure that I don’t see those profits turn into a loss. I’m always trying to prevent taking a big loss and then When I’m right and I’m actually making money on the trade and making sure that those gains don’t turn back into a loss again.

12:41
He asks me the question, is a lot of losing a part of trading? Yes, it is. I’ve probably had 1000 losing trades in my career, at least. I’ve had a lot of losing trades, some good ones and some bad ones, and I’ll get into it here really quick. But one thing that You shouldn’t lose out on, and that is swingtradingthestockmarket.com.

12:57
That is where you’re going to get all of my daily insights into the market, into the fang stocks and into different trade setups that I’m looking at and some really good videos on different setups that I’m following and ones that I want to bring to your attention. You got to check it out. You’re supporting the podcast and the process.

13:13
It’s cheap. It’s swingtradingthestockmarket.com. Again, you’re getting all my analysis that I provide each and every day. Now, I took a trade on Friday. I took it on QID got in at 1981, and initially the trade started working out for me, OK.

13:29
Then it started rally back up and I looked at the chart at the end of the day. I said, what’s my edge at this point? Do I have an edge when I get in at 1981, it’s now trading at 1951. We consistently see these Monday gaps higher. We see the market wanting to buy every single dip, and we saw it again today.

13:44
I got a 1981. I’m sitting on a loss of about 1.5%. Am I going to hold it over the weekend? I have a stop loss at 1898, but again, I could see this market gap higher and I get stopped out of the trade and it sucks. So am I gonna hold it over the weekend, or am I just gonna go ahead and close it out now?

14:01
I ended up closing it out that day because I had no edge left in the trade. Yes, the stop loss hadn’t been hit, but when I’m looking at the chart, do I really have a justification for remaining in the trade? And that was the case. I didn’t. So I took the small loss, got out of it. I actually got back into it today. Now I don’t know as of this recording how that trade’s actually going to turn out.

14:19
I’m slightly profitable at the moment, but I was able to get back in at a lower price. Actually, I think one cent lower from where I got stopped out, but. Had I held it over the weekend, I would have been stopped out at 1898. So it actually saved me a lot of money because I was trying to manage the risk. I was trying to keep my risk small, keep it manageable until I was on the right side of the trade.

14:38
And in Liam’s case, it sounds like he’s had a lot of losing trades because he’s asking me about my own losing streaks that I’ve had in my career, and I’ve had some. I think I’ve had 11 time that went like 12 losing trades in a row. That was awful. I hated it. But the one thing about that streak is that it ended.

14:54
And I’ve had some really good trades. I think I went 2 months at one point this year without a losing trade. And so yes, you’re going to have streaks at times and it’s gonna feel like when you’re on the right side of the trade, you’re invincible. You can’t do anything wrong. You’ve got the whole market figured out and it’s at those moments where your losing streak usually starts and you start losing again, you feel like the market’s rigged, I hate you, and you’re never gonna be able to snap out of it.

15:13
But sure enough, you do. But in the meantime, like right now, I was telling you earlier, I’ve had a few trades this month so far, have not worked out yet, but each loss was kept to under 2%. So I’m keeping the risks small while I still Try to get on the right side of the market because as a trader who’s falling odds, it’s following probabilities and following reward versus risk just because the market’s going up doesn’t mean that that’s the right trade to be taking all the time because it can be going up, but the risk can be so much greater than the reward.

15:43
So when I start to see reversals and it’s coming at key resistance levels, I’m going to play those, and it may not work just because it’s a good reward to risk ratio doesn’t mean that the risk isn’t going to be realized and the reward will go by the wayside. Sure. Good reward risk ratios do get stopped out at a loss.

16:00
If you love trading, consider trading smaller sizes. Again, if you’re gonna make it in this career, you don’t have to be coming out of the gate, guns blazing like Yosemite Sam from Looney Tunes. You don’t have to be making massive amounts of money to justify that you belong here as a trader.

16:20
Trade smaller sizes until you get comfortable, until you can get confident, until you can believe in yourself that you can become a good trader, so you can show that you can manage the risk appropriately. But we so often. Associate the dollar returns with how successful we are as a trader.

16:37
Instead, focus more on the percentages. If you’re trading $100 on a single trade, and it’s a fractional share of Amazon or something, but if you made 10%, you made 10% and maybe down the road. You can add more to your account or you can trade a bigger position size, the one that you’re comfortable with because you’ve developed your confidence, you’ve developed your methodologies, you’ve developed your strategy to be able to trade in a manner that allows you to profit more.

16:59
Some of my best trades, I’ll give you a few here recently, Chevron, that wasn’t even one that I did in the trading block. I added that. My dividend portfolio over a year ago, and I think I added it there and I don’t remember the exact amount. I just bought it and added it to my portfolio as a dividend play. And I think at the time it was like an 8% dividend that it was paying out, and all of a sudden you had the huge run up in energy and I, I think I made like 80 or 90% on the trade.

17:20
I closed it out over 160. So it was a phenomenal trade and I made even some dividends along the way. But it wasn’t necessarily something I set out to do that with. Another one was SPCE. I did that one in the trading block, and I think at one point it was up over 96% or maybe even over 100%.

17:39
I took some profits along the way. Turned out to be a really good trade. And then I had IQ one time. This one was a long time ago, but I think I made about 90% on that one as well. There’s really no reason for me to even bring those up because they’re such an outlier. They’re not part of normal trading. And so when you ask about what’s your best trades, we can all point to our best trades.

17:58
We can point to that options contract that just, you know, returned 400% or we can point to that memes stock that went up 500% in a single day for you, OK? We can all do that. But in the end, it’s not going to be about these 90% winners or these 80% winners or these meme stocks that fly 500% higher.

18:14
It’s gonna really be how you manage the risk from trade to trade to trade, so that you’re protecting the profits that you make from those winning trades by keeping the losses small on the losing trades. And remember, you’re trying to learn how to trade. If you learn how to trade and you can build your confidence, you can build your strategy and everything else, the profits will come with it.

18:31
But for now, focus on learning to trade, focus on how to be methodical, how to have a plan in place, how to manage the risk. Now my worst traits, I have a few of those. I had a biotech stock one time, this was like. 20 years ago, for SharePlanner and everything else, bought into it, did some due diligence.

18:49
I thought it was due diligence at least, but went through their balance sheets, thought it was a good company. I think they had an FDA approval. I didn’t even know about coming out, so you could see how well my due diligence was. Actually, this was about more than 20 years ago. In any case, it went up like 60%. I can’t even remember the name of the stock. It went up that day and I remember.

19:04
Not taking any profits and then like a year later, I sold it for probably like a 10 or 15% loss. Another one, and you guys are probably, if you’re a longtime listener of this podcast, you probably heard me talking about LinkedIn, got stopped out of it the day before, but it got bought out by Microsoft. 30 minutes before the close on a Friday afternoon, get stopped out for like a 3 or 4% loss.

19:23
Monday morning, it was announced that Microsoft had acquired them at a 60% premium. That was a pretty frustrating day. So, we have bad moments, we have bad trades, we have bad times and periods of trading that we wish we could forget or if we’re stuck in the middle of them right now, you wish you could get out of it and get onto the greener pastures.

19:41
But these are the times that are gonna develop you as a trader. You’re going to have difficult times as a trader. Trading. It’s not easy. It’s very difficult. It’s hard. Otherwise, nobody would quit. Everybody would stick to it and make a career and nobody would actually work. So, remember, stay the course, trade some position sizes that are going to be more suitable for you to be able to learn and grow from until you have the confidence to be able to trade with bigger position sizes.

20:05
If you enjoy this podcast, I would encourage you to Leave me a 5 star review. They do mean a lot to me. Also send me your questions, ryan@shareplanner.com. I do read them and I do put them on the air, and make sure to check out swingtradingthestockmarket.com.

20:20
It’s truly a gem for traders to be a part of. There’s so much information, it’s really good. 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.

20:40
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21:02
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.