What I’d Tell My Younger Self | Podcast Episode #281

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 today’s episode, we’re going to talk about something. I would tell myself if I was just starting off training. What would I give myself as advice as the new Trader? So we’ll be addressing that from today’s email from a guy who wants to be called Jimbo and honor of Jimbo Fisher from Texas A&M, which is kind of a sore spot for me.

0:53
Considering they just beat the Miami Hurricanes this past week and I like Miami Hurricanes, I didn’t go there, but I did go to UCF and I have my whole family from the Miami area. So I do like Miami. They got their tails whipped by Texas A&M this past weekend even though this email came when Texas A&M had just lost the week prior.

1:13
So we’re calling this guy Jimbo and Jimbo rights. Hey, Ryan first off, love the podcast in the YouTube content. Keep up the great work. So I’ve been training for about a year, my account is only $900 trying to build confidence using my strategy with a small account. Before I increase my size being that I am using only a cash account on wiebel.

1:34
I’m only Long Trader and this bear Market, I found myself sitting on my hands quite a lot. So I use that time to digest podcast books or videos on technical analysis side of the market. My question is this, when you first started to trade, how did you discover your first trading strategy? That was consistently profitable?

1:49
Did you have a checklist type criteria with different indicators before you enter deposition? Or was it certain patterns that you were looking for? Also, I know that you preach risk management which has helped me out a lot, but if you could go back in time to when you first started trading and give yourself one piece of advice, what would it be if this somehow?

2:05
Make it to your podcast. My name should be Jimbo and honor of Texas A&M’s lost this past week in, which was actually two weeks ago. Thanks Jimbo. All right, so reason why I give people fake name, so I don’t have to use their real names and they may not want their real names used so I don’t use their real names.

2:20
But first, before I answer these questions, what am I drinking tonight? I got some Redemption folks, Redemption straight bourbon, whiskey finished and cognate casks. I was at Total Wine not too long ago. The guy says man, you need to pick up some of this stuff. This Redemption. And Cask series is unbelievable, especially the one that’s finished in the cognate.

2:38
Casks, look at when this guy tells me, something’s good. I take him at his word. I buy it. It’s 49.5% alcohol. 99 proof. So, pretty solid whore right there to the eyeball man. It has this like really nice honey glow to it. It’s really good and smelling it smells really good.

2:54
You pick up some grapes and you can actually smell a cognate. I can actually even tastes cognate. Any, I pick up like the taste of pair, I don’t really like pears. I’ve never been a person that just grabs a parent, eats it, but Very tasty and doing that. And the okey flavors that come along side of this bourbon is pretty good.

3:11
So, the one thing I probably like the most about this is that you get to enjoy the taste before you get the Finish. It’s almost like two separate segments, but taste lingers before that finished kicks in, and the spice, it’s there, it’s nice. Its pleasant, it’s not overwhelming, but it’s not muted either and it waits a little bit before you actually have to taste it.

3:27
So I really like this one. I mean I think this one is really good in that finish. You pick up on some like praline good stuff. I knew it was going to be good based off at the recommendation. I was Getting, I didn’t know. It would be this good. I thought. Okay, maybe it’ll be like a 75 or something like that, but I’m going to give this an 8-3. I think it’s pretty darn good.

3:43
I want to say I spent somewhere around $60 for the bottle, but we can sipper. Yes. Probably not everyday separate but we can sipper. Oh yeah, I’m drinking this on the weekends for sure. So, again, Redemption can ask Siri finished in cognatic, Cask I’m giving this one, a 8.3 folks.

3:59
Okay. So back to Jimbo and everything that he has to say. First off, he’s being smart, he’s His time, he’s learning the ropes of trading and it’s not easy, man. The more you trade, the more you realize, you don’t know. So he’s in this process of realizing how much he doesn’t know and how much he still needs to learn.

4:16
And when the best ways to do that is when you’re trading with a small position, even if you’re filthy rich man, it’s better to do it with small positions and a small account size before it really starts to matter. Because you need to understand how you react to losses, how you react when you got to get used to being able to take losses on the regular, because there will be regular losses in your trading.

4:34
And so, he’s training. With $900 small Callie wants to add more, but he’s going to get more comfortable with a trading. And I think that’s a really smart thing for Traders. But when you’re trading with a small account, treat it, like it’s a large account, treat it like you’re trading a couple million dollars. How do you handle it?

4:49
Don’t just say, oh, it’s $900 I’ll ignore my stop-loss here, because a lot of people do that, and guess what? They start getting a couple of times lucky and they make a big game, and then they say, oh, I’m going to start adding a lot of money because I actually know what I’m doing. No, you don’t know what you’re doing. You just got lucky at a couple of Trades and so don’t fall into that pit trap. Thinking that you got lucky a couple of times. Let’s go throw some big money at it and really when it comes down to it, you got lucky because you remained undisciplined in the market, actually happened to forgive you, but it won’t always forgive you. In fact, what it tends to do more than anything is make, you think you’re better than you are and then it humiliates you.

5:22
So he’s also using weebl. I’ve used we will before. I’m not a huge fan of it guys. I really don’t like it. I know that there’s like the convenience side of it being on your phone. I’ve tried it on the phone. I’ve tried it on the desktop, not a huge fan of it. I’m still partial towards thinkorswim. I also like fidelity. I think Fidelity has some really good fills when I use them, I always get the best fills Fidelity, but just from being able to get in and out of a trade really fast, I like thinkorswim, the best, definitely not recommending Robin Hood, that’s for sure. If I had to choose between weibo and Robin Hood, I would definitely choose Weeble but I think there’s just better platforms out there more established platforms as well.

5:49
One of the things that he does and I don’t even think he realizes that it’s a good thing, but he says in this bear Market, I find myself sitting on my hands a lot. So I use that time to digest. Books and videos. What does that tell you right off the bat? He’s not forcing trait. That’s a really good thing. He’s not forcing trades, he’s not feeling this need to have to trade each and every single day and it’s taken me a long time to get to that. And that’s one of the things I would tell myself which we’ll get to that in just a second, but he’s not trading a lot and because he has a long lonely account. He’s waiting for the right opportunities to come about now is because you have a long only account does that mean you can’t trade inverse ETS? And I’m not even just talking about leverage ETS know you can? I mean there’s psq that’s a one-to-one, inverse ETF of the NASDAQ there. sh that’s a one-to-one inverse ETF of the S&P 500 meaning that if the S&P 500 goes down, 1% sh is going up 1% and vice versa.

6:43
If the SP goes up 1%, you’re going down 1% now. Yes, there’s other leveraged ETFs. We can get to 21 and 32 1, but if you’re staring off, trading is much better to just stick with the one to ones, boring? Yes, with the nine, hundred dollar account even more boring. But when you’re trading with the nine hundred dollar account, you’re not trying to get rich, that’s where a lot of people fall into these traps like, oh, I’m going to throw a thousand dollars at it and see if I can make a hundred thousand dollars and not going to do that. Unless Just absolutely win the lottery on some crazy trade, that was destined to lose, but you just happen to get lucky on it. Don’t play stocks like that because most of the time ninety-nine point nine, nine times out of 100, you’re going to lose. But it’s good. That Jimbo is being patient. That he’s just not forcing trades in a bear Market to the long side because he wants to trade.

7:24
So, the next question that he asks when you first started to trade, how did you discover your first consistently profitable trading strategy? Well, I think I learned a lot of that, by honestly learning about what doesn’t work when I first started off, I was I would have all these indicators on the charts. I would have RSI a macd and stochastics. I mean, I could just go down a list of stocks. I would have Bollinger Bands across the price action and I would have V WEP, and I would have about 15, different moving averages on there. I have simple and I’d have exponential moving averages. If somebody was using something, I would look at it. So before you know it, you know, you had the 200-day moving average, Crossing above the 50-day moving average, then you would have the 10-day Crossing above the 5-day moving average.

8:01
And before you knew it, you would have the 200-day moving average. It was Sink down through the 50-day moving average, but you would have the 10 day moving average. Crossing back above the 5-day moving average and so you are getting, always the signals that were contradicting each other and it was almost like analysis by paralysis, right? Heard that expression before, too many inputs, too many variables, too many things that you’re looking at. So over time I’ve realized I need to start scaling it back. I need to get rid of most of my moving averages. And today I have the five-day, the 10-day, the 20-day, the 50-day in the 200-day, moving average is pretty simple straightforward. Moving averages that People use, do I rely on them heavily? No. Only at the chart. Tells me that I need to take. Take notice of how a stock price is consistently bouncing off a particular moving average, maybe it’s 200, maybe it’s the 50-day, in terms of indicators.

8:52
What indicators do? I care about none, really? I have a stochastics on my charts, I’ve rarely rarely reference it. Usually, it’s just to show what the stochastics are showing about the Spy or the cues or iwm on a short-term basis in terms of oversold or overbought. But keeping a checklist like what Jimbo asks, yes I did keep a checklist. I also kept spreadsheets of how Going to become a millionaire. When I was 20 years old, by the time I was 23 years old, that didn’t happen. And oftentimes when you keep the spreadsheets of what you’re projecting, a what you’re going to get off of every Trader, every month and trading, or every week or even every day, it blows up in your face just they don’t work. The markets, not going to adhere to a spreadsheet, that’s not going to adhere to your goals.

9:30
What you want to be good at is just taking what the market gives and being consistent extractors of profit out of the market. Some days, it’s going to be plenty. Some days, it’s going to be like last week for me on a trading basis there, Is a lot of profits to extract from the market so far. This week, it’s been a light profit week. Things, change from day to day from week to week and from month to month and even year to year. But if somebody had a spreadsheet of saying, okay, I’m going to be a long-term investor here and every month I’m going to make two percent and every year I’m going to make, I don’t know, was what? Two percent compounds to every month. But let’s say I’ll make twenty seven, twenty eight percent a year. Okay, what do you do in 2022 when the markets are down over 20%?

9:53
Does that mean your strategy Filled from a long-term investor? No, I mean long-term. There’s half the weather bad markets? Yes, you’ll have a drawdown throughout the course of your trading career when it comes to long-term investing, but the markets not going to follow your spreadsheet just because you created it really fancy with borders and colors and everything else. And all of these if-then statements, now this is not going to care about that. It’s going to do what it wants to do and it’s going to invalidate your spreadsheets to stay away from that. The thing with the checklist is that you can say, Okay, I need the RSA I to be Crossing back up from oversold levels and I need a Mac D to be doing this kind of crossover.

10:33
I need to stochastic to be coming. Get out of the oversold range. I want the stock to be doing this in relation to the Bollinger Bands and if all these things add up, then I will go ahead and get long on the stock. Well, the problem with that is very few times as the indicators do exactly what you want to do. Again, you’re trying to force the indicators to do what you wanted to do rather than essentially using technical analysis. To see what the charts are trying to tell you that it wants to do. And if you follow what the charts are trying to tell you, you’re far better off than following a checklist of a bunch of indicators that need to be doing these exact things for you in order for you to make the trade, What the charts trying to show you follow. What the markets are trying to lead you towards.

11:08
Now, I use a top-down trading strategy, and you guys have heard me probably talk about this, a lot and previous episodes. And that’s essentially, I want to follow what the markets doing. So that means I want to be on the right side of the market overall and I want to be in the right sectors and I want to be in the right Industries and I want to be trading the right stock within the industry that’s within the sector within the overall market.

11:26
And if I do all those things, I have a much higher percentage of winning on my trades, then my chances of success go up versus just randomly trading setups or In a checklist of indicators that need to be all pointing in a certain direction my checklist. When I first started off training was very long and it had a lot of requirements, but it was also a very bad checklist.

11:45
I also had the spreadsheets. Those were bad spreadsheets. And the end I’ve learned that what I can get from the market is what the market is willing to give me and it’s my job to be able to manage those profits that it gives me to where I’m not just giving up right back to the market because I was careless or Reckless with my trading. Now, some of the things that I would tell myself, if I could go back in time, to care about risk, I didn’t care about Hardly at all, when I was trading through the.com bubble, I was young, I was a teenager.

12:09
I just thought the markets always went up and that again had a spreadsheet that was telling me I was going to be a millionaire before I graduated college. So that Reckless approach with trading because I was ambitious to make a lot of money was my downfall during the.com bubble because I’d never saw the.com bubble coming.

12:26
I took a beating from it didn’t understand why I was taking a beating. I do a hindsight obviously, but I didn’t care about risk. That’s really what it boils down to. I didn’t Care about risk. The other thing I would tell myself, don’t hold through her nickname, I lost a lot of money and might be getting trading years by holding through earnings.

12:42
I mean, some of my worst losses came from holding a stock through earnings. That’s why you see me today, I’m telling you don’t hold a stock through earnings. It doesn’t even matter if you know what the earnings are going to be, and I never did. But if you did, you still have to anticipate how the markets going to react to it and that’s even harder to do. So, that would be another thing that I would tell myself, don’t trade through the earnings.

12:59
And to remember that a bad day, doesn’t mean a bad year, you can have bad days, you can have days where the market just be. You to Smithereens. But if you’re managing the risk, if you’re following your trading plan, it’ll be all right. I’ve had plenty of bad days and sometimes even like a marginally bad day can get you down or a bad week.

13:15
That’s really not that bad but still drags you down a little bit, but you can’t equate that to the entire year or two that month. And when you realize that you realize that you don’t have to trade every day, you have to wait for the opportunities to come your way. So much about trading is about patients about not trading and yet so many people think that trading is only about trading.

13:32
Does that make sense to you guys? One of the best ways to make money? In the stock market is by really trying to Tamper down on how often your trading, you don’t have to be go in like berserk mode here where you’re making, you know, 15 20 trades a day. It’s just not necessary.

13:46
It’s better to hold out for Quality rather than to rely on quantity because a lot of times we think that the more we trade, the more profits will get but usually that just results in the more losses that will have because the trades that we’re taking we’re compromising, we’re compromising on what we believe is a good trade for the need to have to trade and that comes down to the fact that trading requires a lot of give-and-take, you’re going to have losing Going to have winning trades.

14:06
That’s why you want those winning trades to be so much better than the losing trades because when you have that give-and-take, you don’t want the take to be so much that you’re not able to maintain profitability in the stock market. And it also goes back to why I say, if you want to see how profitable a person is, look at their losses.

14:21
You can always tell how profitable person is going to be in their trading. By the way, they manage their losses. If they can’t take losses, they’ll never be profitable. I have a friend that always brags about how he’s never had a losing trade. Well, the problem is, he’s never Sold a single losing trade.

14:36
He’s got an account full losers. But he’ll tell you to this day, he’s never had a losing trade and he’s very proud of it. He’s got a ton of losers. He’s got stocks that are literally down 99.99% essentially, you don’t even trade anymore, there’s no volume. And finally, my last piece of advice to myself, if I could go back in time, don’t trade margin.

14:53
There was times where I did, and I would get emotional about a trade and I’ve tried to Revenge trade, because it was a bad trade. And so I would ignore my stop loss and then I would go into margin doubling down. And sometimes I would find myself like, Sent long and the stock market and that was just a disaster because all of a sudden, it’s one thing to be 100% long.

15:11
But then when you’re getting even more long with somebody else’s money, that creates a lot more emotion because your loss is really start to pile up them when it starts to go against you. So staying away from margin, not needing to get rich right out of the gate guys. Stay away from that mentality, it will really pay.

15:28
You some huge dividends. So, wrapping up this podcast, episode one thing I would tell you to do is check out swingtradingthestockmarket.com I’m that is my Patron site that goes along with this podcast, guys. You’re going to get all my stock market research each and every day that’s going to include trade ideas.

15:44
That’s going to include my watch list and updates on the Fang, stocks. Big tech stocks and the market as a whole including members only videos. Guys, this is a really good steel, so check that out. swingtradingthestockmarket.com, and in the process, you’re supporting this podcast. But yes, not only a swingtradingthestockmarket.com important.

16:02
But remember, in these points that we talked about, you know, Meeting the need to have this like checklist that equates to having the market to meet your needs as a traitor, rather than following what the charts are, trying to tell you what, the markets trying to give you. One thing, I would always try to encourage people to do, is to trade the market that you have not the market that you want, not the stock chart that you want, but the stock chart that you have.

16:22
I also think that better accounts exist with thinkorswim and Fidelity than some of these others. Like, Weeble and Robin Hood. And a lot of what I learned through trading came from the process of realizing. What didn’t work, what I shouldn’t be doing? And that was like things, like holding stocks through earnings going into margin, not caring about risk enough.

16:41
Knowing that a bad day, doesn’t, you know, mean the end of the world. So if you enjoyed this podcast episode, I would encourage you to leave me a five star review. Those do mean the world to me and it encourages me to keep doing what I’m doing because I hear your feedback. It means a lot. I read the reviews and I really want this to continue to be such a Bastion of knowledge and wealth for you that you guys can go to to learn more about the stock markets and make sure to leave those five star reviews.

17:05
Make sure to be sending me your questions as well, ryan@shareplanner.com Thank you and God bless. Thanks for listening to my podcast. Swing trading the stock market. I 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 with your membership, you will get a 7-Day trial and access to my trading room including alerts via text email and WhatsApp.

17:28
So go ahead sign up by going to shareplanner.com trading block that’s www.shareplanner.com/trading-block. And follow me on SharePlanner’s, Twitter and Instagram and Facebook, where I provide unique market and trading information. Every day you have any questions, please feel free to email me at ryan@shareplanner.com all the best to you and I look forward to chatting with you soon.