A Day Trader Perspective | Podcast Episode #289

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, hey, everybody, this is Ryan.

0:31
Mallory with swing trading the stock market. In today’s episode is going to be a good one. We’re going. Give you a little bit of a perspective from a day Traders, Point of View, got an email from a guy. He’s going to be called King Louie, King Louis rights. Hey, Ryan I know your podcast is about swing trading, but I have a day trading story to share here.

0:51
Longtime listener in a past trading block subscriber. I learned a lot from you. You can call me King Louis, that was my name on the trading block, and I do remember this guy. He has quite the unique name. He writes, you tell Dan every podcast about ask management, and let me tell you, it works.

1:08
If you want to survive in the market risk, management is the key. I do both swing trade and day trade. I have been doing well and staying focused is just as important as risk management, I’m Ryan to tell you a personal story of what happened to me in the market since I was doing well day trading SPY. I took a shot at SP X and let me tell you my emotions trading.

1:26
This thing went through the roof. I got so caught up in this trade, I never said a stoploss, I was up on the trade, one second down, the next, receive a phone call from my son’s school. I walked away from the screen bad move. I came away a few minutes later only to see my tree down over 60%, had I set a stop loss.

1:42
I would have been down 15 to 20 percent max. I was just dumbfounded by this, that I just froze and saw the account go lower and lower. I just thought to myself. How could I let this happen? Why did I let this happen? I thought the days of me not setting, stop losses were long behind me, but emotion took over and got the best of me thought of just exiting.

2:02
The trade didn’t even cross my mind at that moment. I broke a lot of rules. Rules in this trade and got punished almost right away. Traded it against the trend didn’t set a stop loss over-leveraged. Did it exit the trade after seeing the loss? Yes, I was upset about this but it’s a learning experience as well.

2:20
I couldn’t believe that the one trade I didn’t set a stop loss on was the one that was going to be a huge, loser lesson learned again. And maybe I’ll stay away from SPX and continue trading SPY instead, which I have had great success with. I have a lot of Undercover but I’m a little wiser now to listeners who want to day trade.

2:39
If this email makes it into one of your podcasts but you did day trading is definitely not easy. You need a lot of focus discipline, risk management and you need to be quick. It took me years to finally start having success day trading. If you’re a beginner, swing trading is the way to go. I still swing trade and to me it’s fun day, trading feels more like a job because if there is no set up, you have to wait and wait until you finally get one if it ever comes to fruition and it is a lot more.

3:05
Or stressful to day trade than the swing trade. Thank you for your time. Your podcast is absolutely my favorite regards, King Louie. All right. Quite the story there with trading SPX and a big loser. Their we’re going to unpack this entire email. But first, what am I drinking? I am drinking me, some John J Bowman Single Barrel.

3:24
Bourbon whiskey retails. I don’t know. You can find it anywhere between like 55 to 70 dollars. Usually, and I got this one from a friend. He let me borrow a little bit of it, so I could use it for this part. Last year because I haven’t bought it for myself yet. So it’s 100 proof that makes it 50% alcohol.

3:41
Overall, the color it’s got like this gold, honey, ish looking color to it, smell wise, pick it up, like some strawberries. I mean, that’s, that’s kind of a different take on a bourbon in terms of smell, you even get some tobacco and then on the tastes like licorice Oak.

3:58
But I think the taste is honestly a little bit on the Bland side. A lot of people say this stuff is like amazing and I was kind of wondering. Why I was interested in trying this one so much. I’m not a huge fan of licorice. I also think that licorice flavor is a little bit Bland and not the best flavor in the world so that might be skewing my rating on this one finish.

4:18
Okay, it’s got a little bit of heat. I wouldn’t call it anything to write home to Mama about and I’ve read to where some people say, oh, this is like the in-between, like eh Taylor and a Buffalo Trace, I don’t know if I’d even put it above Buffalo, Trace, I gave Buffalo Trace and 8.1 the last time that I reviewed it.

4:34
This I’m going to give a 7.9. I think a lot of people are going to be in disagreement with me on that but I’m just not a huge friend of John J, bourbon bourbon, it’s okay, it’s somewhat above average but nothing that’s amazing. So John J, Bowman 7.9, Single Barrel Bourbon whiskey.

4:52
Alright, so back to King Louise, email here. So there wasn’t necessarily a question that was being asked here, but there is a lot to unpack in terms of his approach to trading some of the things that he did wrong. I think it’s worth with dissecting all of that. And one of the things that he says, I mention risk management on every one of my podcasts. Now, it seems redundant that I would do that, but it’s important. It’s important to me to bring up risk management in all my podcast because in every trade we should be using risk management. And if it’s something that you have to do on every trade to be able to keep you in the game, then it’s probably something that I should mention in every one of these podcasts because if you’re not doing it, you’re playing a very high-risk game here and which one trade is all it takes to wipe you out.

5:36
Now he says, doing well and staying focused is just as important as risk management. I struggle with that one a little bit, just because of the fact that I mean, I think don’t get me wrong doing well is important and, as well as staying focused is important too, but that’s kind of like saying being profitable is more important than risk management. Well, you can’t really be profitable unless you’re practicing a good amount of risk management at least consistently profitable. Yes, you can do a lot of play and get lucky on it and be profitable there, but ultimately, what are you gonna do? If you get a lucky trade, where you exhibited zero discipline or risk management. You’re going to try to repeat it again. I know this one guy, he was telling me about how he made 40,000 dollars on Dogecoin is very proud of it, right? He got in, on the early stages of it, he put a whole bunch of money on it and he made 40 grand. And I’ve probably been told this, you know, a few times since I’ve known this person.

6:29
Now here’s the thing, I never heard what else he did with that money and I have to ask myself did he just make 40,000 dollars trading Dogecoin, say hey I just made 40,000 dollars trading Dogecoin, I don’t think I’m ever gonna do that again. I think I’m going to just walk away from it and never trade anymore crypto. I got lucky that I’m fine with that. I’m walking away. I highly doubt. It’s not human nature to think that. What probably happens is like, hey, I just made 40,000 dollars trading Dogecoin. I need to find me another one of these kinds of coins. Hey, what about Litecoin or ETH or Bitcoin. Hey let’s try these out now, let’s try to make some money trading those coins and they will use the same kind of discipline that they used before because that’s what worked for them before. But what they’re doing is not consistently able to work. It might work for you one time here, one time there, but if you’re going to make a career out of it, can you completely disregard risk? No.

7:22
So I find the whole story curious because the guy tells me, he makes 40 thousand dollars trading crypto or Dogecoin to be specific, but he never tells me what he does with the money afterwards. Did he put it in a CD, did he put it in a treasury bill? I’m kind of curious, whatever happened to it. I haven’t had the guts to ask him yet because I don’t really want to pop his balloon but it’s probably going to have to be asked at some point because it’s driving me nuts. But just knowing how most people react, after a winning trade, a big winning trade at that, they’re going to try to do it again and that’s usually when they lose all that money. So my guess especially with, as crazy as cryptos have been, a person who made 40,000 dollars on a big trade in crypto probably lost it all in the next trade or multiple trades thereafter. And so going back to King Louie here, where it talks about doing well, which is IE kind of means, like being profitable is more important than risk management.

8:13
Well, I don’t think you can get to where you’re doing consistently well without doing risk management. Therefore, I think risk management is more important than doing well, because risk management is what ultimately leads to doing well. Maybe I’m splitting hairs here but that’s what I’m going to go with here. And then he talks about staying focused and I probably don’t talk a lot about staying focused. In some ways, I talked about not being focused on my podcast at times. It doesn’t mean that when you need to be focused, you shouldn’t be focused. But I also talked about at times that swing trading can be boring and if that’s all you’re doing then it doesn’t hurt to have like some side hustles or just projects. One thing I like to do is take some breaks at times and go play the piano.

8:49
I’ve played the piano since I was in first grade. Had a couple of old ladies teach me growing up through the years. I think they were well into their 80s. One of them died like the same night that I had a piano lesson from her. I’m not laughing about it. Well okay, you know what, I guess it sounds like I’m laughing. I’m not trying to laugh about it. But the point is the point is I play the piano sometimes, you know, I’ll go downstairs, I’ll play a couple of songs, come back up, get back to work. If I know it’s a slow day or something right and I know there’s not likely to be a trade to take place, I’ll do that. You know go grab a sandwich and play a couple songs or two. But if you’re going to be a day trader and you’re going to trade, you know, 9:30 when the market opens Eastern Time till 4 p.m. when the market closes Eastern Time and you’re going to be focused, man, that takes a lot, a lot, of discipline, and work, I mean it at that.

9:36
Hardly, I can’t do that. And I also think too for a lot of day traders, instead of just trading for six and a half hours of just being laser-focused on the markets, they usually trade different time periods. So that a lot of them will trade like 9:30 when the market opens until 11 a.m. so the first hour and a half and then they will trade from 2 p.m. until 4 p.m. and then they’ll do something in the middle, maybe take a Wall Street lunch that lasts three hours, but that’s usually the way a lot of people will do it. They will just trade the more volatile times. Why do they choose the first hour and a half and the last two hours because that’s usually when you get the most volume and you get the biggest moves out of the market. You figure like the first hour and a half that especially that first 30 minutes. That’s probably some of the biggest moves that the day.

10:15
So a lot of your day traders are playing that, that’s why you also have a lot of volatility in the market because there’s so many people trying to capitalize on that first 30 minutes. For me, personally, I don’t want anything to do with the first 30 minutes. I think it’s one of the most misleading moments all day long in the market, is that first 30 minutes. So for me, I’ve avoided a lot of bad trades. I would say, hundreds maybe even over a thousand bad trades by not trading in the first 30 minutes. And the reason why is because you might get a gap up and it just fades the rest of the day, or you get a gap down. And you think, oh, I got to short this market as soon as it opens, and all of a sudden, it rallies the rest of the day.

10:50
We saw that with the last CPI report. CPI report came in horrible, the market sold off, and everybody saying, oh crap, this is another three or four percent down day and what happened? Market rallied right back the rest of the day, finished green. But no, I think staying focused is important at the times that you need to be very focused on the market. When you’re making your trades, when you’re going through your technical analysis, you need to be focused on the charts at hand, on the setups at hand. But I still think, overall, the absolute most important part of trading is risk management.

11:18
One of the parts for staying focused for me as a trader that has really paid off for me over the years is coaching myself throughout the day. I know that sounds kind of weird. Like, what do you mean by coaching yourself? Like, are you giving yourself a pep talk? No, I’m usually asking myself questions like okay, Ryan, are you getting in this because you’re trying to FOMO yourself into a new trade? Is this going to be a revenge trade because you just lost on the previous trade? Is this a trade setup that you’re comfortable with? I’m audibly asking myself these questions. Are you comfortable with stop loss placement on this one? Are you really going to take a 6.5 percent stop loss on this trade when you only think that it might pull off 10%? That’s less than two to one. And I have to talk myself through a lot of different trade setups. I’ll be like, you know what, I like two Q’s on this particular chart but man, it’s got that resistance level right ahead.

12:10
Like Ryan, you can’t make that trade if that resistance level is sitting right overhead, I mean it’s bounced off of it four or five times, what makes you think it’s going to break through it this time? And so I have to ask myself those questions and almost like I’m holding myself accountable per se. I’m asking the tough questions that maybe a lot of times as traders, we don’t want to ask ourselves but it keeps me out of a lot of bad trades in doing so. So when you’re trading, don’t be afraid to ask yourself tough questions and answer them honestly.

12:29
Yeah, you know what? I am trying to FOMO into this. I know it’s kind of weird because it sounds like you’re just talking to yourself but you are. But you’re trying to talk yourself into good trades, not getting into bad trades or trades that you’re chasing after. And so you’re asking yourself these pertinent questions. And if you’re being honest with yourself, you can say, yeah, I’m getting into this trade because I’m afraid that it’s going to rally the rest of the day without me. And how many times does that really happen? And if it does, there’s always going to be another day, another opportunity. So just you know, move on. Okay, moving along because I’m kind of getting behind on this particular email here, he talked about how he started trading SPX and that he was down 60%. I’m guessing that he was trading like options or something. He didn’t place a stop loss. He got distracted by having to deal with something pertaining to his son and his son’s schooling. His emotions went through the roof.

13:21
But here’s the thing, you can’t let yourself get so caught up in the trade that you become undisciplined. The moment where you don’t want to set a stop loss is the time that you know what, maybe it’s a good time to move on from the trade. Because oftentimes our reason for not wanting to set a stop loss is because we’re too prideful or too emotional. Pride is an emotion and it can stop us from making the right decision as it pertains to trading and lead to some big losses.

13:38
Why do most people not like to take losses? Because they’re prideful. They don’t want to admit that they had a losing trade. When you get to the point in life where a losing trade kind of feels like the same thing as a winning trade in many ways where you just don’t get excited about either, you’re doing a good job in trading. It probably means that you’re trading in the right position size, you’re allocating your right amount of capital, you’re not getting too many positions going at once in your portfolio. But when you feel like I can’t set a stop loss, I’m down too much, the stock is a guaranteed winner, those are probably the times where you know what? I need to go ahead and move on from this trade. I’m not thinking clearly, I’m doing things that are going to sabotage my account and cause me to have to make up for this loss for many years down the road.

14:17
As traders, we can’t let our trades go down sixty percent, fifteen percent, even twenty percent. I mean, yes, I know there’s trading strategies out there from a swing trading standpoint that do allow you to do that. But in general, and I’m speaking in general terms here and I’m speaking from my own experience, if I start letting stocks go down forty and fifty percent and that was very easy to have happen over the past year, the way that the market’s been acting I will never last in this business. I will always be trying to dig myself out of a hole. Some of the stocks that I was the most excited about, some of the ones that I was the most optimistic about, always seem to be the ones that stopped me out. And it was frustrating when it would happen. I was like, man, what the heck happened?

15:00
I mean, this is a textbook basing pattern, breakout pattern, bull flag pattern, whatever. But it didn’t work. It went completely opposite on me. And it’s usually always the trades that I’m the most optimistic about. And the biggest winners are usually the ones that I almost don’t want to take. And it’s for that very reason how the emotions can be really misleading and misguiding what our gut tells us. I hate it when people say they trade with their gut because the gut’s usually wrong. Risk management is there for us because we’re usually wrong. We do things that are going to sabotage. So we have to be disciplined enough to use risk management to protect ourselves from ourselves. And this one comment he makes, he says I couldn’t believe that the one trade I didn’t set a stop loss on was the one that was going to be a huge loser.

15:41
That’s usually how it works. The one that you don’t think that could ever ruin you, ruined you. I remember talking to this one guy, he was playing metal earnings a long time ago this is probably like 2018 he was like there’s no way that this thing could possibly go down all that much, maybe three or four percent is downside risk, but this thing’s gonna probably blow up twenty or thirty percent to the upside. And what did it do? I think it dropped over twenty percent. Took a huge loss all because he wasn’t practicing risk management. In this case, he was holding a stock through earnings as a swing trade. And I’ll say this about day trading King Louie, he’s doing good at it and I hope he continues to do well at it. I think you can do well at day trading. I think it’s very, very difficult to do day trading.

16:23
There’s so much that has to work in your favor over the course of the day. You got to get into stocks that are going to make some good runs for you during regular trading hours. Swing trading takes advantage of the regular trading hours and the overnight price action and the indices that lead to gaps higher or lower in the markets the next day. And so I’ve always felt like swing trading takes advantage of both worlds. It takes advantage of the benefits of long-term investing. It also takes advantage of the benefits of short-term day trading and combines them into a trading strategy that can last from a few days to a few months. And there’s a lot of ability to create a strategy that works for you, for your lifestyle and everything else.

16:57
Day trading, like I said, it’s very difficult and most people who try it will not succeed at it. And again, I’m not trying to throw cold water on King Louie I like King Louie, I like this email, I think he’s learned a lot, I think he’s going to do good at all of this but in general, become a good swing trader before you start to think about being a good day trader.

17:17
And one of the things that I believe that can assist people in becoming a better swing trader is by signing up for swingtradingthestockmarket.com. That’s going to support this podcast. And in the process, you’re going to get all my stock market research. Maybe you agree with some things but not the rest, or you might like this trade idea, but not that idea. But what I’m trying to provide you is a whole slew of ideas and research and opinions on how I see where the market’s going, tech, different watchlists. Really a cool feature that goes along well with this podcast, so check that out swingtradingthestockmarket.com.

17:47
And make sure to leave me a five star review on whatever platform you’re listening to me on and keep sending me your emails. ryan@shareplanner.com King Louie helped me out here and gave you a really good email today, but make sure you’re sending me yours, and I’ll try to put them on this podcast.

18:03
Thank you guys, and God bless.

18:05
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. With your membership, you will get a 7-day trial and access to my trading room including alerts via text, email, and WhatsApp.

18:23
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. Do you have any questions?

18:40
Please feel free to email me at ryan@shareplanner.com. All the best to you and I look forward to trading with you soon.