A Trader Without Conviction | Podcast Episode #294

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 Mallory with swing trading the stock market in today’s episode is not going to involve Email from one of you guys it’s going to involve a topic that I think might sound a little bit odd at first.

0:41
When I first tell you the title of this podcast, or you might already know the title of the podcast, just by reading the title of the podcast in your app, right? But it’s going to be cold Trader without a conviction. Being a conviction list traitor. What does that mean? What does it mean to trade without conviction? It almost sounds like, man, you gotta believe in what you’re buying, right?

0:59
You gotta think that it’s gonna go higher right after you get long on it. No, you don’t, you really have to be a Fiction list, traitor, to succeed in the stock market. I was doing my morning ride up in the trading block and oftentimes, it’s some of the stuff that I write their inspires me to do a podcast episode off of it.

1:15
And one of the things that I told people this morning is, like, look, I went into the CPI report bearish, I had a bearish position, and then by the time, the CPI report came out, I went ahead and closed out the Bears position immediately got long. Now, it sounds like I didn’t have any conviction there as I and if you thought that, then you are right.

1:31
I didn’t have any conviction about any of my traits and I don’t think you can. Because the markets ever-changing the markets, always willing to prove you wrong. If you have 100% conviction about something when it comes to trading, then why would you need stop losses because you believe in it so much, but would be even the point of having a stoploss the fact that I use stop-loss is the fact that I’m so heavily stressing focusing on managing the risk is a sign that I don’t really carry a lot of conviction on my trades.

1:58
Yes, I hope that they go up. I want them to go up or if I’m sure I want them to go down but it doesn’t. Necessarily mean that I know that they’re going to go up or that I know that they’re going to go down. I leave that in the hands of the market, the hands of the stock to do what it must do. And then I respond to it.

2:15
But before I get too much, further into this topic. What am I drinking here? Got myself, a bottle of Russell Reserve 13. I thought, I actually did a review on this but I apparently I had not this is Barrel proof. Non chilled, filtered, guys, this stuff is good. Everything at Russell’s Reserve does is good.

2:31
I mean, I’ve done reviews now on their Single Barrel. The 10-year done it on a private. Like this is the Russell Reserve 13. They’re actually reasonably priced to especially like their standard bourbon. Very reasonably priced. I think you can get them in the 40s, I like him. I think every one of these things are, at least in every day sipper.

2:47
Now, the Russell Reserve 13. I think it was like $130 when I bought this bottle. It does get a little bit higher up in price because of how long it’s been aged. But man, I’m telling you it’s good they even say that or the rumor has it that the Russell Reserve 13 was putting a lot of 18 to 20 year old barrels into this particular product.

3:04
And it’s Really tasty. I mean I tell you the smell when you put it up to the nose guys you’re picking up toffee or picking up caramel you’re picking up vanilla to the II mean. This thing’s beautiful it’s a really dark brown but manages beautifully, Crystal Clear into the taste, lots of vanilla flavors.

3:21
They’re really tasty, really strong vanilla, really smooth. I love this burner. And the biggest thing is, I wish I could have gone in two or three bottles of. It was the last one on the stand at the time unfortunate because I would love to have had some backups on this one. But then, the Finish. Comes on real strong cinnamon flavors, many rules spicy, it tingles the tongue.

3:39
Tingle said, I tell, you know, ethanol know, like unpleasurable smells tastes finished. Nothing really good. This is by far the best Russell Reserve. I’ve had yet, I did the private select at 87, definitely worth that. I give this one an 89, I think Russell Reserve just all across the board.

3:56
They’re always good. I had a friend called me the other day. He says, Ryan, what bourbon should I pick up? I said, dude, you gotta pick up some of the Russell Reserve, he did. He said it was a hit. Oh, Before I forget Russell, Reserve, strong strong proof, it’s one, 14.8 proof and yet it just tastes amazing, 57.4% alcohol.

4:15
So Russell Reserve 13-year 8.9. Now back to trading without conviction, Goldman Sachs, they always come out with this list of conviction buys, that’s their conviction by list and then they take stalks off of their conviction by list, which I always find ironic is like, how strong to the conviction did you have it as long as it just keeps going up?

4:33
Well, I have a conviction about any stock that can He needs to go up all the time and never goes down. But the sad thing is it’s talks to go down. So how much of a conviction can you really have knowing that there’s going to be pullbacks this year? Alone is a huge Testament, to how much a stock can pull back. You take a stock like Adobe trading at almost $700 to share goes below. 300, you take Unity software all the way up at 2:10, that stock symbol.

4:57
You trying it to 10 all the way down into the 20s 90% loss. Most people thought you were crazy for thinking that the NASDAQ could pull back 30. % it did. So you can’t have a conviction because stocks will always disappoint you at some point even on your long-term holds. What kind of a conviction are you going to have on your long-term positions?

5:15
If it goes down 80%? Are you going to continue holding? I’m not not going to hold it, if it goes down 50%. Now, that doesn’t mean you can’t hold stocks long-term because a lot of people have gotten very wealthy doing that and it does work but there’s going to be a time where you buy a stock for the long term and it doesn’t work. And what are you going to have like this conviction about is like?

5:32
No, because I had a conviction. When I first started trading about it, I should never Sell it. No, I know people that are like that. I got friends, I kid, you not. I have friends and I think I’ve talked about this guy before on this podcast. He probably broke claims to me that he’s never had a loss. I don’t sell losing stocks.

5:48
Only have winners. I’ve never lost in this town stock market before. Now, here’s the crazy thing, he’s got a crap ton of losing stocks in his portfolio so it begs me to question is that is your ego so important that instead of selling a stock when it becomes obvious that it’s not worth holding?

6:05
Anymore you bag hold it simply because it’s worth it to you to continue to take losses. So you can say that you never had a losing trade before, think about that. That’s what his ego is worth to him and who cares, who cares? If I go out into Times Square holding a sign that says, I’ve had 100 losing trades this year.

6:21
Is anybody going to walk by and really care? No, you go to a friend’s house and times. I’ve had a lot of losing trades this year. Are they going to lose sleep over that? No, you’re gonna go to sleep and sleep, like a baby. So it’s really just like this conception about ourselves. Like we can’t afford to admit that we had a losing Great. There’s nobody else cares.

6:37
So you got Goldman Sachs. They have their conviction by listen to their not convicted about it anymore, but you could probably say about any stock keep going up until it does. And I won’t have any faith in you anymore, then you have like, Kramer eat us all, we gotta back up the struck on this one, you know, it’s and he hits the bye-bye.

6:52
He has this conviction about stocks and we’ve seen plenty of times. Now, that doesn’t really pan out that way because when you back up the truck on a stock and you load it up and you get overweight and something, some point, you may have to dump that truck traitor. Get overweight a stock. You see that more with apple and Amazon, and Google, those stocks Tesla people put their whole life savings.

7:12
In the Tesla, you see it with the Wall Street bets crowd with GameStop and with AMC and what do they get in return? Maybe I’ll set it up on Amazon, which stood before her incredibly? Well, even those are pulled back quite a bit this year, but most people get completely destroyed over it, they get into margin, they get into leverage.

7:27
It’s one thing to be overweight in a position in your account, but to go into leverage into margin yourself. You have zero room for error and who knows what the future. Of apple looks like or Amazon for all. We know they could come out with horrible news tomorrow about something that happened that one of their facilities are their outlook for their company and everything goes to crap.

7:44
We just saw that this week with FTX, I mean, I’m not trying to say FTX is an apple or an Amazon, it’s not what guys, the guy went from being worth billions to worth nothing. Just completely destroyed a company overnight, nobody had a clue about that going on until it happened. Your faith can’t be. And the stock that you’re trading.

7:59
Your faith has to be and how you’re managing the stock, how you’re managing the trade, how you’re managing the risk? That’s where the faith. Has to come and that’s where your conviction as to come into play for me. Personally, I have a conviction on how I manage the risk. My conviction is not in the stocks. I pretty much have no faith in the stocks that I trade.

8:16
I expect them to disappointment. In fact, every trade that I get into, I expected to be a loser. Thus, the reason why I manage the risk, you go back to 2000 the NASDAQ, when it peaked in 2000 Microsoft is trading at fifty three dollars, a share. It drops 67 percent. That’s a lot. Oh, but Ryan you see were trading at today.

8:32
Yeah, you take the NASDAQ. It took like 15 16. Years for it to get back to its all-time highs. Again, you really want to be back holding that long for it to get back to where it once was enough. Sell it, buy it back when it finally basis and starts to break out again with the expectation. It may work. But if it doesn’t work, I’m not going to hold on to it out of conviction.

8:49
I’m going to go ahead and sell out of it. You gotta do it with everything when it comes to the stock market. Don’t have conviction. This is what I would tell you conviction is 90, you can look it up on a Webster’s Dictionary, but in the stock market, conviction is a lazy way of not having to plan for risk, assuming nothing will actually Go wrong.

9:05
I’ll say that again, conviction is a lazy way of not having to plan for risk. Assuming that nothing will go wrong before the CPI report. Came out on Thursday. Actually, let me back it up. I’m going to go to Monday Monday, I came into the market. I will stop doubt. Got back in on Wednesday, took a quarter position before the CPI report, came out on Thursday for about two percent of profits.

9:27
And then Thursday, we know what happened there CPI came in, light Market took off S&P 500 Rally, 200 points, I was stopped. The very beginning of the market open because it was hitting my style. Actor, was a little bit beyond my stop-loss went ahead and took products, I took a three point, three percent loss on SDs.

9:44
If I would have had conviction to stay in the trade in just muscle my way through it or even double down on it. Instead of getting out at 45:59. I would be looking at a loss in the lower 43’s followed by the following day down into the 42s. That saved me a lot of money by not having conviction and by following my trading plan, that I said in place because I don’t have conviction about any of my stocks.

10:05
I I do have conviction about how I manage those stocks then I get stopped out. Well, Ryan, you can’t go from being bearish coming into the day and then flipping bullets just because the markets, right? Ah, yes, you can, you can flip very quickly because why I don’t have conviction, I don’t have about conviction about Market Direction.

10:22
And I don’t have conviction about the stocks that I trade, just the in the manner in which I trade them. So, yes, I get long, I start playing the Apple balance, I start playing and bouncing another play. Now I’m up in both of those because I realized that Socks are going to go against me at various points in time throughout the year many times throughout the year.

10:40
I’m going to take losses regularly and so is anybody else who does this? Long-term? The difference is, is how you manage the losses. You can’t be profitable. If you don’t know how to manage a loss, show me a good Trader. And I will look at their losses only and tell you whether or not they’re a good Trader. I could tell you, by the way, they manage their losses.

10:57
Whether or not, they’re good at what they do. Also, you want to know what else is good? swingtradingthestockmarket.com. Yes, you got to check this out, so we can trade in the stock market.

11:15
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11:36
Here’s what I would tell you as well, when it comes to being a conviction illustrator, I expect every The fail. And I expect every cell off to eventually bounce. What my job is, is to respond. My job is to respond to when the market does start to rally. And my job is to respond to when it stops rally. When the market starts selling off, my job is to notice that it’s selling off. And if the reward to risk ratio is right to get short and then my job is also to cover those shorts when the markets not selling off anymore.

11:58
What I hear a lot of people say, and I saw people do this with the CPI report. Oh, it went up, too high. I’m going to have to short right here. Why do you not think that the market can’t go higher than you? Expect course, it can. That’s where most people get themselves into trouble because they think that the market can’t do something in the market, proves them dead wrong.

12:13
And then they don’t know what to do because they didn’t account for that. They had a conviction, they had a conviction that this thing was going to go back down and yet it just kept going higher and higher. After the CPI report, did I expect the S&P 500 to Rally 200 points? Now, I thought fits a good CPI report.

12:28
I would probably guess it would rally like 90 points that’s it. It rarely 200 plus points guys, it goes Back to the fact that I don’t have conviction about Market Direction about the stock citrate, I have conviction about how I manage those traits in. Those are such different concept.

12:44
I have conviction that managing the risk is the ultimate way to find profits and stock market. If you enjoyed this podcast and encourage you to leave me a five star review, and I will be getting back to your emails in two episodes ahead. But I sometimes I want to do the podcast on a particular topic or something that I think will make sense to you guys while it’s Fresh in my mind because I start thinking about it and then I come up with all these points that I want to just make sure that I hammer home.

13:10
So I have to deviate from the usual emails and get right to one of these things. So, expect that to happen in the future to I do like to answer your questions and I have somebody I still need to get to but I also like to make sure that when I feel like I’m onto something and usually is my wife, that tells me, she’s Jen’s like Ryan, you should make that a podcast episode.

13:28
And so I do and I love her for that. She’s really like everything to me. She really helped me out with trading with wife. She’s a great wife. Alright guys, make sure to keep sending me your emails. ryan@shareplanner.com. Thank you guys and God bless. Thanks for listening to my podcast.

13:45
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14:01
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, 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 creating with you soon.