Many Trades vs Few Trades | Podcast Episode #298

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, and we are on episode 298 and today’s episode, we’re going to talk about too many trades versus too few trades. We got a guy who wants to become a full-time Trader. He’s looking at making the move in the next two to three years. And he’s wanting to know what’s the benefits of trading with just a couple trades versus trading with a bunch of trays, and we’re going to get to all of that here.

0:53
This guy wants to be called Big Ed and Big, Ed writes. Hi Ryan. You can call me big head. My ultimate goal is to become a full-time Trader, but I am easing into it and learning as much as I possibly. We can and taking my time currently, I am eight months deep into my journey.

1:09
Hopefully, I can make the move within the next two to three years and the meantime I am trying to absorb all of the best educational materials that I can find. Your podcast has been very helpful. Please keep up the great work. Well, I appreciate you consider my podcast. Some of the best educational materials that you’ve been able to find so far.

1:26
It really does mean a lot Big Egg goes on to write. I have a full-time job so I keep about two small trades, going at any given time with stop losses, of course. My question is, as a full-time Trader. How many trays are you usually in at one time, what do you feel are the advantages of be involved in many trades at once versus just a few take care and have a Merry Christmas.

1:46
Big Ed. All right, Big Ed, I appreciate the kind words and the thoughtful question. And what am I drinking today? Well, I’ve got myself some Breckenridge bourbon. Whiskey is an 86 proof. Drink with that means it’s 43 percent alcohol.

2:02
And I’ve never had this bourbon before and kind of excited about trying to cause I see that the stores all the time. I just never bought it before. Now, when I give this thing a good with definitely could pick up on the honey, that’s pretty much the dominant smell that I pick up on. But to The Taste first, I couldn’t figure out what the heck.

2:17
I was tasting there and then I realize it’s almost like a banana bread, kind of a flavor is not bad, but I wouldn’t necessarily say it’s great, it’s very subtle flavors throughout and then you get like, a pinch of spice right there at the end, not a ton nothing, Excited about remember it’s 86 fruit.

2:34
So this isn’t like 100 Proof drink where you’re going to feel that you know punch in the gut at all. This is got a just a pinch of spice there at the end and then there was this, like, weird flavor and I couldn’t figure out what it was. It wasn’t overly appealing to me maybe for some, it would be, but it had some kind of like taste that I knew I didn’t like and then I figured out what it was, was burnt toast.

2:57
Sucker has a burnt toast flavor to it, alongside the banana bread. So maybe Maybe it’s like a bourbon with notes of burnt banana bread at, huh? That’s pretty much the best that I can do on a scale of 0 to 10. I struggled with this one because I don’t think it’s necessarily worthy of being in the fives.

3:13
It is drinkable. I do consider it better than water at a 4.3. I’m going to give it a six point one. Would I consider that every day sipper? No, I’m not gonna drink this every day. Nor would I want to at that point I’m probably going to start hydrating myself more regularly if I had to do that.

3:29
But overall 6.1 Not bad. No horrible. To try if you’re at a bar and everything’s too expensive, maybe try Breckenridge, it’s okay. I mean it won’t be the worst bourbon you ever have so 6.1 for Breckenridge, bourbon whiskey.

3:44
Now, back to Big Ed here, one of the things that I noticed, right off the gate that he said that he’s easing into learning as much as you possibly can about trading. And that’s a good thing, you know, you want to take the time to absorb, what you’re learning along the way. Oftentimes think that, you know what, if you try to hydrate yourself through a fire hydrant, Current, you’re going to be surprised at how much of the water you don’t retain or how much you don’t actually drink. It’s just going to blow you away, but if you get your water from a slow dripping faucet, you’re going to be able to keep most of that water. If not all of it, that comes through that faucet. The point is trying to get too much too quickly. We’re just simply trying to absorb all the information that’s out there all at once.

4:24
It’s going to be difficult to apply at all and it’s also going to be very difficult to remember. A lot of it. So easing into it is a good date. What kind of concerns me Little bit is that he wants to make the full-time trade within the next two to three years from his full-time job and that can be a pretty fast accelerated Pace that he’s going on, so he’s easing into it. But he’s going to quickly get out of his full-time job within the next two to three years. You might be thinking to yourself, well, 23 years, you can learn a lot, you can. But two to three years, may not give you all the necessary experiences that you need to be equipped to handling the markets. Now, he’s only been traded for eight months which puts him back to a belt, you know, February or March.

5:02
Of this year. And that means he’s really never been part of a bull market yet and eventually he will. I mean, maybe this recession goes on for three years. I doubt it. And assuming that it doesn’t go on for three years he’ll likely see you bull market and opportunity to capitalize the upside, right? So he still missing that part of it. He’s also missing the kind of year like, 2015, where the market just turned sideways the entire year and that was a difficult year for a lot of Traders, just because there was never really any true Direction you’ve seen that The Russell 2000 at times to prior to this massive sell-off.

5:36
The Russell 2000, spent trading sideways for a good amount of time. I want to say it was like seven or eight months, or so before finally had a breakdown. So, let’s say you were exclusively trading, the small cap, Russell 2000 Index. Well, you were trading sideways for a long time, and you were having to fade the extremes of that price in order to make a profit.

5:55
So big Ed here. He needs to see more of the markets and whether or not he can get that within two to three years remains to be seen. But even if you do get the bull market experience along with the bear market experience from this year, bear markets, don’t come along all the time. It’s also worth seeing what happens when the markets really not doing anything and that does happen a little bit more frequently than a bear market and it doesn’t hurt to go through multiple bear markets.

6:18
It doesn’t hurt to go through multiple bull markets and sideways Market because none of them are the same. 2008 isn’t like 2000 2000s, not like 2022. There’s a lot of similarities and I try to point those out and like my YouTube channel and everything. How’s the similarities that I’m seeing between the difference sell off?

6:35
But are they the same? No, usually the Catalyst, the price action. They’re very different, and they all have their own personality. It’s kind of like kids, right? You can have four or five kids. They all look like each other because they’re brothers and sisters coming from the same parents, but they all have their own personalities ones, outgoing ones, introverted one’s a little rebellious.

6:58
Were the other toes, the line and is a do-gooder. So all bull markets, have different personalities. Have different characteristics as do the bear markets and as do the sideways markets. So it’s good to build up those experiences two to three years maybe you’ll get enough.

7:15
Okay, I’m not going to count anybody out, but I will say this going from part-time, trading to full-time. Trading is very difficult. It’s very hard. And again, I don’t want to say, you can’t do it but realize the task and the challenge that you’re putting upon yourself and that’s why it’s important to have a side.

7:33
Because aside Google actually help you to buffer. Some of the learning curve that comes with trading full-time. A lot of people have this idea that trading full-time means that you can’t do anything else. Well, if you’re a swing Trader full-time, there’s a lot of downtime.

7:48
There’s a lot of boredom and swing trading, so it’s good to have sight gags, especially side gigs that you can monetize because the monetization will help buffer. Some of the requirements that comes with full time, trading in that is making a full time living A full-time trading, the more you can buffer that with a side gig the better off you’ll be and don’t worry what people think of you for saying, hey, I’m a full-time Trader.

8:12
That has a side gig. That’s making money. There’s like, well, that’s not true. True full-time training. Who cares? Who are you doing it for their approval? Or are you doing it for yourself? Are you doing it for your family? Are you doing it to provide a living? My gosh, if you can make money full-time trading, and you can have like a hobby or a craft or a gig, maybe it’s playing at the Bars at night, right?

8:33
Maybe it’s doing dual pianos at the local pub, but if you can do that, make some money and you’re enjoying what you’re doing, is it really work? No, you’re just doing it because you can and it helps you out from a stress level standpoint with your swing trading. So I’m a huge proponent of Psychics.

8:50
I don’t like the idea of trying to put these arbitrary numbers of two to three years. I want to be done. I want to be full-time tray because then that could push you into making a decision or not quite ready for instead. Keep learning. Keep practicing, keep gaining those experiences and when you’re ready, then pull the trigger on the full-time trading but don’t push yourself to have to do it within a set time frame because then that’s just putting unnecessary pressure on you to be able to do something that may or may not be possible.

9:19
You know what, if you have a God forbid like a family member? That requires a lot of extra help. You have to take about four or five months away from the market to be able to attend to their needs or to help them out or something. Well, that’s time that you’re not getting from the stock Market in terms of experiences, but on the other hand, making sure that your family member is taking care of that.

9:39
They’re being looked after as much more important than gaining. The experience is for full-time trading that’s priorities. And so there’s a lot of unexpected things that happen in life. It’s very difficult to project what’s going to happen in the next week. Much less in the next two to three years.

9:56
Heck just the other day I thought. Okay, I’m going to get X y&z done today and that gum and if the audio on my Where did it go out? And then I couldn’t figure out what was wrong with it. Go to Best Buy, I get more speakers. Those speakers, don’t work with it. I get another set of speakers. Those speakers, don’t work with it.

10:11
I go back a third time to get speakers. Those speakers don’t work. I found out that the computer that I bought, the speakers that I was using before they were Bluetooth. So I was never actually plugging them into my computer. I later came to find out that this super expensive computer that I bought, they’d never actually installed the drivers for whatever.

10:32
I needed to be able to run the audio on the back porch of my computer. Now, combine I probably wasted about 9 hours that day didn’t get anything done that. I wanted to and that’s the thing about life, what we plan and what we think isn’t necessarily how life plays out Now, you might have heard me, another podcast.

10:52
I’ve also said that, you know, growing up my dad. He used to recite the Proverbs to me all the time and I’ve retained a lot of them. I still read The Book of Proverbs all the time in the Bible, but in Proverbs 16:9, I says, a man plans his ways, but the Lord directs his steps. And so, we can plan all these things that we’re going to do with our life in the next two to three years.

11:10
But oftentimes life takes a completely different route. So keep learning, keep practicing. Keep gaining those experiences but don’t put a cap on when you have to be done and move on and transition into full-time trading. Now, actually about his email here because this is often times what happens is I get on these tangents with these emails and it’s usually not about the actual question that’s being asked.

11:33
But before I get into that, make sure to subscribe to swingtradingthestockmarket.com, you’re going to get all sorts of, really good information for me, my stock market research, my videos that I do multiple times a day, providing you analysis on the overall Market on the big tech stocks.

11:50
To them watching, watch list that are updated regularly. You’re going to want to check this out, it supports the podcast, swingtradingthestockmarket.com. Now, how many traits do I usually have going in my portfolio at one time that’s going to depend on the market?

12:07
So a bear Market on much more cautious, a much more patient than I am in a bull market. Now, that doesn’t mean it, I’m impatient in a bull market, but a much more aggressive in a bull market bear. Mark it. I often find myself in cash, waiting for those one or two trades that come along over the course of the week or a month that I can pounce on.

12:29
So, in a bull market, I might make, you know, 25 to 30 trades in a given month and a bear Market. I might be only making 11:52 trades in a given month, sometimes even less, I’ve gone during the course of this year, I’ve actually gone like a couple weeks without making a trade and that can be frustrating even for me at times because I do like trading, I too want to make the trade The one thing I don’t want to do is take on unnecessary losses.

12:53
So in a bear Market I have to often be much more patient with the entries that I am in a bull market, bull markets are much more forgiving, just like what we saw in 2020 through 2021 where so many new Traders came into the market and they made a butt load of money and then the bear Market of 2022 comes around and they lose it all because the bear Market will destroy you.

13:14
If you’re not using risk management bull markets tend to be a little bit more forgiving. And bear, markets will bring to light the weaknesses and your trading. So in a bull market on average, I usually have about four to seven trades on at once that can be about 40 to 80% of my Capital being deployed on average and a bear Market.

13:35
I’m usually either cash or one or two positions with a short bias. So that means I have far less exposure, much more cash and a bear Market than what I would in a bull market. And why is that in a bull market? You have low volatility Levels, you’re not seeing the market.

13:52
Go up to 3% in a given day. You’re seeing the market go up a quarter percent, a half percent and it does it multiple times throughout the course of a week or a month and you get some pretty decent gains from it and because the volatility is much lower, you can afford to have more positions working for you at once.

14:11
But in a bear Market where you can actually see the market drop five or six percent in a given day, man. If you’re on the wrong side of the trade whether you’re it’s Our short because bear markets have dead cat Bounce, has you stand to lose a ton of money? So in the bear Market I let the volatility do the work from.

14:27
I take fewer positions and let the volatility that’s inherent in the market of during bearish times. Do the heavy lifting for me, because the more trades you have, the more exposure you have. And the more trades that you have often times is because of the fact that you’re trying to catch up with something trying to catch up with the market for the month, the week, the year, there’s an index that your pegging your performance too.

14:50
Got to be careful about actively tracking against the indices each and every day. Because if you get behind on a day or a week, or whatever it might be, you’re going to start forcing trades. That’s not there, simply because you want to get back ahead of the market.

15:08
It’s like an erase. What do you do when you start falling behind the leader? You push down on that accelerator a little bit harder. You take those turns a little bit tighter and in the process you’re increasing your risk. You’re increasing the chances that you might go right into the wall and crash.

15:24
So careful about Out putting on extra trades because you simply want to catch up with the market. Be careful about actively tracking your portfolio against the market. Every day. I know you log into like, fedele, for instance, it always wants to tell you what you’re doing against the market. I don’t really track myself against the market, I’ll look at it, at the end of the year, I’ll see how I did from a day to day or a week to week.

15:40
Yeah, I tend to know whether or not, okay? If markets down five percent on the week and I’m up 3%. Okay. I know I’m beating the market then and everything. But do I really track it? Do I really want to follow. Okay, how am I? And day to day, day to day, month, to month week the week. No, I don’t really do that.

16:04
And I don’t feel like I need to because really, what I’m focused on is the things that matter to the market market, doesn’t care how I’m doing against it, it really doesn’t doesn’t know who I am. Doesn’t know about my portfolio doesn’t know about my positions. We sometimes think it does because we’re so enamored ourselves and what our portfolios doing the returns that it’s providing that we actually think the market cares about it but it doesn’t what I care about are the trades making good.

16:20
Traits. It’s like I said, if you manage the risk, the profits will take care of themselves. If I manage the risk, the profits will take care of themselves. And on a day-to-day week-to-week basis, there’s really no need to track myself against the overall Market, because I’m just focused on making good trays. And what I like to do with my portfolio, regardless, if it’s a bear Market, or a bull market, bear markets, tend to have faster trades.

16:41
You can’t just, you know, hold out a short position. Maybe in some cases you can, but in general, it’s very difficult to hold a short position for two or Months because you’re going to get some nasty dead. Cat Bounce, has usually along the way. And so usually, my short position only last like a few weeks, Max, whereas my swing trades to the long side and a bullish Market.

17:01
They can last up to three months if I get into it right after the earnings report. I don’t ever hold a swing trade through earnings. Most of you guys already know that, so it really caps how long I can hold a swing trade, but yeah, if I can hold it for three months, that’s great. But my foolish positions tend to be held on to for a lot longer period of time than my bearish ones but Overall, let’s say we’re in a bull market.

17:22
What I don’t want to do is just say, hey, I’m a hundred percent cash right now. It’s a bull market. Let’s go add 10 positions to the portfolio right now. 10% of my Capital allocated to each one and have a full portfolio. No, I think that’s what a lot of people do. They think that because they have the cash available, they need to utilize it right there and now but that also creates an instant overexposure to wear.

17:43
Okay, maybe it works out for you, but if you get some kind of crazy headline event or some kind of risk event that causes Mark to sell off three or four percent the next day and it does happen from time to time in a bull market even will then all of a sudden you just got ten positions that are all taking a beating and probably more than 4%.

18:00
It’s probably taken like a five or six percent beating in your portfolio. That’s something that I like to avoid. Well, what I like to do is build up my positions over time. I like to start with a couple positions and as those improve it as I’m taking some profits off of those. I also like to add new positions to the portfolio.

18:16
And ideally I embrace the notion of having, like, 10 or 12. L’ve trades in my portfolio at once because I’ve taken profit and so many of them maybe have a third of a position and XYZ and another third and ABC and another third and rst.

18:31
And yes, I’m going through the alphabet here, just giving out random stock symbols but those all represent trees that have gone very well for me and trades that don’t have a lot of risk left in them because I’ve managed to profit. So, well, along the way, I’ve already taken profits off the table and now I’m just left with like a third or a quarter of a position.

18:49
But I have a whole Bunch of those in the portfolio that actually add up to something meaningful. So over time, I build up my portfolio in a bull market in a bear Market, it’s going to be the same thing. I’ll start off with one short position and as that one increases in value I will you know start to take some profits in that but also along the way lad, more positions to the portfolio as well.

19:10
But ultimately in a bear Market you don’t tend to get as many positions active at one time with that approach, and with that big Ed has got to make sure that he’s being Impatient with himself that he doesn’t try to force himself out of the labor market to quickly. And if he does have a side gig to that you’re working on so that you can supplement your income with full-time trading and in a bull market, I tend to have more positions open at once versus a bear Market where I let the volatility do more of the work and heavy lifting for me.

19:38
If you enjoyed this podcast episode, I’d encourage you to leave me a five star review, those things, really do mean a lot. If this podcast is meant anything to you over the years, definitely do them approached my 300th episode, which I’m excited about. And make sure to keep sending me your emails. ryan@shareplanner.com, I read them.

19:54
I try to put almost all of them on the air, so keep sending them my way. Thank you guys 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.

20:18
So go ahead sign up. By going to shareplanner.com trading block, that’s www.shareplanner.com/trading-block. And follow me on SharePlanners 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 trading with you soon.