Where To Start? | Podcast Episode #304

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.

0:33
In today’s episode, we’re going to talk about. Where do you start? Where do you start? When it comes to trading stocks? Do you just throw some money into a stock and hope for the best? Or is there actually may be an approach out there that might make a little bit of sense? Well, we got a frustrated Trader here on our hands. He wants to know, man.

0:49
I want to get involved in the stock market, but there’s just so much out there, where do I begin? And that’s going to be the focus of this particular podcast episode. So, in today’s email, we’re going to call this guy. He comes from Indiana, actually, and if you guys didn’t know already, I give everybody a good old.

1:05
Nickname. Now the red names have expanded over the years to not just Florida, but man, we’ve had about from Belarus to this particular one, be an Indiana. So I’m trying to think of a good read nickname. For this guy, all I can think of is the movie Hoosiers and the coach Normandale.

1:22
No, it wasn’t necessarily redneck, but come on Norman Dale. You got to go redneck on that one. So, this guy, we’re going to call Normandale Norm for short dear, right? I hope this email finds you. Well, I am a few drinks. And on this Saturday night. So I thought I would finally write you this email to you.

1:38
That I have been wanting to write for a long time now. Oh man, this is always good when they’re a few drinks in. He continues with, I will apologize for any grammar or misunderstandings, you have a great podcast and have learned a lot of invaluable information from you. I have listened to every episode and go back to re-listen to some of them to fully absorb them all.

1:58
So I don’t hear anyone, give you credit for how great your audio is I have tried to listen to others, but it sounds like it’s an open mic night. A comedy club and I instantly lose all interest. Well, that’s because I spent a crap ton on a set up here, to make sure that if I’m going to talk in y’all’s ears, that at least it’s a pleasing sound.

2:17
And it makes my voice sound a lot better too. I think it’s the same setup that Joe Rogan uses in terms of Mike and then I, yeah, anyways, I won’t get into all the audio details of it because I had to take pictures of all the settings. So if something happened were, you know, like a toddler comes in and starts changing the dials on everything I would actually be able to know how to put it all back without having.

2:35
To hire some outside help. I also have a really good editor, he does a great job. So I think the all that combines for a pretty good podcast in terms of how it sounds to the ears, but anyways, he goes on the right, my background so that you can dissect my email a little bit more. Is that I started with Robin Hood and he put some parentheses.

2:52
Yeah, I know what you’re thinking with a free stock from a referral when I invested $100 just learning, not really being too serious, as it pertained to investing. But somewhere in 2022. I did get serious and have a thinkorswim. Now, and I’m a member of your trading block. And I have three thousand dollars in the market following your trades and trying to learn from them.

3:12
Question 1. This is more recent and I don’t understand how you can do a trade in spy at 390. Dot 28, with a stop loss at 4:05 52. Like how do I even put that order in? Okay, so that’s a good question. That’s actually a shortened question. So, we’ll get to that one.

3:28
And then, question two is, I feel like you’ve answered this question before, but not to the degree that I am satisfied, but where do you start? Art in the stock market.

3:46
Now, we’re talking all caps here, where do you start in the stock market question, mark, question mark, question mark, exclamation mark question mark, question mark what I mean? I had to look up what a bear and bull market was. I have trouble navigating the thinkorswim platform and I am not sure if I am taking full advantage of the SharePlanner website, I want like a basement level start where you just tell us how you started. Just learning terminology even start with one stock and see how it follows a pattern like the different sectors. Where is one to start? If they have, absolutely no idea about the stock market. I hope I wrote this email in a clear and effective way, if not I am, sorry, I hope to hear this in a podcast because it would be super cool. And if so I can’t wait to hear my Florida redneck name. Also, I am from Indiana kind regards Normandale.

4:23
All right, Norman who’s couple of drinks in from Saturday which I think I’m doing this on a Tuesday so I guess he’s sobered up by now. This is a good email and I think a lot of people have this question and it’s a rule. Lee one of the tougher questions to start because there’s such a huge swath of knowledge out there.

4:39
There’s so much learn, there’s so much to figure out that it does. Make sense to try to simplify one start in the stock market. And before I get into that, what am I drinking? Because I have something to drink with every one of these podcast episodes that I do. And this one is going to be Koval bourbon now really nice amber brown color to this Koval bourbon.

4:59
It’s 47 percent alcohol. 94 proof now to the smell and I’ll be the first to admit my shoe. Isn’t the best at picking up smells but I definitely can smell like a little bit of caramel a little bit of mango, but the taste and The Taste is where it’s at.

5:15
I didn’t pick it up at first, but on my second Swig, I let the first Swig, like burned my tongue a little bit, you know, by keeping it on there for a little bit and that’ll let me be able to taste it on my pallet a lot on the second Swig huge, huge flavor of apricot and I’m not a huge apricot flavor, but if you’re in the apricot, this is a good bourbon.

5:30
This is like the one that I would say is probably the best apricot flavor. I’ve tried to date. I Don’t taste a lot of them that have the apricot flavor but this one definitely has that taste. And it’s very strong and it’s very smooth. But then on the finish it goes, instantly spicy. It goes very peppery and tobacco.

5:46
So definitely some strange bedfellows with this particular bourbon that I’m tasting here apricot to The Taste and then to the Finish you got it. A spicy tobacco charred flavor, it’s not bad. I think it could be an everyday sipper for somebody who really likes that apricot flavor not going to be for me but there’s people out there.

6:04
I’m sure that like it. 00:10, I’m going to give it a six point nine. I think my scale has changed a little bit and recent episodes due to trying the Pappy’s. I just think, man, that was a whole other level there. When I tried that stuff, that was really good. So I think maybe I’m a little bit more particular than I have been in recent episodes, but nonetheless 6.9 for kober.

6:22
But now let’s explain shorting here. When I say I’m shorting a stock, that means I’m not buying this stock. I’m actually borrowing the shares from a broker, which is readily available on most platforms. And I’m selling the shares hoping to buy them back later.

6:38
So so what you want when you’re shorting a stock as you want it to go down in value. So that when you’re buying it back, you’re buying it back cheaper than where you sold them at originally. So it goes back to take in like the Buy Low. Sell High concept of when you’re investing in a stock to reversing it to where you’re selling high and by and low, you’re just doing the same thing. You’re just doing it in a different order and you’re keeping the difference.

6:56
So I’ve always equated to the borrowing like a pair of sunglasses. Right in, let’s say the pair of sunglasses, cost $100. Well, he’s not giving it to me to keep forever, but he is It to me, for a short period of time. So, what I do with those sunglasses is I sell it to my other friend for $100.

7:11
Now, the friend that I sold to, he got his sunglasses, he’s happy, but I still owe my other friend, a pair of sunglasses of the same sort right now. I don’t have to pay it back for maybe a couple months or so, right? Or maybe it’s a couple weeks but now I’m hoping that I can find it somewhere online for like, 80 or $90. Let’s say I find it for $85, then I buy them and I go give it back to my friend that I originally borrowed the sunglasses from.

7:34
That’s a Fifteen dollar game for me, because I borrowed it from him, sold them for $100. And then I found him somewhere else. For $85, I gave him back his sunglasses. He walks away with his original sunglasses person. I sold those sunglasses to the original ones. He walks away with the sunglasses that he wanted for $100.

7:50
And in the meantime, I’ve just pocketed $15 or 15% kind of like that was shares your borrowing from your broker, you’re selling them. Then you’re hoping that the stock will go down so that you can buy them back at a cheaper price. So, when I’m shorting spy, I’m shorting it at 390, hoping that I can buy it. At a much lower price.

8:07
Now that so far the shorts been great for me, but I have a stop loss in at 4:05 tour. If it goes back up to that price, I will get out because I don’t want the short to keep running against me because that’s just going to only hurt my pocketbook when I have to buy back that ETF at a much higher price than what I originally sold it for.

8:24
So, yes, you can lose money on shorting, actually a lot of money because there’s no ceiling on how high it can go, but I use stop losses. Just like I use. Stop losses when I’m buying a stock, I use them. When I’m shorting a stock as well.

8:42
Now I don’t want to spend the entire episode talking about shorting stocks because I have spent time in the past on other episodes about them. But that’s essentially what I was doing there with this question about what is it mean when you’re putting a stop loss above your entry price on a stock because I’m shorting it now.

9:00
Where do you start on learning the stock market? And I know a lot of people have started this year in training. They started in 2021 or even 2020 and they’re probably still asking the same thing. I would first start off with saying what not to do. I would not trade penny stocks, I would not treat options would Treat crypto, I would not trade Futures.

9:17
I would not trade Forex and now that’s a lot easier to say now, than it was say, a year ago or two years ago because everybody was getting into those things, particularly crypto and options. It amazes me. How many people do not even trade stocks out right before they go straight to options. It is absolutely mind-boggling how many people trade options and have never actually traded a stock before.

9:35
And guys, I can’t even begin to tell you how bad of an idea that is. Yes, I’ve traded options before I’ll do covered calls. I don’t mind doing them. Do I prefer to do it? No, that’s not my go to play and I’ll tell you why. When you’re trading options, you’re adding a lot more variables than the actual stock that you’re trading.

9:56
You’re adding a Time concept. You’re adding volatility, you’re adding all these other Greeks and hopes of being able to make a lot more money as a result. But oftentimes what results is people just losing a whole lot more money. And there’s a well Ryan you can only lose the premium on what your trading. Yes.

10:12
But people will trade premium. Their stocks if they’re only putting five thousand dollars down on a single trade, if they’re trading equities they’ll do the same thing with options. So they control a whole lot more shares and then all of a sudden overnight your position drops, 50 percent because news piece came out that went against your position.

10:29
Holy cow, options are not your friend, they are designed in such a way to make sure that you lose because the large majority of options, do expire, worthless. And then crypto, obviously a huge thing back in the day Wall Street, bet stocks I would probably be another that On there too. Just don’t even go.

10:45
Follow Wall Street bets. I’d also say, turn off all the media stuff. Turn off, Bloomberg turn off Kramer, turn off. CNBC guys, I don’t listen to any of those during the day. Only time I turn on CNBC is when I want to hear what the FED has to say for the fomc statements, that’s it, I don’t turn it on.

11:05
Actually, if you look at what I have on in my office during the day it’s I’m going to give them a plug here I guess but it’s the Cozy Coffee Shop YouTube channel. Yeah it’s basically like this YouTube channel that plays nice soothing jazz music and it has a little coffee shop background.

11:21
It’s kind of cool puts me at ease. I like it, it keeps my nerves down and then sometimes, if it’s cold outside, put on a YouTube channel of a fireplace with the crackling of the background. Yeah, because I don’t need CNBC to tell me how to trade, and I don’t think Traders need CNBC to tell them how to trade.

11:36
So, turn off the media. Don’t do all those other vehicles for trading, like, penny stocks options and all that. Start with stocks. Start with stocks over $10, a share start with stocks that have at least five hundred thousand dollars of shares traded daily. Why do I say 500,000? Because there’s nothing worse than being stuck.

11:57
In an old liquid stock. That’s not moving. It’s very easy to do. Unless you have those parameter set in place beforehand, and that ensures that there should be a lot of movement in the stock throughout the course of a day. Don’t trade the biotechs. Don’t trade a stock through earnings, you want to avoid a huge learning experience, early on in your trading, stop trading earnings if you haven’t ever traded before and you’re ready to start trading.

12:18
Okay, fine. But just don’t hold a stock through earnings and you will be shocked at how much money you save yourself, long term, and how much pain and Agony as a In Trader, you save yourself by not trading a stock through earnings.

12:34
So start with stocks start with the stocks that have a higher share price that are not penny stocks that are not crazy, volatile that don’t have a lot of headline risk. Like right now, for instance, if Twitter was still a stock, which it isn’t. But if it was, would I be trading that heck, no, you know, it’s headline risk, would be associated with that for a while there.

12:51
I wasn’t treating, I actually haven’t traded it since, but I’m open to trading it now. But I wasn’t for a long time. Was Boeing ba, why? Because every time, My like I got into a stock, another engine fell apart or something, and crashed the stock. So, yeah, I’m not doing that anymore.

13:08
So yeah, don’t trade stocks. That have a lot of headline risk to them. Don’t trade the Wall Street pet star focus on price and volume, and price, and volume alone. A lot of people want to clutter up their charts with a lot of indicators. I don’t do that. I do use moving averages.

13:25
I think those are good like 5, 10, 20 50, 200. Some people throw in the hundred and those are only important when price dictates that they’re important. So if price is Going up and down through 200-day, moving average and showing little regard for it. It doesn’t matter. 200-day, doesn’t matter my eyes, but if you constantly see where it’s bouncing off of the 200-day moving average, and that’s probably something important, but become skilled at price of wine.

13:42
Ignore all the indicators out there. Most of the indicators I couldn’t tell you at this point because I haven’t used them in so long what the heck? They actually do because they really don’t matter. In my trading, learn some simple patterns learns, what bull flag patterns me, learn what head and shoulders patterns means, learn what cup and handle patterns mean, trendlines support resistance.

14:05
Since trying to think of these things off the top of my head. What else might be? Good double tops. Triple tops, double bottoms, triple bottoms wedges. Right. There is a ton of different patterns that you can learn and become familiar with fairly quickly because they’re very simple in. Those are some of the best patterns to trade off of learn, what consolidation mean also don’t trade, just because don’t trade, because you want to trade trade because there’s a trade out there that aligns itself with the stock market Direction, with the sector that it’s sin with the industry that’s within the sector that it’s in to trade it.

14:27
Things are aligning probably not worth trading because you’re fighting an uphill battle and really from a training standpoint, I want to lose the least amount as possible. I don’t want to go take on unnecessary losing trades. But when you’re trading in the direction of the market, the sector in the industry that a stock belongs in, that’s a good combination and plan out, your trades know where you’re going to get out before you ever get in, get a good book on technical analysis.

14:43
The one that I would say to get, is the technical analysis of the financial markets. I don’t know the guy, but I always recommend it. I think it’s a pretty good book. Has to cost like 110 dollars back in the day. I think that’s what I paid. I think I paid at least $100 for this book now, it’s twenty eight dollars and it’s worth every dime.

14:59
You’re going to learn a ton as from this guy named John J Murphy and I have gone. A lot of you guys to buy it in the past, I don’t get compensated for it all but that’s a quality book and I definitely think that it’s worth buying because you’re going to learn a whole lot about the market and he gives you that kind of that beginning approach as well know your position sizes.

15:15
How much you going to put on each trait, know what your risk tolerances for each one of your traits for me personally. I’m not going to go after trades. That I’m risking 10 and 15% on, on a rare day. Do I go above 6%? Most of the time, it’s somewhere between two to four percent.

15:27
Then I’m willing to risk on an individual trade if I’m feeling cute, maybe 5%, and I’ve talked about this in past podcast episodes, but I think it’s definitely worth reiterating is that so much of successful trading is about creating a trading style for yourself that adapts to your lifestyle.

15:43
And only you can do that just like position sizing and risk management. Only you can do that. Only, you can figure out what your tolerance. Is for risk is position sizes and it all comes back to creating a trading style that works for your lifestyle. If you’re working a crane on a high Riser, it’s probably going to be difficult to be as a scalpel or a day trader so don’t try to be a scalper a day trader.

16:06
Try to be more of a swing Trader up position Trader. Create the trading strategy that works for your lifestyle and I think you will find much more success in doing that versus just adapting to somebody else’s, trading style, making it your own. That’s why with swingtradingthestockmarket.com, Yes, this is a plug that I’m putting in.

16:25
You’re going to get all my stock market research, but I really try to tailor it for people to be able to use, regardless of their approach to trade and be able to adapt to their own Lifestyles and with it. You’re going to get my watch list each week. You’re going to get the updates on the overall market and the big tech stocks and just a lot of different really good videos to help you and assist you in my trading.

16:48
So, wrapping this up for Norman here and for all of you guys listening, there’s a lot that I covered, but this is more of a 20,000 foot view, but it does give you a little A bit of a start when you’re going into the stock market for the first time, learn some of your basic price, patterns focus on price and volume stay away from the indicators, don’t trade your penny stocks options, crypto fuse, 4X just learn how to swing trade stocks.

17:09
And if you don’t know something, look it up on Investopedia. That’s a great resource to again. Not something I’m paid for but I am willing to acknowledge and there’s a good resource out there. Investopedia does give you a lot of good information. Don’t hold a stock through earnings. You’ll save yourself.

17:25
A lot of money. Trade stocks are over $10, void. The biotechs, avoid stocks that have less than 500. 2,000 shares traded on an average or daily basis.

17:32
If you enjoy this podcast, I would encourage you to leave me a five star review. I appreciate that. And keep sending your questions. ryan@shareplanner.com. I do read them. I do try to put almost every one of these things out on air. If I’ve missed one of your emails from the past, send me that same email again and I will make it podcast episode out of it.

17:53
There’s also a good chance you might have missed the podcast episode and already did it, but I’ll be able to tell the difference. So make sure to check out swing trading the stock market. Thank you, Merry Christmas and God. Bless.

18:07
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.

18:23
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.

18:35
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.