Day, Swing, Position Trader | Podcast Episode #306

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 and today, this episode’s gonna be a good one.

0:36
We have a question from a feller here in England. For the purposes of this episode I never use people’s real names. So what I tend to do is give them a good Florida redneck name but since this guy’s from England, I got to give him an English kind of name. I’m going to give him the name, Longshanks from the movie Braveheart, that crazy King.

0:55
We’re going to call them Longshanks and Longshanks rights. Hey, Ryan, I love the show. It’s been really helpful. In my trading, my personal situation changed and I pause my trading for a while, but I’m looking to get Back into it really soon. So I’ve got a couple of really basic question. It would be great if you could help me with first this is super basic, but you can say a little bit about the difference between the different styles of trading day, trading, swing trading position trading and who each style is good?

1:20
For this question isn’t good enough for the show or really isn’t suitable. How this I’m looking to get into a style of trading and the current market where I can scan a number of indices each day. Looking for the patterns you mentioned is this even practical how many indices would I need to? Have on my watch list in order to make this practical.

1:38
I’m talking about focusing exclusively on indices, rather than individual stocks. I’m figuring that inverse ETFs. Be where the money is to be made right now, or am I way off. Love the show, keep up the good work Longshanks in England.

1:54
All right, Longshanks. Good question. But I think there’s a lot to explore here, especially with the first question. Because I think a lot of people don’t quite understand the differences between day swing and position training. And even with just talking about the different types of index trading, that’s out.

2:09
There we can get into that as well. First, what am I drinking? Well, I am drinking this. Like Japanese whiskey. It’s called oh sheesh. Oh he she he she so what I plan on doing maybe a little bit different today. I’m just going to drink it during the course of the show and give you my thoughts at the end. We’ll see how that little format change works.

2:27
But yeah, that’s the plan here. So he/she is 44 percent alcohol and that makes it 88 proofs of kind of weak on that. And but Back to Longshanks and the different styles of trading. So day, trading day trading is definitely going to be a lot different than swing trading and swing trading is going to be a lot different than position trading position trains really different from day trading day trading and it kind of speaks for itself.

2:52
Most of us already know what this is. This is where you’re taking advantage of the movements of a stock and the same day of trading, you’re getting in your getting out, you’re not holding anything overnight. That’s the essence of day trading and a lot of people like it because they don’t have Take on any of the overnight risk.

3:07
And I think that a lot of times too and I’m not saying this is about all day Traders. I’ve met some really successful day Traders out there. I think day trading is probably one of the most difficult Avenues to make profits in the stock market. You are having to find and extract the profits out of the stocks that are going to make the best moves during the course of the day.

3:27
Now, you can have a stock that goes up 40% premarket. And that’s going to be one of the more enticing stocks to want to get into and try to day trade. Especially if it gives you a good pattern, but just because it has a big premarket movement. Doesn’t necessarily mean it’s going to continue in that direction.

3:42
Oftentimes, you see a lot of profit taking people who were in it before the big move. And if it’s up 40% during like man, I’m going to get out of some of this stuff at the open. Now, I’m going to book profits and then you just really don’t find it doing much during the day, or you find it actually give back some of those gains. So extracting prophets, especially after a big move can be really difficult also, I think that day trading it tends to lead to a lot of hyper trading so If people weren’t making the gains that they need from that specific day, they’re not meeting their goals.

4:09
So what are they going to do? They’re going to keep trading until they can start extracting. Some profits are going to keep looking for more traits, that usually ends and Hyper trading and then a commission free environment. You’re even more incentivized to keep trading throughout the day until you finally hear that Bell. Go off at the end of the day. So I think day trains very difficult because for one the time elements against you you have to be able to extract this profits between the opening bell and the end of the day.

4:33
If you don’t, then you’re going back to Being flat, overnight swing trading and this is the one that I have always found to be the best method at least for me. And well, that’s why we call it swing trading the stock market because that’s what I’m really good at swing trading. In my opinion, is the easiest to learn.

4:48
I feel like it gives you the best of both worlds. If you’re looking at being a long term investor, well you got to hold your long term trades and I’m not saying that there isn’t long-term Investments worth getting into or anything, but I’m definitely not saying that I even have some long-term Investments. But long-term doesn’t give you the Need to get in and get out of the market like swing trading.

5:08
Does swing trading. You can recognize the hey, this is a bear Market Market is trending lower. I’m not going to be long on stocks while it’s trending lower and you get that opportunity to avoid a nasty sell-off and then the overnight. Yeah, there’s risks from holding anything overnight. That’s one of the reasons why I try to identify key risks in the mark and say, hey, I’m not going to trade through this.

5:27
Like, for instance, earnings, I’m not going to trade through earnings. I realized that I could be swing trading a stock that has an earnings report coming out and be down. 20%, I also So realize that I’m not going to trade small cap, biotech stocks and to be honest I’m not going to treat a lot of large cap biotech stocks because if they have an FDA decision that comes out and it negatively impacts them, I could be down forty or fifty percent on that particular biotech stock and then just stock that have just tons of volatility or a lot of gaps.

5:53
I’m not going to trade those. Why? Because there is risk, the holding stocks overnight, even holding Apple overnight, who knows? I mean, maybe they get downgraded one day or they have a one of their main suppliers, go belly-up and they could be down 10 or Percent. That’s possible. I’ve actually seen it to where I was long, apple one year.

6:10
And I think it was my first trades at that year and they came out with a earnings forecast, ahead of their earnings report saying that they were going to miss. And guess what happened? I was down like seven or eight percent overnight in apple that sucked, but it does happen. But when it comes to swing train, there is a lot of easy to recognize areas of risk to just completely avoid and then swing trading.

6:31
If you are trading in the right direction and if your stock is breaking out, there’s a Out of profits, be able to make by simply holding the stock overnight that day. Trading doesn’t afford you with and swing trading. Also takes advantage of that short term momentum and the stock market, whereas, position trading.

6:51
And now, we’re getting into this last type of trading that requires you to hold much longer term. You’re looking at a more of a mixture of fundamental and technical analysis to where you’re saying, okay, based on my analysis of the Economy based on my analysis of the stock market, I think we’re looking at a bear Market over the next six to eight months.

7:08
Once I’m going to start positioning myself for that kind of a move. And so you’re willing to hold these positions for a much longer time. Maybe it goes into even long-term territory where you’re holding a position for over a year that happens as well. One of the big position traders that I can think of as Michael burry he holds positions for a long time. Like he was short Tesla for extremely long period of time.

7:25
You see a lot of your hedge funds that are like that their position trading swing trading though. Works really good for retail because they can get in and out of a stock whereas maybe some of your bigger institutions. Kids can’t do that kind of stuff. So they have to do either long-term, trading, or position trading my way this bourbon, I’m not really feeling it, but I’m not really big on the Japanese whiskeys.

7:43
I don’t think it’s a bad Japanese whiskey. I just don’t think it’s the best thing I’ve ever had. Definitely pick up on some strong. Almond tastes, holy cow. All right, and before I forget, check out swingtradingthestockmarket.com, that is the patron website that goes along with this podcast, you’re going to get all of my market research each and every day.

7:59
I’m talking about some really good stuff here, guys, that’s going to include updates on the stock. It was sitting out videos each and every day covering topics, such as the stock market updates, you’re getting updates on big tech stocks. You’re also getting my watch list and stocks, and I’m following each and every day.

8:15
So, check that out. swingtradingthestockmarket.com credible value, and you’re supporting this podcast in the process. So, back to Longshanks here. Hopefully, we have a good idea now about the differences between day trading, swing trading of position trading. Obviously, I’m biased towards swing trade.

8:31
That doesn’t mean that that’s the right method for everybody. But I think for a lot of retail day trading is going to get you into a lot of Of hyper trading over trading, Revenge trading, and putting undue amount of pressure to be able to extract profits out of the market each and every day. And when that doesn’t happen, you just keep on trading and keep losing more.

8:52
It’s very, very difficult to be successful in day trading and then, of course, the swing trading, I think that’s the really, the happy spot. The middle ground between long-term investing in day trading, that allows you to extract profits over a longer period of time without getting into like position trading or having to hold for months on.

9:10
End allows you to take advantage of short term momentum in the market flexibility. That’s all For not in long term trading or position trading and it really it’s flexibility. That’s not offered and day trading, because day trading, can’t hold overnight swing trading. You can look when I’m swing trading, if I have a bad trade, I’ve been known to turn it into a day trade, why?

9:27
Because it was so bad. You know I got stopped out the same day so it’s not like swing trading, you hope that you don’t have day trades and swing trading but they do happen from time to time.

9:43
Now about Longshanks question about this style of trading. He’s proposing and I’ll read it again here for you just in case you don’t remember. Exactly what it was. He’s looking to get into a style of trading in the current market where you can skin a number of indices each day looking for the patterns that I mentioned.

9:59
And he wants to know whether or not that’s practical. How many indices would he need to have on his watch list in order to make that practical? He wants to focus exclusively on NBC’s rather than individual stocks. He wants to even consider ETS as being a inverse ETS. Actually, for there might be an opportunity to make some money right now.

10:18
Is he off? I don’t think he’s off, I think there’s a lot of people that trade just ETS and I think they do pretty well off of it. There’s been times where I’ll get frustrated by like downgrade or something stupid in an individual stock and I’ll say to myself, why the heck do I even trade individual stocks? But of course, I go back and I look at the track record realize I actually do have a pretty good track record with individual stocks.

10:35
So sometimes in the moment you can get frustrated because when you’re trading ETFs you’re not being handcuffed by the earnings as much. Yes, if Apple comes out with bad earnings and your trading xlk which is the technology sector ETF, it’s going to have a pretty bad impact on technology.

10:53
But it won’t have the same impact that it has on Apple. And in terms of just trading, indices, I think that’s a, I mean, a lot of people do it, but if you’re just looking for specific patterns, you may not always be getting them. If you’re just trading off of like spy, QQ Q IW M, and Dia. And I don’t even like Dia because it’s a price weighted index which is just total garbage.

11:09
But in DIA is the Dow Jones Industrial ETF spy. That’s going to represent the top 500 companies. That’s represented by the S&P 500. The Qs Q QQ, that’s the NASDAQ Hundred and then iwm is the small cap 2000 and x.

11:24
And you could trade just off of those, but you’re not going to have a whole bunch of stocks that really skin, you’re just going to be looking at for stocks every day. Now, of course there’s like mid cap index funds and some other ones that aren’t really heavily track, but still worth following as well. But there is a ton of ETS.

11:41
Now, ETF Market has really gone and really, really crowded of late. I mean you got the inverse Kramer stocks you got, are you got stocks that are benefiting off of certain political parties or ideology or Or just tons of different ETS out there and you got to be careful. One of the main things you got to do with ETS is check the volume.

11:58
If you’re seeing this as an ETF, that has less than 100,000 shares traded daily. It’s probably something worth moving on from and not even considering it usually needs to have like 500,000 to a million shares at least being traded on a daily basis. One of the things that I think is a good idea to add to the watch list are the sector ETS.

12:15
That’s going to be materials. That’s xlb. You’re going to have communications xlc, you’re going to have energy. That’s XLE financials. XLF, Industrials Excel. I try to remember these off the top of my head without having to reference all of them. You got technology.

12:31
Xlk discretionary. Xly you have Staples xlp real estate Excel re trying to think what the other ones are here. Healthcare XLV, utilities xlu. I pretty sure I nailed them all. I could be wrong but there’s lists out their goal or that could tell you which ones they are those Those are the ones that I like the best but there’s also ETS for some of the industries like semiconductors and SMH or biotech IBB.

12:44
Those are ones that I also track as well, and I’ve been known to trade individual sectors, I do it as well. I’ll just as willing to trade it individual sector as I am a stock as long as there’s a trade setup there that I can capitalize on. But now I would also say that one of the bigger questions is going to be this person needs to ask himself, especially as he’s getting back.

13:05
In he paused for some reason, I don’t know what it is, we need to ask himself, what is going to be my position sizes on these traits? How much am I willing to put in there? Because if you’re trying to follow a, you know, like a specific pattern, like let’s say, I want to just trade off, a bull Flags, bear Flags.

13:20
Okay, how are you going to trade them from a position size standpoint? Because trading is so much more than just the what are you trading and patterns that you’re pursuing. In fact, I would say that’s a much smaller part of the bigger equation which is position sizes, how much of your out. Your capital or you allocating to a single trait because if you’re trading too big, you’re not going to make the right decisions.

13:41
You’re going to make bad decisions, it’s almost inevitable that you’ll make bad decisions. If you’re trading too large and then what’s the risk allocation, what kind of stop losses are you looking at? I usually look for stop loss is somewhere between like two to four percent to 25 percent.

14:02
Even and the reason why I do that is because I want to keep risk so tight because the tighter the risk is the easier, it is to get a 2 to 1 return off of it. Now granted, if it was just Easy by saying it like that I would go after like stop losses of point five percent there has to be a little bit of buffer because a stock and easily move a half percent and you’re all sudden out of the trade and it was a meaningless stop out.

14:25
So I tried to find key support levels that are two to four percent just below where I want to get in at or where that desired entry price is that and then put that stop loss below a key support level. So if it’s breached, I know that it’s time to get out of that tree and you got to remember, patterns are not guarantees.

14:52
You see a bull flag and it breaks out. It’s not a guarantee that it’s going to break. Well, it’s just an increased likelihood that the trade will work out in your favor. You’re essentially looking at ways to increase the chances of a trade working out, in your favor patterns using technical analysis, do help increase the odds of them working out in your favor, but they’re not a guarantee.

15:14
So you got to make sure that you’re not putting your hopes all into one thing, but you’re also guarding yourself against the downfalls of trading and that is the emotions. That’s why I am emphasizing position sizing because I think it’s a very overlooked aspect. A lot of people when they consider position sizing they’re like well when I get into a trade and I make 10% I want to make sure I’m at least bringing in a thousand dollars, so I’m going to trade 10,000 dollars.

15:30
Well, they may not have the emotional wherewithal to be able to trade ten thousand dollars on a single trade, doesn’t make them stupid or not smart. It just means that they’re not equipped or ready for that yet. So maybe what they really should be doing is trading a thousand dollars on a single trade, but most people won’t like that because they’re saying to themselves.

15:46
Well, I’m not going to make much money off of that, if I’m right, you know, I’m only making $100 which to me, I think. Think you should be thrilled about. But again, it goes back to the idea that trading is not about profits. It’s about managing risk, it’s about planning your trade, because then, if you do those things, the profits will take care of themselves.

16:03
But most people fail to realize that in there, just looking at the prophets so risk. Allocation, in terms of how big a stop losses, position sizes, and then recognizing that technical analysis is a great tool, but it’s not where the success has found. The success is found with how you manage the trade, how you manage the risk.

16:21
Technical analysis is only Guide. It’s saying hey there’s an increased probability here. There’s an increased likelihood. Like when I see a rising trend line and the stocks pulling back to it, I can play that balance but sure it may break right through that trend line I’ve seen it just recently with apple Apple’s break into year old trend lines and so that doesn’t mean technical analysis has failed.

16:41
You, it just means that technical analysis is showing you something that you should consider in your trading. In terms of, hey, this support level didn’t hold. What is that telling me now? And then you need to act accordingly. Hey, this support level did hold, what is That telling me and then you gotta act accordingly. We get upset at technical analysis when it doesn’t confirm our bias.

17:01
And that’s not what technical analysis is set to do. It’s set to tell us what is the story that’s taken place here? It’s breaking through a key support level that it hadn’t broken in two years. That is something to consider that’s something to consider in our trading. Maybe it means get out of the trade, maybe it means to short the stock, but in the end patterns, all those things, they’re great to recognize and to be able to use in your trading.

17:17
There’s a lot of Floral in it. I got to say I’m not a huge fan of it. Not really at all. It’s a little toasty. I’m going to give it a 58. No. You know what not? If I’ll give it a 6 1. I don’t think it’s all that bad to finish is it’s a little Bland, that’s a little licorice but I don’t think it’s a horrible thing.

17:33
I mean I got to remember this is it Japanese whiskey. I’m not a huge fan of woman General in terms of some of the other Japanese whiskeys have tried in the past. It’s not the worst one. So I’m going to say 61 I think that probably bear and again this is called don’t even know if I’m saying it right. Oh he she Brandy. Single Cask.

17:49
Whiskey the Blended. Japanese whisky 44%. 88 proof. If you enjoyed this podcast episode, I would encourage you to leave me a five star review, on whatever platform you’re listening to. And keep sending me your emails, ryan@shareplanner.com those things do Get Ready, Get Ready.

18:05
Every day. And I try to put every one of them into their own podcast episode. So if you send them to me, there’s a good chance that you will get a podcast episode out of it. So keep sending them my way. Make sure to sign up for swingtradingthestockmarket.com. Thank you guys. God bless every one of you. Thanks for listening to my podcast, swing trading the stock market.

18:23
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18:45
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