Trailing Stops & Winning Trades | Podcast Episode #313

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’s episode Dude, I got an email with three different questions on it and we’re going to attack all of them.

0:39
We’re going to talk about trailing. Stop losses. We’re going to talk about a particular book and we’re going to talk about ETS whether you should be trading them short term or whether you can trade them just long term. So we’re going to talk about all of that and more this evening, I’m going to call this guy the judge because he’s a judge and that’s kind of a pretty good name right to have and we’ve had Billy Bob Bo Frank, but we haven’t had anybody named The Judge.

1:06
On this podcast. And that’s what I’m going to do here with this email. He starts off by Ryan. Dear Ryan. Sorry in advance for how long this goes on about two months ago, I discovered your podcast and have since gone back and listen to all the episodes. This morning I finally hit the last one so I figured this was the time for me to email you some of the questions that I have by the way it’s not a boring email actually pre read this and it’s a good email I think it his backstory is great and I really like it how people are provided me with their back stories.

1:35
On these emails because it gives me such a good insight into where you’re coming from and it really helps a lot of other traders that are listening to this podcast to hear your stories and of where you struggled. And were your success is even if you don’t have a question for me, send me your stories because they make some great episodes.

1:51
So the Story begins like this. I have always been interested in the stock market, but have only recently started really diving into it. My first thought came to me back in 2008. When I asked my grandfather for a stock for my birthday, he gave me ten shares a BAC. That’s Bank of America and he used drip, to re-invest those dividends each time, there was one rendered, I still own those shares today and will probably never be able to sell them.

2:15
I know that you preach, not trading on emotion, but holding these 10 Shares are worth the risk. To me, my grandfather made millions in the stock market over the course of his lifetime and on top of his day job. However, he passed away in 2009 and the mentorship. He could have offered me went with him.

2:30
I was in college then and I opened a Charles Schwab account and bought about 100. Dollars worth of various chairs, mostly based on what Jim Cramer said. Oh, and I ended up losing most of that capital and ended up. Oh, gosh, and ended up losing interest in trading as well.

2:47
But I kept the account open, I left my other positions along and those positions have grown to a little over $400 since 2009. That’s awesome. Fast-forward. To 2019 some friends. Introduced me to this awesome, new app, that was going to make everybody Rich. So I downloaded Robin, Hood and funded it with a about $50 to play with.

3:05
And instantly hated the platform. I hated the lack of research tools and I hated the fact that it was pushing stocks on Me based on whether they were trending on social media. And I hated how everyone would be enjoying dinner or drinks together and all of a sudden everyone would have to whip out their phones and be expected to prove their social worth amongst each other by showing whether their chart was green that day.

3:27
I couldn’t put a word on it then but Robin Hood Bros sums it up perfectly that if for those who don’t know, I used to call them, I still do call them Robin Hood Bros. But when it Was at its Heyday dude. Robin Hood Bros were some of the most annoying people on the face of the Earth. He’s right? That I should patent that saying Robin Hood Bros and that he should probably find better friends.

3:46
So, yeah, I got a lot of friends that trade stocks and everything I can’t ever remember a time where we’re like, whipping out our smartphones and were asking each other to show the gains for the day, whether or not your screens green. I mean, I know that’s what Robin Hood likes to do and everything. But holy cow, show me you suck at trading without show me that you suck at trading by that kind of a behavior, right?

4:05
Is email goes on to say that around the same time. I met a guy that was actually doing the research and making small percentage gains consistently. He explains. Swing trading to me and talk to me about the charts and patterns and Jesse Livermore in a tree sparked, my interest in trading. However, at the time I was a criminal defense attorney with an insanely busy in chaotic schedule.

4:22
I read up on technical analysis, but I felt like I could never get a handle on things enough to actually start trading. By the time I got a chance to settle down at night. The market was long closed and I was tired present day. I am 34 years old. I have a wife. And two kids in a much more settled schedule. Really, man with two kids, shoot, I got three.

4:40
One of them is grown up to our teenage boys and man, I don’t know how settled I feel, but no, they’re good kids though. Six months ago, I was sworn in as a judge, that’s the name. So no longer a practicing lawyer. My schedule is such that most days. I could allocate my lunch hour to trading and I have quite a bit of freedom to engage in part-time trading.

4:58
When I am not actually in the courtroom, my retirement is pretty much taken care of. So I’m not worried about that. I am not really interested in becoming a full-time Trader as I do. I love my job, mostly my goals are to be a smart swing Trader and maybe make some money along, the way that I could spend on fun things with the family and or supplement my retirement after discovering your podcast.

5:18
I think I have found a support to get me back into trading with some confidence and direction this week, I signed up for your patreon account. That is swingtradingthestockmarket.com website that goes along hand in hand. With this podcast, you get all my stock market research each and every day that’s going to include updates.

5:35
It’s on the stock market that big tech stocks which is really valuable this past week with all the earnings that came out and you’re going to get weekly watchlist and different trade ideas to consider as well. So that swingtradingthestockmarket.com and he gave me an excellent plug. I couldn’t pass that up. He says I am playing the sign up for SharePlanner to in the near future but I wanted to make sure I was ready to start entering positions before I do today.

5:56
I funded I think or Swim account with a thousand dollars. I have been going through videos on thinkorswim to try and get a grass for this program. As a new Trader, it is quite overwhelming. I want to have a grasp of Before I start investing, my plan is to swing trade on thinkorswim. And if I can go a few months with consistent gains, I will start adding Capital to the account on a monthly basis.

6:14
I plan on using my Schwab account as a long term Investment Portfolio finally on to my questions again, like I said, I really do like the stories because it gives me an understanding of the person where they’re coming from, who they are, is really good. And it’s also good for you guys to hear it too.

6:30
First, I’m wondering. What are your thoughts on trailing? Stop losses. I seem to remember a podcast we talked about not using them though. I have not been able to find that. Act One it seems to me if you are letting a winner run a trailing, stop loss would be a good way to do it. Especially for someone that is trading part-time with a full-time nine-to-five job. Who cannot keep a constant eye on their positions?

6:45
Is there a time and place for trailing stop losses? Or is setting a firm stop loss and moving it up as necessary and when able to a better approach, second, have you ever read Jesse Livermore his book? How to trade stocks if? So, I am wondering, what your thoughts on his method of technical analysis at the end of the book, art is Swing trading in.

7:03
Today’s market, the same, It was in the markets of the first part of the 20th century. Are his spreadsheets methods one that can still be used today or has the Advent of Technology especially when it comes to charting rendered, those methods, archaic and more time consuming than they are worth third on the podcast.

7:20
You often talk about ETFs, I am not really familiar with ETFs yet but I think I have a basic understanding of them. For those who don’t know what ETFs are, those are exchange-traded funds. They’re like a cluster of stocks that are managed by a person, or a company or a firm in there publicly traded.

7:42
Also, it seems like to me that ETS. Like the volatility that individual stalked us my thought is that ETS would make a great vehicle for long-term investment position. So I am thinking my strategy will be to swing trade stocks and invest long-term and ETS and drip stocks. I am wondering what your thoughts are on.

7:58
Such an idea though, thank you for all you’re doing. If I find time to respond to this email, thanks in advance, sincerely. The judge.

8:14
Now as to what I’m drinking. While we’re doing this podcast here, I’m drinking. Jack Ryan Beggars, Bush, 12 year old malt, great last name, and it sounds like it’s a spin-off of that Amazon Prime show Jack Ryan, and all this clear, and present, danger movies, and Patriot Games Jack Ryan. So not a bad name but I’ve never had this before. I’ve never even heard of it.

8:29
Until I’m just opening it up right now and at the end of the show, I’ll be I’ll be drinking it throughout, and at the end of the Shelby, Telling you what? I think of it. Okay, there’s a lot to cover here. First, I like to dig through some of the email here and just pick up on some of the things. I noticed in what he was saying about his trading background, in terms of your grandfather, giving you 10 shares of Bank of America back in 2008, and not one to get rid of it, I get that and Bank of America since the time, and I think it’s gone from like, 13 or 14 dollars up to its present-day of, like $36, right?

8:57
So I get not wanting to get rid of it. You’re reinvesting dividends and it’s one of those things. This is what your grandfather gave you want to hold onto it. I can understand that and considering if you were like 13 or 14 dollars back in 2008-2009, you’re talking about $100 a total value, it’s not like it’s going to 0 and no, it’s Sentimental, Man, your grandfather gave that to you.

9:18
I get that. But what really killed me though is the whole he puts a hundred dollars of on various shares based off of what Jim Cramer says. Now, for those who don’t remember back then in like 2009, Jim Cramer was a big deal. Everybody loved him. I mean, I think he goes back to what 2005 2004 when he started that Show but I’m telling you back in those days people were mocking him like they did today.

9:39
I mean they did to a certain extent. One of the strategies that a lot of people would do is he would talk about a stock on a show and it would immediately get this huge after-hours boost. I mean, I’m talking like 56 percent sometimes. If it was a small company, it could jump like 20%. It was really crazy. And people would immediately short the pop and they would make money.

9:57
So that was the way that they would play. The Kramer picks back in the days, they would short the after-hours hype. Now, Jim Cramer actually has me blocked on Twitter. I Melt one time on one of his bad, really really bad, stock picks. He was like calling it the next Amazon or something of that degree. And I did a follow-up question with him and he blocked me.

10:14
So I don’t ever get to see what he says anymore on Twitter. I kind of miss it but oh, well, it was kind of fun. Getting blocked by him too. I think I have most, the CNBC that’s blocked me. I’m not sure why most of these people have never even met before yet. They’ve gone out of their way to block me for whatever reason. And by the way, I don’t even watch CNBC except for probably on the fomc days and There’s like a big earnings report like yesterday where you had Apple Amazon.

10:38
Google are reporting after the Bell yet. Starbucks Qualcomm. Or there’s a pretty big day. So I wanted to kind of see what was happening there. Outside of that, I really don’t turn it on. I just think that they’re just you know, bloviating a lot of hot air on that show and really I would say 99% of the people on that show are absolutely stupid.

10:57
They really are. And you look at like the opinions. They give their just following the crowd. There are talking their book, They’re following the crowd, they’re really not. Eating it all from the institutions that they work for their given, the talking points to follow, and they’re following them when the market selling off, like it did in 2022, you could see the fear, you could see the deer in the headlights expression on their faces.

11:19
So don’t look that CNBC. As these people being, like, really of any kind of like, value of any kind of worth, they’re not smart. They’re not good at what they do. They’re just really good marketers. They follow the company line, and they just are simply, like, mouthpiece.

11:35
Is for whatever bank or institution or hedge fund that they work for. I will say this though, I do like Josh Brown, I think he’s actually pretty good. I enjoy listening to his commentary when I happened to stumble across it. Which isn’t very often but he seems to be one of the guys, that’s more of a realist and understands the gravity of a lot of situations when most others don’t.

11:53
But outside of that, this email has nothing to do with CNBC, but it felt good when he brought up Jim Cramer to, you know, rail against them a little bit. Maybe that’s why they don’t like me, because maybe they already knew, I didn’t like them, and that’s why they blocked me, but he lost most of his Capital, but Capital is actually grown because of the essentially the long-term effects from 2009 to 2012.

12:10
He won the market was just on one of the most historical bull market runs of all time. Yeah. Even if he took a loss initially on most of his trades that during that time, if you had a couple of good place, you could easily make $400 off of it just by simply holding until now, one of the things that was really good in which, you know, I knew who this person was but he met a guy that did swing trading.

12:30
He was really outside of the whole Robin Hood. Wall Street bets crowd. He was just making consistent gains. Hurley. And that’s really what trading is about. It’s not about hitting it. Big on one particular stock, so many people trade like that, they think that that’s what’s trading’s about hitting these big home runs, but it’s really not. It’s about a series of good consistent winners Time, and Time and Time, Again, keeping the loss of small, keeping it to where your losses don’t Define your portfolio.

12:51
But there’s so many Mille that it highlights all of the winning trades that you had throughout the year. Now, present-day, he’s 34 years old, has a wife and two kids. He has more time than he did when he was just a criminal defense attorney. Now he has some down time during the day. He talked. About how lunch time is one time where he could probably do a lot of Swing trading.

13:09
And that could be a time where it keeps him out of a lot of bad traits. Because the two periods of time that most people get themselves into trouble is that the beginning and at the end of the day, but probably more. So at the beginning, because there’s so much hype. There’s a gap that people were probably talking about usually before the Market opens up whether it’s higher or lower.

13:25
And when that Market opens, boom, people are flooding, the market with orders, their Market ordering in a things are getting horrible fills and it’s just not a good time to trade. I never trade in the first 30 minutes. Or trading I used to and yet he’s not able to do that because he’s the judge and he’s having to sit in a courtroom during that time most days and so the lunchtime offers him, a great opportunity to actually look at the markets but what’s cool about that?

13:49
That’s usually the lowest volatility period in the market. So you’re able to really see how the stock market has settled in, what is it doing? What is it trajectory for the day and then what stocks are lining up with the the right industry sector and Market Direction? So I think it his situation, it’s actually a good position.

14:05
And because if you need to make stop-loss adjustments, based off of what was seen early on in the day, he can do that. If you needs to get into a trade, you know, it’s during one of the calmer periods of the market session and that works to his Advantage as well.

14:21
It’s a great platform. I have no beef, I think I’ve been using them since I was using them before they got bought out a TD Ameritrade. And since then, TD Ameritrade bought them and then Charles Schwab bought them. They have really not changed too much over the years. Many platform looks almost identical to what it was. Was just 12 13 years ago but it’s still really good platform.

14:38
I have not had too many issues at all, but if you’re just checking them out for the first time it can be a little bit on the overwhelming side and the videos. That’s probably a good way to start, but they also offer when you set up an account and if you had any, you’ve never taken advantage of but I’d probably call them up and say, hey, I really like the walkthrough on your platform.

14:56
There’s a guy that will call you up and do like, a remote screen sharing session with you and walk you through the whole thing actually. Found that really beneficial the last time I did it, I had already been using it for Like 10 years. I think I was setting up another account and I just went ahead and took that and it was really nice to do that.

15:11
All right, so what about its questions trailing stops? Are they better than just creating manual stops putting in the stop order every day? I think they are, I think there are a whole lot better. Now, trilling stops if you have no other recourse as trilling stops better than nothing. Absolutely, man. At least, you’re protecting the risk in some Direction.

15:28
But what I don’t like about trilling stops is that it creates the potential for the stop loss to be placed in the absolute wrong. Areas. Because what I like to do is I like, my stop loss is be below key support levels. I wanted to know that if it breaks through that support level and triggers, my stop, something is changing technically on the stock that makes it to where I don’t want to be in it any longer.

15:46
It also creates less likelihood that when it breaks through that support, that it’s just going to go, right. Bouncing back up to where it was before trailing. Stop loss is though it can have just like a general pull back, it might not have violate anything technically but it stops you out of the trade. Why? Because that’s just where the trailing stop loss was placed that, you know, and for those who don’t know what a trailing stop loss is it’s the Actually you can set it by Dollar.

16:06
You can set up by percentage but you can be like, okay, I want my stop loss to be placed two percent from the highest point that the stock has been at since I got into the trade. So then let’s say you’re doing this overnight, you’re good to cancel and the stock opens up 5% higher and pulls back, 3%, and then shoots back up all the way up to seven percent or something that can happen the first 30 minutes of trading your out of the stock.

16:27
So even with like a winning trade, when you’re letting it run, it’s better to just readjust the stop-loss manually. As the opportunity permits you to be able to do so because otherwise, if you’re doing chilling, stop, stop loss, might be placed above a rising trend, line or above a key support level, when it should be below both of those.

16:45
Now, this book, I actually need to read this book, Jesse livermore’s, how to trade stocks. I’ve heard about it, but I forgot about that book. So, I think after this after I’m done recording this podcast episode, I’m going to put an order in for it and after I get done reading it, I’ll do a episode about.

17:00
It should be sometime this year that I’m able to get to it. And yeah, we’ll talk about maybe I’ll make a couple episodes out of it, but It’s a anything by Jesse Livermore is really good. He was really a Trailblazer back in the early 1900’s trading stocks and yes he blew up accounts. He was a legend in his own right. I mean he was a guy who knew how to read the tape who was really able to read the markets and make some pretty good trades.

17:20
I think he killed himself do at the end but so much of what he says. If you read reminisces of a stock operator, my favorite book of all time. If you read that book, I can’t begin to tell you how many good tidbits of trading knowledge is just dropped in that book. I mean, it is an amazing Amazing amazing book and it’s about Jesse Livermore.

17:37
But there’s so much good stuff to take away in that book. I mean, when I my copy of it is completely underlined everywhere and is trading methods are really not outdated. I mean he’s talking about breakouts. He talks about trendlines, he just does it in different ways. Yes. The markets a lot different than it was back. Then we have technology up the yin-yang versus what we had back then, we don’t even have commission’s now anymore.

17:58
We just let our Brokers front-run Us. In the charting methods, they are still while they’re very much more advanced in today’s day and age. Age, the stuff that he talks about can be applied to the charts. I mean, so many of the good old books are still very much applicable to today’s trading, third question, ETS, I think ETS are good for short or long terms and he mentions.

18:17
I think that ETFs might be less volatile than underlying stock not true at all because ETFs like you take a like a leveraged ETFs of you PR 0, which is 3x of the Spy, right? I mean you’re going to 3x return for what the S&P 500 is doing now. Grants, by is also an ETF, but as you pr0 going to be more Little than KH C, which is Kraft Heinz.

18:38
Yeah. Probably so or any e. Yeah, I would expect or apple. Yeah, or let’s take s QQ Q + T, QQ Q, which are three, two, one returns both inverse and normal of the nasdaq-100. Are those going to be inherently more volatile than Apple?

18:55
Yeah. And you take something like IBB because there’s going to be a whole array of biotech stocks that are involved in. IBB, could it be more volatile than A visor or J&J. Yeah, it could be more volatile than those. So I think ETFs, they can be used both for swing trading in long-term. I have ET SMI long-term account and I also trade ETS in the short-term fact.

19:12
Most of the 2022 was all ETFs. I didn’t trade, many regular socks. I did some but I didn’t read a ton and I definitely like ETS way better than mutual funds. Mutual funds usually have a higher fee to them and the good thing about ETS, like if you’re looking for a long term returns that match the market and your long-term, Ants then yes, by and use those.

19:37
I mean, spies essentially a long-term return at the S&P 500, right? You’re getting the return each year of the S&P 500 and then QQ Q is given you, the annual return of the NASDAQ 100, plus you’re getting dividends which that also helps to. So you can swing trading. You can use them for long-term Investments.

19:52
I really like them for long-term Investments. I think, you know, people getting into trading should probably when they’re trying to build up a long-term portfolio, Focus. Some on the spies, and the cues. Especially when they have like, dips, like what we saw over the course of 20 22 that offers some really good. Fine opportunities. If you enjoyed this podcast, I would encourage you to keep sending me your emails, man.

20:10
I’m continuing to get them and I really, really do like them. They keep giving me some really good material to work with each and every week, I’d also encourage you to check out swingtradingthestockmarket.com as well, man. That is the vehicle that continues to fund this podcast and allow me to provide you with this great content each and every week.

20:26
Plus leave me a five star review, on whatever platform you’re listening to me on. If I’ve been an impact to you and your trading, the best thing you can do to return the favors by leaving me, a five star review. I Ooh, really appreciate those and it does help me continue to buy the right message about good risk management principles when it comes to trading in the stock market and ask for this bourbon.

20:44
This is actually been a pretty good bourbon. I’m actually surprised that it tastes as good as it is. Again, it’s a single malt, Irish whiskey, it’s 12 years old, it’s called Beggars, Bush 12, it’s called Jack Ryan, and it’s got a lot of like, honey and orange zest flavors to it. It’s really good.

20:59
Has some tropical appeal to it, this might be better than the last one that I had the last Irish whiskey. I’m the last podcast. I’m going to give this one a seven for. I think it’s really good. Really got good flavors, 74 for Jack Ryan. Very much surprised by that, but it’s good.

21:15
All right, guys, I’m out here ryan@shareplanner.com send me your questions. Thank you, 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 training.

21:35
Waiting room including alerts via text email and WhatsApp. 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.

21:52
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.