Don’t Break Even | Podcast Episode #318

0:07
Hey, I’m Ryan Mallory and this is my swing trading the stock market podcast. I’m here to teach you how to trade in a complex ever-changing, world of Finance, learn what it means to trade, profitably and consistently managing risk, avoiding the pitfalls of trading. And most importantly, to let those winners run wild, you can succeed at the stock market and I’m ready to show you how, hey, everybody, this is Ryan Mallory with swing trading the stock market in today’s episode.

0:35
Going to call it. Don’t break even and I got an email here from a guy who wants to be called row tag. I have absolutely no idea what that means, but I don’t use people’s real identity. I use their desired name where I just give them a name. Usually a Florida red nickname but in this case it gives me 1 so I’ll run with it.

0:52
He writes hi Ryan and you can call me Road tag. I don’t know, maybe it’s like an inside joke form and I’m not on the inside, but any case he says, I’m a first-time email or podcast listener since June 2020, I was recently listening to your podcast and hurt you Heat your basic steps of Swing trading. One plan, your trade to manage the risk.

1:09
Number three, prophets, will take care of itself. At always thought about writing in asking a question. But also made a deal with myself to do this when I broke even little did I know that? It would take two and a half years to get there. I had no business making trades at that time, but it looks so easy.

1:25
So I took half of my capital and dumped it into Ino and then proceeded to lose a lot of it. Very quickly. I did exactly what you said not to do. I watched it drop, hoping it would come back. And then of course, Course, after I manage the risk quote-unquote and got out. The stock kept going up, pay my tuition that day for one of the many lessons.

1:42
I will learn in the next few years. So I understand what managing the risk, man, but I didn’t really manage the risk for say it took me a while to really grasp that concept. So, along the way, I want a few times really big, but I also lost small but not small enough.

1:57
Several times, it was a grind. There was a lack of discipline. Definitely, a lot of fomo, that’s fear of missing out for those who don’t know what that means. Really took me two years to find myself as a Trader. And so now I am writing you as a reward to myself because I finally broke even this past week, I blew up my account and it took a long time to recover without any additional capital.

2:17
I did not want to have a recurrence of that fateful trade, and I wanted to prove to myself that I could be good disciplined in a profitable Trader. And I feel that I have become that. Finally, I went in with the get rich quick mode in this case, I was unlucky and undisciplined. And I wanted to share the story with you and your listeners.

2:33
I’m sure there are plenty out there. That have done exactly what I did there is. So I really have no question for you. I’m just happy to be out of the red sincerely row tag. I love these stories. I mean, he doesn’t even have a question, but I feel like this is something worth given an episode 2 and that’s exactly what I’m doing here.

2:50
So, his big investment mistake was trading a stock called Ino. That is an Ovo Pharmaceuticals. I’ve never traded before. It’s a biotech. Biotechs are very volatile and low dollar. Biotech stocks are even more Troublesome to So this stock now I’m going to guess that this is probably the time frame that he was treating.

3:09
It was somewhere in the first six months of 2020. No way to know that but it went from being around like three dollars in the beginning of 2020 and it shot all the way, all the way up to thirty four dollars. So, crazy move. But what do you think it did after that? It came all the way back down.

3:25
And now it’s trading today at a dollar, Twenty Eight. So he talked about how he had some trouble with fomo again, fear of missing out. Now, I don’t know the exact parameters of his tray but let’s say, He got in around $15 shoots up to thirty four dollars. He thinks he’s doing really well for himself and then it proceeds to go all the way back down to sub 9.

3:43
So he’s lost like, 40 percent of his trait that’s a big loss. And if he’s dumping like what he said, half of this Capital into the stock that’s like over a 20 percent, lost your account, but it could be even worse. Maybe he even bought it closer to 20, who knows. But then he was able to get back out on the bounce of, at break even.

3:59
And then after getting out at break, even at $15 a proceeds to go up to like 18 or 19 dollars. So he could have That, you know, another 20% there that could have been had. But why was he not able to get that next twenty percent that was made? Because one he was emotionally drained, because he had just wrote a stock from 15 all the way up, to thirty four watches, it come back down to nine dollars, he’s down. 40% when, at one point, he was up over a hundred percent and then it gets back to break, even he just wants to get out.

4:24
He’s like, oh man, I got out finally and sometimes people don’t do that and then they stay in it and it comes right back down and then they lose even more money. He actually did the smart thing getting out when he did because now it’s trading at a dollar. Twenty Eight. Could you imagine how much money he would have lost and he just tried to stay in there hoping to repeat that magic. And that’s a thing that a lot of people want and I think the Wall Street bets crowd, it was Notorious for it and still are like you saw GameStop go up to over a four hundred dollars a share at one point and everybody’s trying to repeat that magic.

4:50
Sometimes the stocks don’t repeat their magic, especially when it’s a one-off kind of event where the stock just goes completely, parabolic loses, all sense of reasoning or rationale, and then comes back down to earth. That’s a pump and dump and then people want to get back in or they hold through it in, there’s I’ll just get out when it makes that next big run again, and it, never happens.

5:09
Everyone. It, let’s say that does happen. They don’t want to get out, because they think it’s going to go even higher than they think. It’s going to go instead of four hundred dollars it’s time. It’ll go to 800. So they don’t actually sell when they had the opportunity to be forgiven of their sins, when it comes to trading and get out. And so, Ino, classic example, I mean, he kind of, you know, beats himself up for getting out at break even and then watching it go up even higher.

5:30
But at that point, when you write a stock down 40 or 50 percent, there’s a lot of emotions. In it. And the very fact that you got into a trade, didn’t manage the risk and was able to still get out after being down at some point, you know, forty or fifty percent. That’s a huge blessing right there.

5:45
Just count your lucky stars, but that need to break. Even is always a result of a lack of discipline. I have a friend that was sort in the market just recently and he’s just been shorting the market to, no end. I mean, he’s just adding another 10 percent. Another 10 percent going into margin and all that with a leveraged, NASDAQ ETF, inverse ETF.

6:04
And being a crap ton of money and the process. I think he was down over six digits at one point and so it’s frustrating. But what does he desire at this point to just get to break, even not even thinking really about the profits, but about the desire to want to break even.

6:26
And so when we get ourselves into these problems, into these bad situations, we’re not really looking at the chart. We’re not studying the charts per se as much as we are thinking will study the chart hoping that there’s something there to tell us that will eventually be right and get out of this horrible bind.

6:44
But ultimately, we just want to get back our money. And so why do we do that? Because it’s a lack of discipline and there’s a huge lack of discipline there when you need to break, even as swing Traders.

6:44
What’s the difference between a successful Trader in an undisciplined swing Trader is that they take losses regularly? Why? Because they can you can take losses regular. I’ve taken plenty of losses even this year, but there have been small losses. They did manage losses. They’ve been disciplined losses.

7:02
And when you’re doing that, there’s never a thought of, okay? If I get back to break, even I’ll get out because the loss is so small. I don’t have to even consider that because I know that, all right, this trade wasn’t successful. But the next trade may be successful. I’m going to get out now, take the small loss and then my next trade, if that’s ends up being a winner, it’s going to more than likely far outpaced any loss that I took on this trade.

7:19
And if you have a series of losing trades, let’s say you have eight or nine losing trades. You can still make that all up with one winning trade simply because you manage the risk on all the other previous losing trades.

7:38
Another thought the think about is NFL football. I’ve seen a lot of times and it’s not even just football. It’s baseball. Basketball is pretty much every sport but teams will stage an incredible comeback. They’ll be down like 20 points in football or 30 in basketball or maybe they’re down like six or seven runs in the bottom of the eighth in baseball and they will stage a historic comeback and it’s one for the ages and then they get back to break even and then they lose the game.

7:53
And it’s sad, you’re like man you got all the way back up. There you fought your way all the way back up, only to lose and now that doesn’t always happen. Where if you remember like Tom Brady, he was losing 28 to 3 to the Atlanta Falcons ended up coming back and winning the Super Bowl. Even saw it this year. I think, Minnesota Kings were down to the Indianapolis Colts by 30-plus points and they came back and won that game.

8:09
But there’s a lot of other ones too. They’ll be down, you know, a good chunk of points and they’ll make a comeback. They’ll either take the lead by just a little bit or they will tie up the game and then all of a sudden you’ll see that pendulum swing back to the other team and all of a sudden they will run away with the game and that win and why is that?

8:26
Because I think sometimes we just become satisfied with breaking even. So you make your money back, you get back to break even and I think almost ethically. There can be this mindset in our head that tells us. All right, everything’s fine again. And then you start going back to trading and you start losing all that money.

8:42
Again, maybe it’s not with one trade this time. Maybe it’s just over the course of time you lose it but whether the person admits it or not, they were fine with just breaking even. And that’s why I called this podcast, don’t break even. First of all, don’t put yourself in a position to where you have to break even. You put yourself in a position where you have to break even, that’s all you’re going to be obsessed about.

9:00
It’s not going to be about making profits in the market. It’s not going to be about managing risk. It’s just about breaking even and you get into this like ride-or-die mindset to where it’s either. I lose everything or I get back to break even and when you have that mindset, you’re going to be satisfied with just breaking even.

9:15
And then on the next trade, you’re going to probably find yourself getting into a struggle again with the stock market. If you want to know, it’s not a struggle swingtradingthestockmarket.com, this is where you can get all of my stock market research. We’re talking about weekly Master Watch list updates, daily watch list. You’re also getting updates on big Tech, you’re getting updates, and these are videos too, which makes it even better.

9:35
Updates on overall market conditions and you’re going to get these videos multiple times each day. So it’s really a really good benefit in the process. You’re supporting this podcast which I highly encourage everyone to do and roadtag’s benefit. He mentioned how he got into trading because it looks so easy and it does.

9:53
I got emails from people all the time. Family people that I know don’t really know but they’re always wanting to get into the stock market, especially after something really big happens. They start seeing the Wall Street Bet stuff happens like man. Looks easy, I can make money just like everybody else. They want to get in, they see the dot-com bubble, everybody became a day trader in the dot-com bubble 2020 during the covid shut down.

10:14
Everyone was day trading, people were quitting their jobs, not going back to work because they thought they were great traders. Now, they’re back at work if their job still available to them, but that’s what they do. They think that it’s easy to think it’s a way out, trading is not a way out, trading is a grind.

10:31
And one of the things that I like, what he said here, is he grinded his way back. He wanted to make back the money. I know I just spent a bit of time here talking about not having your focus of breaking even. And we’ll talk a little bit more about that in just a second as well. But I do like the fact that he grinded, he just didn’t throw more capital into the pot and say, hey now I’m trading with this amount of money and now I can pretend what happened before never happened.

10:52
No, he grinded his way back and he started to understand that trading. It’s not about hitting it big on Ino or some other stock or a meme stock. It’s about grinding winning trades. Losing trades. Winning trades offsetting the losing trades and then that’s where you get your profit.

11:07
And we think it’s easy, we start to get the fomo, we start to think, hey, this is my big shot, I’m going to get into the stock market and fomo has always existed fear of missing out, man. You had it during the dot-com during the 2000, anybody that had a dot-com website, think how lunacy that sounds in hindsight, you had a dot-com website, you were making money companies would announce that they have a website. Now people would buy up the stock and send it to crazy heights just because they came out with a website and then you go back into like 2006 and 2007 what was getting everybody in trouble for house flipping and that same mentality is back now.

11:40
And people are going to eventually get themselves into trouble with the house flipping now except this time, they’re holding onto the house or not necessarily flipping it, they’re creating airbnb’s out of it. I kid you not. I saw a person post on Instagram saying, I want to buy a two million dollar ranch in Montana. Monthly mortgage taxes hired help upkeep amenities, they’re all twelve thousand dollars combined arbitrage four homes on Airbnb which will cash flow twelve thousand dollars a month.

12:04
I just covered the cost of my ranch with an asset. This is how you need to think. Then you put a brain emoji and a light bulb Emoji, whatever that means. So somebody responded back to him saying all five are liabilities, as they are all mortgages and the guy responds back to him saying I won’t own the properties.

12:20
I will rent and sublease, the guy doesn’t have this terminology, right? So why do I bring a random post into this? Because why is this guy doing that? He’s trying to make everybody think including himself that this is easy that in just like roadtag here thought trading was easy? What was the reality? It wasn’t easy. He wrote and lost money and that’s what a lot of people don’t get.

12:38
They get into these things and they get themselves into big, big problems. I’m seeing people right now, get into Airbnb, buying homes and creating Airbnb’s out of them that have no business doing it. Trading will always look easy. The scammers out there will always try to tell you that making money is easy, doing what they do and it’s not. That money has to come from somewhere.

12:56
Nobody’s just going to give it to you. And so in trading it’s not easy because when you’re buying a stock, there’s somebody selling that stock to you thinking that you were wrong, that it’s not going higher. Otherwise they would still be holding on to it. So when you’re buying a stock, there’s somebody on the other end, whether it’s an algo, whether it’s a bot or whatever selling it to you, they believe in that you’re wrong.

13:14
So we talked about the dot-com and the house flipping. Then you got into the bank stocks, which is probably one of the more sane approaches to trading the market because you were talking about Apple and Amazon, and Google and Netflix and Microsoft and those stocks, their big stocks big companies. They made incredible runs, but there was a huge fomo about those as well to where they took up a huge.

13:35
A huge percentage and they still are to this day, a huge percentage of the NASDAQ 100 and then people want something, they want bitcoin and then they went to NFTs. And then they went to the metaverse and then they were getting into SPACs, special-purpose acquisition companies, where they were using a publicly traded company blank check companies, essentially to acquire private companies and make them public.

13:54
And now you got 0DTE, zero day to expiration trading, this might be the most insane thing even more insane than NFTs that I’ve seen yet today is people buying options with the understanding that they expire within hours, trying to make a buck off of the market. The time decay is so extreme in it.

14:10
I was watching it just yesterday the amount and now the options market is about 50 to 60 percent of zero DTE traders. And I’m not going to get into what exactly that is. It’s very easy to Google but it’s highly dangerous and people equate highly leveraged trading tactics and high-risk trading tactics with easy money and it’s not, it’s actually the exact opposite because it can’t last, it’s not sustainable.

14:33
And I love roadtag’s story because he had to get disciplined. And one more thing that I would tell you is that when you take a big loss, when you are undisciplined, when you find yourself losing a lot of capital, don’t go at it thinking that you have to get your money back or that you have to break even.

14:50
Yes, you want to make a profit and hopefully over time, you can get back to where you were before and exceed that. But that shouldn’t be the focus, your focus now should be, is where are you at now. If your account goes from $100 of total value down to $25 of total value lose 75 percent.

15:05
Well, that’s $75 that you lost or 75 percent. That’s the market’s money now, that’s somebody else’s money. That’s not yours. So you’re not getting back your money. People still say it as if they still own that money you don’t, that’s somebody else that’s gone. And so the mindset should be, is I got $25 here, I’m going to start managing risk.

15:24
I’m going to be disciplined, I’m going to let the profits take care of themselves. I am going to grind it out, I’m going to be disciplined, and I’m going to grow my account from where it’s currently at not to where it used to be. We can’t trade like that it’ll only cause you to probably lose the rest of your money. So it’s not about going from point A to point B and then back to point A it’s about going from point A to point B and realizing that point B is now your new point.

15:47
A there’s no getting back to point A you’re already at your point A after you take that loss, you feel me? I know that. I might be splitting hairs here. But again, I’ll say this. So you understand it, a lot of times we start at $100 of trading. I’m just using it easy round number, we go from $100 that your A down to $25, that’s the new B and we say to ourselves, I just want to get back to point A. No you’re already at the new point A. Point A is the $25 and you’re going to start managing trade from there.

16:09
Hope you guys enjoyed this podcast episode. Thank you to roadtag for sending me in a great email. And it took me a couple weeks to finally get him into the show, but I’m glad we were able to do that.

16:27
Keep sending me your stories. Keep sending me your questions. I like your stories. I like your questions. I like a combination of them both as well. You can send them to me. I won’t use your real name. So you don’t have to worry about that, but I’d also encourage you to check out swingtradingthestockmarket.com, support this podcast and get my stock market research.

16:42
And at the same time, what an excellent combination and make sure to leave Swing Trading the Stock Market podcast a five-star review. I love those. I appreciate those. They give me a lot of encouragement too, so much as I want to be an encouragement to you guys and your trading to help you guys along in your journey help me along too leave me a five-star review.

17:00
Thank you guys. God bless, thanks for listening to my podcast. Swing Trading the Stock Market. I’d 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.

17:20
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17:36
Please feel free to email me at ryan@shareplanner.com. All the best to you and I look forward to trading with you soon.