Is Swing Trading Worth It? | Podcast Episode #344

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.

0:25
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 I’m going to be looking at a question that comes from an 18 year old guy that’s just starting to get his feet wet with trading.

0:40
Still doing a little bit of paper trading but some really good thought out questions that he has for me. Instead of using his real name, going to give him the name Gomer for a good Florida redneck name he writes. Hey Ryan, I have been listening to your podcast for a few months now and I’ve learned a lot.

0:56
I’m only 18 years old and have not started trading with real money yet as I feel I have more to learn before putting my real money in. One question I have is is swing trading even worth it? I have read some books and spent a lot of time learning about swing trading, but I’m wondering if it’s even worth it.

1:14
I know that if I invest my own money into an index fund like the S&P 500, I will make a good return over the long run. I’m not sure if I want to continue putting my time into swing trading if I can get good returns with much less effort by investing in the long term. Now, I do plan on doing longterm investing regardless if I swing trade.

1:30
I know it’s important to have a diverse portfolio, but what I’m trying to decide is if I should just take the money and time I would use for my swing trading and use it in my longterm investments or focus on using it on other things like my own business, my education, or another form of investment. With longterm investing, I know I can expect 7 to 10% return on average per year, but with swing trading I’m not sure how much I can expect to make or lose.

1:53
So I am considering saving myself the headache of swing trading in just. Focusing on long term investing and building my wealth in other ways. If I do continue with my swing trading journey, I will make sure to manage my risk and follow all of your principles that I have learned through my listening and research.

2:16
Feel free to give me your own Florida Redneck name. Thank you so much, Gomer. OK, so terms of financial terminology, you did great, man. I don’t even use all the right financial terminology all the time. There’s times where I have to Google, you know, a particular Candlestick pattern or a pattern that I noticed, and I’m just having a brain fart and I can’t remember exactly what it is.

2:35
I have to look stuff up on Google myself or Investopedia. There’s good resources out there. We’re not all perfect, so don’t ever get too worried about the fact that I feel stupid asking this question or I don’t know if I’m using the right terminology. Most of us don’t use the right terminology probably in the grand scheme of things. So overall, really good question.

2:51
That is one that I think a lot of people deal with. I think a lot of people dealt with it last year. I think a lot of people who started trading in 2020, especially with the Wall Street bets craze and all the lockdowns, I think there was a lot of people who jumped into trading.

3:09
They felt like it was either rigged or just the odds or stack to get some of it. Or there’s no way that a common man or woman can make money in the stock market. And the whole purpose of the swing trade is not to simply give you this rah rah speech for swing trade. There’s things about longterm trading that I like and there’s things about swing trading that I like.

3:25
And there’s going to be years where your longterm investing will outperform your swing trade. And that’s OK because if. Long term trading always outperforms Swing trading or swing trading always outperformed long term trading. I would only do one or the other. I wouldn’t do the other if it was always predictable that you’ll always be able to beat the market swing trading.

3:41
Why would I do long term trading or why would I have a dividend income portfolio? Because there are going to be times where your long term investments do perform. That’s why it’s good to have different time frames and different strategies when it comes to trading. And it doesn’t mean necessarily have to have multiple strategies pertaining to swing trading but having dividend income and having long term investments.

4:01
In having a swing trading portfolio, and even for some people it might be also having a crypto portfolio or having a real estate portfolio, trading cards portfolio. There’s a lot of different ways to be able to spread yourself out a little bit to where you’re getting different streams and different kinds of streams of income.

4:18
But being 18 years old, you got a lot of time ahead of you. You got a lot of time to figure things out. One of the things that I would ask you to think about is that being an 18 year old here in 2023, you were born in 2005. Obviously 2005 and 2006, you’re not going to remember that much. And then in 2007, 2008 highly doubt you were interested in the market, but at that point in time you had a significant recession.

4:39
You probably read about it. You probably know a little bit about it as well. 2007, 2008, extreme correction. Now after that 2009 to like 2015, you had this zero interest rate policy that was very prevalent in the stock market, cost stocks to go way up and its effects continued on until about 2022.

4:57
When we saw our rule, first significant pullback going back to the Great Recession and now you’re seeing in 2023 where stocks have largely forgotten about the turmoil that 2022 was all about and you’re seeing a lot of your especially with big tech stocks going right back up to their all time highs.

5:13
So I think. In some ways it’s easy to say man, the stock market always goes up, especially if you’re 18 years old. Because what you’ve seen from really when when you’ve had a memory of the stock market and let’s say you started trading when you were four years old back in 2009, I doubt that was that’s the case. But let’s just say for argument’s sake, you went from 2004 all the way till last year when you were 17 years old, really not seeing any significant pullbacks.

5:36
You had a significant pullback and 2020 when all the everything got locked down and the economy started to crash, but. That only lasted like five or six weeks. By the time you start to realize, oh, this is a crappy economy, all of a sudden the bottom was in and everything started taking off. People were buying, you know, Royal Caribbean and and all the airline stocks and everything else trying to bottom hunt.

5:56
Before that in 2018 when you would have been, what would that be like, be like 13 or 14 years old? I started investing around 11 years old. So if you’re like 13 or 14 years old, yeah, you could probably have seen some of the craziness that was of. Quarter four in 2018 where the market essentially pulled back about 30% over the course of three months, October, December were nightmares.

6:16
But the market did bottom out in December when the Federal Reserve decided to abandon their policy of trying to raise rates and and sell off its assets. That was where you had to taper tantrum and so even that sell off, even though it was pretty extreme, it only lasted for a couple months and then 2019 the mortgages was right back off to the races until the next crisis in 2020.

6:37
So for most of your adult life and your teenage years, you really saw a market that was very conducive, the long term trading. But it’s not always going to be that way. When you go back to 2000 and you go into the 90s, we saw a very similar market where the market just went for an unfettered period of time, just completely retired.

6:54
It was an absolute moon shot with the.com era. And then that one started to Peter out back in March of 2000 and then we put the top in and then what you saw in the NASDAQ where it drops over 80%. And you saw significant pullbacks in the S&P 500, and you saw a market sell off for about 3 years before it finally bottomed out.

7:13
Take a lot of investors money with them and then if you were panicking and you sold at the bottom because you’re like, I can’t lose everything. And a lot of people did that. They bought at the top back in 2000 thinking that everybody’s going to be a day trader. They started buying in in 2000 and they saw all of their investments just go to crap.

7:32
By the time it finally bottomed down in 2003, which at that point they reached maximum pain and they sold out only to see the market start to put in the bottom and work its way back up. But when it started to work its way back up, what do you think the S&P 500 did? How long do you think it took for it to get back to its all time highs?

7:48
Well in 2008 it got back up to those all time highs that we’re seeing from 2000s dot com era but instead of really breaking through them and and starting a major expansion and price. For the S&P 500, it double topped in 2008 and came right back down again and so it would take the S&P 513 years to get back up to those 2000 highs.

8:11
So if you had never invested any more money after the dot com bubble and but you had stayed in the market the entire time, it would have taken you 13 years. Just get backed up to where your all time highs were. During the dot com bubble for the NASDAQ was even worse. It took 17 years. So you’re waiting almost 2 decades to get back to those brief all time highs.

8:30
Now in reality, if you’re consistently adding to your portfolio over the course of the time when the market finally peaked in 2000 and your dollar cost averaging, then, yeah, you’re adding to your portfolio over time. And you’re, you’re taking advantage of some good opportunities, especially in 2003, you’re taking advantage of those opportunities and you’re adding to the portfolio over time.

8:47
So it probably wouldn’t have taken you 17 years to make your money back, but that money that you had in the market. Up until 2000, never saw its true value until 17 years later from a buy and hold approach. Now, one thing that won’t take you 17 years to find value in is swingtradingthestockmarket.com.

9:04
You can also access it if you’re watching this on YouTube by just clicking the join button down below. You’ll get access to all my market research each and every day. Or just go to swingtradeinthe-stockmarket.com and you can get it all there as well. That’s going to give you access to all my research, which includes market updates.

9:21
Updates on the big tech stocks. We’re talking meta, Amazon, Apple, Netflix, NVIDIA, Google, Microsoft, Tesla. We’re also doing weekly bullish and bearish Master Watch list updates. Daily Watch lists the stocks that I’m specifically targeting for potential trade setups. So you’re getting all that plus additional videos as well as it pertains to swing trading, so check that out.

9:39
swingtradingthestockmarket.com or on YouTube. You can just click the join button. And let’s talk about, I’ve been a little bit negative on long term trading, but there’s some really good aspects of long term trading too. And the one of the things that I like about keeping my accounts separate from each other, I don’t like my swing trading portfolio in the same account as my long term accounts.

9:57
And I don’t like my dividends and the same accounts as my long terms either because they all have different objectives. Especially when you have different time frames and different ways that you’re generating the income, it makes sense to have them in different accounts. And one of the things I’ve noticed with long term trading over the years is that people, they want to try to find these home run plays.

10:14
They want to find these trades that, you know, maybe it’s a stock trading at $2.00, maybe it’s Rivian, or maybe it’s another electric vehicle stock. Or maybe it’s an AI company that’s trading at one or two bucks a share or maybe even on pennies on the dollar. And they hope that from over the course of the long term they’ll make a lot of money in it.

10:30
That might put $10,000 of their $20,000 account in it. Or maybe it’s only even 10% or 5%. Nonetheless, it’s a significant amount. But often times when they’re trading that low, it’s for a reason. And over the course of time, there’s a very good chance that they will not make any substantial amount of money.

10:48
Because by and large, stocks that are struggling financially, they have lower share prices, they don’t have a good balance sheet, they’re more inclined to fail over the long term. And so from a long term perspective, you’re holding the stock for multiple years. You may see that stock down 80 or 90%.

11:09
But what I like to do with my longterm, I really don’t try to find you know home run hits or stocks that I think that this is going to be a company that’s going to be big one day. Now I’m already looking for the big companies and what I want to do is I want to use my longterm account to take advantage of extreme sell offs in the market like 2022.

11:31
That gave me an opportunity to be able to get into some really good longterm investments like AMD at 59 and I slowly get into my just average in over time and then there was DraftKings got into that one in the single digits. And so there’s been really good opportunities when the market was selling off, especially in October and I probably could have added in a little bit earlier than what I did.

11:48
But nonetheless I was able to add some really good and long term investments to My Portfolio that I felt like would pan out to do very well over time. But now when the markets trading near all time highs or it’s just really trending higher, I’m probably not going to add new long term positions to My Portfolio.

12:08
I’m going to wait for another extreme pullback and so I wait for extreme market sell offs. Whether it’s over the course of a couple of months or a couple of weeks like what we saw in 2020 or 2018 or it’s over the course of a year like what we saw in 2022. Those are the times that I want to be adding to my long term positions.

12:28
Now I know some people like the dollar cost average and that’s fine too. I have nothing against that. But for me, I like to use the time when the markets rallying really hard and I already have my my positions that I’ve added when the market was lower. To raise some cash so that when the market does drop again, I have that cash available to be able to apply to new longterm positions.

12:48
Now on the swing trading standpoint, it’s a lot different as well because longterm it’s kind of hard to short a stock for the longterm. I mean, you got to be a pretty crappy company just to perpetually short it forever and without any significant rallies because it’s those dead cap bounces or even if it’s just a temporary rally, they can really squeeze you out of a short position.

13:07
But my longterm positions are always going to be long but swing trading. You have the opportunity to go short if you see fit, but I would say like 90% of the time you don’t need to be swing trading to the short side and maybe even 95% of the time. And I think one of my personal flaws when it comes to swing trading is I tend to want to short more, you know when when the market shows a little bit of weakness.

13:26
And so I can take a couple of unnecessary losses there and I don’t like that. And one of the probably the personal struggles that I have as a swing trader is that I can be a little bit more aggressive to the short side than I probably should be at times in terms of. Getting short too early now that’s something I’m actually trying to work on on a regular basis.

13:49
And right now, we’re not seeing that maybe that happens in the next few months, but you really got to be patient on let those tops develop themselves. You don’t have to get in right at the top. But like I said, swing trading does provide opportunities to make money in all kinds of markets, something that longterm investing doesn’t really provide them unless you just really hit it good with a particular stock.

14:08
And we talked a little bit about the history of the stock market from the 0 interest rate policy and from the dot com bubble to the the Great Recession in 2008. But I would also. Encourage you to think about the future.

14:27
There’s a movie that I really like. It’s the original Batman movie. Well, the original Batman movie. For me, a lot of people think they’ll say that The Dark Knight series was like the best Batman series. I’m personally think the first Batman. Not the ones that came after that with George Clooney and Val Kilmer playing Batman, but the Michael Keaton one.

14:43
That was to me my favorite Batman. There was a scene in that Batman where the Joker was was aiming a gun at this one guy and he told him, he said think about the future.

15:03
Because when you go down to zero, you really don’t have any further to go. You can go negative like what you saw some of the European countries go into, but that’s not really something that the United States has ever played with. And I don’t think it’s something they necessarily want to toy with either. And there’s still a lot of talk about a recession either in the second half of 2023 or sometime in 2024.

15:21
We’ve been talking about it possibly happened in the spring. It never happened. We talked about it happening in the winter. It didn’t happen, but it may never happen. Maybe we actually do get a soft landing. I doubt it. But if we see another recession, the likelihood is that we see another leg lower in the market and those longterm positions are going to lose value more than likely.

15:37
And in that sell off, there’s going to be opportunities like I was talking about before about trying to take advantage of some really good companies that are on the sale or on a discount. And then there’s also going to be swing trading opportunities to short the market on the way down. So your longterm and your swing trading, they can all be part of one big plan.

15:55
And that’s one of the things that I try to encourage people is that swing trading isn’t the only way to make. Profits in the market. But it’s really a good tool to use in conjunction with long term trading and with dividends. And if you want to get into real estate or crypto or collecting baseball cards, I mean there’s just so many ways.

16:11
Or if you have a side gig, you know and and you have a hustle on the side that you really enjoy doing and you can combine that with swing trading to make a little additional money or off of long term investing, that’s really a cool, awesome thing.

16:28
So in conclusion, long term trading, swing trading. There’s not necessarily one that’s better than the other. They both have their own benefits. Swing trading can make profits in all types of markets, but long term, if you can get in on the low end of some really good companies can make some extravagant profits for you over the course of many years.

16:45
But now long term can have some serious drawdowns, just like what we saw in the dot com. Just like what we just saw in 2022. You get on the wrong end of some trades or even on the indexes, like what we saw with the NASDAQ in 2000 where it dropped over 80%. You can spend decades trying to make that money back, but if you’re doing that in conjunction with taking advantage of some really good opportunities when you get those sell offs and also being able to take advantage of the market weakness through swing trading, then all these strategies work together and they create a pretty cool synergy for being able to build your portfolio in the long run.

17:18
If you enjoyed this podcast, that would encourage you to like and subscribe on YouTube, leave me a 5 star review on whatever platform you’re listening to. That would be one of the biggest favors that you can do for me. Also make sure to check out swingtradingthestockmarket.com or click join down below so you can check out all the market research that I provide people with each and every day and make sure to keep sending me your emails. ryan@shareplanner.com I do read them all and I’m trying to make episodes out of every single one of them so keep sending them to me.

17:44
Thank you guys and 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 seven day trial and access to my trading room including alerts via text, e-mail and WhatsApp.

18:04
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18:24
All the best to you and I look forward to trading with you soon.