Struggling to Gain Traction | Podcast Episode #370

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.

0:23
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, I’m going to talk about struggling to gain traction in the market. What do you do when you just can’t seem to get any direction out of the market to go in your favor?

0:44
At least, you know, you get into the stock, it goes against you. As soon as you go out of the stock thinking that it’s going to continue to run against you, it goes back up. That’s a really frustrating place to be in trading. And so that’s the focus of this podcast today. Now, I don’t like to use people’s real names or identities on this podcast, so I always give them a good Florida redneck name.

1:05
And in this episode, I’m gonna give this guy the name of Boone Thatcher. Boone Thatcher writes. Hi Ryan, my name is Boone and I live in Arizona. I’m 52 years old. I’m a software engineer for a large semiconductor company, and I plan on retiring in eight years when I’m 60 years old.

1:20
I’ve been fortunate enough to have a long career. Doing work that I love, but lately my mind has been restless and I’ve looked for mental stimulation outside of my core work. One of those areas I’ve started to explore is swing trading. This led me to your podcast and YouTube channel, which I’ve benefited from both greatly.

1:36
I really appreciate you sharing your years of experience and hard work and wisdom about the art of swing trading. When I started my career 25 years ago, I immediately began saving into a four O 1K. Over the years I’ve saved in the range of 7 to 12% and my company has matched between 5 to 10% depending on the company’s financial situation.

1:54
This was the single smartest financial decision I ever made because that fund has grown to around $800,000. By the time I retire, it should be around one and a half million, which should put me past the tipping point for continuous growth beyond what I need to spend in retirement. That’s the plan anyways. My point is that I have a good retirement plan and.

2:13
I don’t need to rely on swing trading income for that. I have an IRA separate from my 4 O 1K that I’m using for trading that has around $45,000 in it. I started trading in the beginning of August this year, which turns out to be bad timing. You could say that again. I literally started trading right when the bullish market turned at the end of July 5 weeks and now my head is spinning.

2:34
The market has gone down, up, sideways, and continues to just churn. I do my research and. I look at hundreds of charts. I pick a few good trading setups, buy some stocks, and then the overall market will lose 2 to 3% that week. It’s like my setups mean nothing and everything just gets carried away with the tide of the bigger market trend.

2:53
I’m trying to follow a top down trading strategy and focusing on the sectors that are trending well on industries in those sectors that are trading well, but it’s been frustrating to just get pushed around by the churn. Regardless, I’m looking for some perspective. That you bring with your years of experience.

3:08
To me right now as a new trader, the market just seems turbulent and unpredictable and I’m having difficulty gaining any traction. Does it ever get any easier to find some setups that work? Does the market calm down and behave more predictably during different periods of time?

3:24
Wondering what advice you may have for new traders who may only see the market sliding around and being so crazy. Hope this makes sense. Keep doing your thing. I think you’re a great man. Take care, Boone Thatcher. That’s a great e-mail, man. You kind of get a good idea of the struggles that he’s dealing with here.

3:40
He’s done a good job. He’s been contributing to his four O 1K for all these years. He’s been working a steady job at a good company, a semiconductor company, and he’s got some money on the site through an IRA. You get some tax benefits from having an IRA and and he’s been able to save up about $45,000 which he wants to do some trading on.

4:00
So now he gets into the market in July and he’s seen the market. Following the October bottom and struggled in December of last year thereafter and then in January here it just takes off. You know, you see things like NVIDIA go up. I don’t know, what was it like 200%.

4:16
Even more. I think Tesla, the same thing. Netflix, meta, Amazon, Apple, Google. I mean they just all have gone bonkers. So then you think that man, this market’s never gonna stop going up, It’s just going straight back to all time highs and then in August you get two months of hard selling?

4:34
And so then that selling leads to frustration, because here the guy just got in in the beginning of August and he hasn’t been able to turn a profit because every time he gets into something, it continues to work against him. Now I will say this, no matter how good of a trader you think you are or have become, you’re gonna have moments of difficulty in your trading.

4:52
You’re gonna go through periods where it just sucks. Sometimes it might last a month, sometimes it may last two or three months. And that’s not impossible to have happen. I don’t think 2023 has been easy by any means for trading. I think it’s been one of the hardest trading years that there’s been in my lifetime. And so I can sympathize with old Boone here and the difficulties that he’s struggling with.

5:11
One of the things, if you look at the NASDAQ 100 for instance, it looks like it’s hardly sold off as a result of the last two months. But one thing it’s definitely done. It has chopped around a lot. There’s been multiple reversals both higher and lower if you zoom out far enough.

5:27
And and This is why I think. Looking at stocks and ETFs and the sectors and the overall market from different time frames is important. You look at it from a weekly or from a monthly, it’s gonna look a whole lot different than a daily or an intraday.

5:47
Now whether or not that plays out or not is anybody’s guess, but a bull flag is simply consolidation on the daily chart. That might only be six or seven days, but. If you get a bull flag on a weekly chart, that could be six or seven weeks or if not, eight or nine weeks. And within those eight or nine weeks, you’re talking about a lot of time there spent chopping around in the market.

6:08
So it’s good to zoom out, look at the bigger picture. Because during those two months, yes, the the Russell has not been in a bull flag. Russell’s just gone completely S the S&P 500 has definitely struggled more than the NASDAQ 100.

6:25
The SP500, and much more so than the Russell 2000s because of the concentration of those top eight stocks. For those that don’t know what that is or who they are, it’s Apple, Amazon, Netflix, NVIDIA, Google, Meta, Microsoft and Tesla.

6:45
Between all of those, Apple alone is like 3 trillion. Microsoft’s like 2 1/2 trillion. You’ve got Google. That’s almost 2 trillion. It’s like 1.8 trillion I think. The point being is, is that NASDAQ is 100 stocks, S&P 500 is 500 stocks.

7:01
S&P 500 is a broader representation of of the 11 sectors S&P. Yeah, it has some staples in it like Costco, it has Pepsi I believe. But by and large, it’s your big tech companies like the companies I just mentioned or AMAT or MU, just the big, big tech companies and so.

7:22
When the big tech companies are doing good, they’re also pulling up a lot of your smaller, big tech companies as well. And the same goes for when it’s going down. And so the NASDAQ has handled its business much better this year than the rest of the sectors, much more than the S&P and far more than the Russell 2000.

7:39
And so it’s important to know what’s driving the market. He talks about using a top down trading strategy, but. What you don’t wanna do with the top down trading strategy is just focus on the sectors and say, OK, these are the sectors that are running pretty well. These are the trades that I’m gonna jump into.

8:03
I don’t really mean to sound too contradictory there, but it’s true. So much of trading is not trading at all. You’re not trading. You’re waiting. You’re being patient, waiting for the right setups and so.

8:20
If you’re trading 40 or 50 times as a swing trader, you get a chance that you’re struggling. If you traded 5 or 6 times, there’s a good chance that you used the opportunities that you had in very specific moments to be able to book some profits.

8:38
You can look at the SP500 and we’re definitely in a sideways market. You can look at the NASDAQ 100. We’re definitely trading sideways there as well. You wanna look at that and realize, OK, instead of trying to necessarily play the breakouts, there’s a good chance that I wanna be playing the balances, I’m gonna be playing the extremes.

8:54
So when we’re. Bouncing off the lower end of a channel band or off of a key support level following a pretty significant pull back, you want to be patiently waiting for that bounce now. The bounce usually comes on strong volume on a substantial, substantially fast price move. It’s not usually something that’s just plodding along.

9:11
Usually those are moments that get sold in the market. What you’re wanting to look for is a strong like, OK, people are covering their short positions, people are all of a sudden inspired to buy long positions and it’s happening off of extremely oversold conditions. You just look at some of the balancing that we’ve seen in late September into early October, it was off of very oversold conditions because the market had pulled back essentially for about two months.

9:35
And so finally we start to get that bounce and there was an opportunity to get long there. And now the market’s working off those oversold conditions. And we’re kind of back into this sideways malaise where the market’s flirting with the idea of pushing back to the downside again. But we’re not quite sure that’s actually gonna happen.

9:52
But the key is. Is to be fading moves in those kinds of situations. To be fading like the overbought conditions when you start to see the market fade again or don’t even worry about that, just try to play the oversold conditions, cuz trying to fade price moves to the upside by shorting it.

10:08
Those are much more difficult to do than trying to play the bounce, because eventually the market does bounce oversold conditions once they work themselves out. And the market starts to bounce again. You can get some good opportunities there. Another good opportunity is swingtradingthestockmarket.com.

10:25
With it, you’re gonna get all my stock market research each and every day. You’re gonna get multiple videos. I’m telling you, this stuff is good. It’s golden. And you’re gonna get bullish and bearish watch lists. Each week. My master watch lists and then daily watch lists too. You’re gonna get different stocks that I’m watching each day.

10:42
Handful of those. And then throughout the day, you’ll get some other videos on some trading ideas, some videos on on the big tech updates and on the market as a whole. So really good stuff that you’re missing out on if you’re not part of swingtradingthestockmarket.com. So remember, the more you trade in these kinds of conditions where it just feels like everything’s fading, everything is unable to get the follow through, the more difficult it becomes for you.

11:03
Trade less. That’s the best thing that you can do. Better to wait for the extremes. And then when you do get in a position, so for instance, in late September I got into meta and Microsoft trying to play the bounce meta. I made like 4.4% overall on the trade and Microsoft I made like 3.4%.

11:20
In both situations I was taking profits aggressively. I was booking them very quickly. I think my first profit was like 3% and 4% and then I closed it out at 6%. I wanted to take those profits very aggressively. I wasn’t trusting the market cuz I felt like we were in a daycap bounce.

11:36
In that aggressive profit taking isn’t necessarily something that I would do in a market that feels very bullish or in a sustained bullish trend. And when you play the extreme moves, you wanna make sure that you’re waiting for that initial move first. That doesn’t mean just like the first green candle you get long on. You wanna see where there’s some feverish short covering, some feverish buying people.

11:57
It looks like when you’re watching on the charts, man, suddenly people wanna get in. I haven’t seen this behavior out this market in weeks or months. It’s noticeable on the five minute charge when people start getting in, you start seeing some massive candles starting to form and you don’t have to be in a rush. You can let it play out for a little bit. Time is on your side.

12:13
A lot of these stocks have dropped 1015% if they rally 2 or 3% without you. It’s not the end of the world. And he also asks too, does it ever get easier as you get more experienced? In some ways it does. In some ways it’s still a challenge. I think one of the things is that the market’s constantly changing the narrative.

12:31
I think there’s a lot of things that don’t change. The greed, the fear, that kind of stuff never changes. The bubbles fed, they all act the same. Fed’s always going to be cowards. They’re always going to cut. When they say that they’re going to stay higher for longer. They’re always going to start raising rates.

12:46
When they say that, they’re not even thinking about thinking about raising rates until 20/23. Remember that that was from, I think it was 2020, where I think, yeah, I think it was 2020. the Fed chairman, Jerome Powell, says we’re not even thinking about thinking about raising rates until 2023.

13:02
Well. How far we’ve come because last year in 2022 we started raising rates. We didn’t even wait to start thinking about it. Apparently we just started doing it and we’ve continued throughout most of the 2023 raising rates. So that’s that’s an example. It’s like feds always going to be cowardly and never follow through on what they say they’re actually going to do.

13:20
Markets going to have cycles. I think that we’re in one of the longest cycles of all time here off of the 2008 lows. I mean, yes, you had a recession in 2020 with COVID with that lasted like. Five weeks before, the market just took off again and bottomed. So the narrative changes.

13:36
You might have a trade war that’s affecting the market. You might have Israel and Palestine that’s affecting the market, or you might have COVID that’s affecting the market, or AI. Those are things that are a changing narrative, something that’s new all the time. In the 90s it was the .com bubble.

13:51
Those things change. The behaviors of the market largely stays the same. I think there’s some things that you’ll see that comes about. Over the years, but usually those things still revert back to the old way of doing things. For instance, like the Zero DTE call buying never really a thing before.

14:07
Now it is and you can see where the markets are struggling to sell off because you have such a wave of people that are buying these same day call options contracts that are expiring and it’s creating delta squeezes. So to answer the question, yes, it gets easier in being able to recognize certain behaviors.

14:25
It can still be challenging to understand the narrative at times, but. You go through it enough, you start to learn a lot about your emotions, a lot about what you’re inclined to do, for better or for worse, and you guard yourself against those things. You start to realize that some things do really work well in preventing substantial losses, like stop losses, like managing the risk.

14:45
And if you enjoyed this podcast episode, I would encourage you to leave me a 5 star review. I really do appreciate those. Leave me one of those reviews to tell me what you think about the show. Hopefully it’s only good things and keep sending me your questions. Keep sending me. Your stories. I love hearing about the stories I’m telling you.

15:01
I read every one of them. I want to make a podcast episode out of your story, so send them to me. I’m telling you, if you’re having a question, there’s thousands of others out there right now having the same question. So it would be beneficial to the community if you ask me this question. And make sure to check out swingtradingthestockmarket.com.

15:18
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.

15:34
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15:53
If you have any questions, please feel free to e-mail me at ryan@shareplanner.com. All the best to you and I look forward to trading with you soon.