Long Term Goals | Podcast Episode #451

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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.

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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.

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You can succeed at the stock market and I’m ready to show you how. Hey everybody, this is Ryan Mallory with shareplanner.com’s

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Swing Trading the Stock Market and today’s podcast episode. We’re going to be dealing with long term goals.

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I got an e-mail from a listener who’s gone through all my podcast episodes and has got some questions for me about long term goals as it pertains to swing trading.

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For this podcast, we are going to call her Lucille because we don’t use people’s real names. Instead, I try to give them a good traditional Florida redneck name.

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Being that I’m from Florida, always have been, good chance I always will be. So Lucille writes.

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Hi Ryan, I love the podcast. It took me a few months but I am finally up to date after starting at episode one.

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That’s like 450 episodes. That’s impressive.

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The foundational advice for a beginning trader such as myself has proved invaluable and I appreciate your practical and humble approach to an area that could be very volatile and unforgiving.

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That is certainly true. I joined the trading block almost two months ago and have been experimenting with setups that might

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work for me and have been journaling each trade with the entry and exit prices, stop losses, as well as the reasons I’ve gotten in or out of them.

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Lessons learned so far include don’t sell a position just because it’s going against you, make sure that it’s breaking the structure of the setup as a whole, and #2 it pays to wait a few minutes and

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research a setup if it appears. Don’t just jump into a trade right away if it matches your criteria.

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Got to tell you, I like the two points that she made right there and we’ll we’ll expand on that in a second.

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This world is fascinating to me and my goal is to be a successful part time trader working my job part time within a one year period.

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I have a full time job as a chef right now and a full time trader within two years. It seems these past two months are seasonally some of the toughest times for trading, so I am trying

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to be patient with my progress. And to be real with you, I am not sure how to measure it.

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The S&P 500 is up almost 5% since I started trading two months ago and my account is up .03% after 18 trades.

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Well, I’m grateful that I haven’t lost money and I know if I’m listening to your podcast that creating a spreadsheet for my future profits is not the way to go.

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I find myself at a loss for a practical path forward without being able to crunch some numbers. Maybe I’m being impatient, but how do you plan your personal finances?

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I know you have additional income coming in from the podcast, but how does paying the bills work for you?

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I have a side hustle and renting out properties I own but it’s not enough to cover everything. Does anyone actually support a family off of trading?

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What percentage return per month are you getting on average? Sorry to be blunt, I’m just trying to decide if this is right for me.

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I am really blessed to have a large trading account but I don’t know what I’m doing with it yet and would really like to make trading my full time job.

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Hope you can offer some advice kind regards Lucille.

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So there’s a lot to go over on this particular e-mail.

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First off, the the two points that she makes don’t sell a position just because it’s going against you.

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This is a hard thing not to do. You get a trade that’s going well for you.

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It’s up three days in a row and you get that one day where it it starts to decline. You’re like, oh, I need to get out of this thing.

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I what if it goes back to red? That that’s a hard feeling to suppress and I think a lot of traders struggle with it.

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I know I’ve struggled with it in, in the past and one of the things, and even still, even still the temptation to want to flee at times is, is strong.

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But one of the things that helps me out with that is taking partial profits along the way. So that, you know, during that three day period, if I’m up like 4 or 5% on the trade, I’ll book some

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of those profits. And a lot of that comes down to the reward risk factors of the trade as a whole where I’m, you know,

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taking some of those partial profits at. But when you take that initial 3rd of a position off, that’s usually what I start off with.

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Some people do a half, some people do a quarter, but for me it’s a third. When I take that initial 3rd off, I don’t necessarily like doing it at the moment.

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I’m like, man, what if this thing just keeps running? Because that’s, that’s what goes through.

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Everybody said how high can this stock go? But after I do that, there’s such a sense of relief.

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I I feel like a lot of the pressure is taking off because the chances of it being a profitable trade has skyrocketed just by taking that third of the position off because I’m reducing the risk, I’m

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taking some profits. In order for it to be an unprofitable trade, it would have to really go against me in order for that

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to happen. So taking partial profits along the way certainly helps to fight that need to have to sell a

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position just because it goes against you. And then she also says it pays to wait a few minutes and research has set up if it appears.

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Don’t just jump into the trade right away if it matches your criteria. I agree with that as as well.

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I think so often people rush into trades because they feel the need to have to get in at the lowest price possible.

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They see it trans like well what if it goes up from here? Well what if it does?

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Is there a ban on still being able to get into it? Does the moment that you discover that it’s a valid trade setup, only a valid trade setup at that

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particular price point, that somehow it’s not a good trade setup? If it goes up $0.10 after you notice it, you don’t have to get in right at that point.

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And that’s a psychological thing. It’s good to find a good trade setup, but you have to also ask yourself, is this the appropriate

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time for me to be executing that trade setup? Because if it’s a bear market in the markets going down and you’re finding a good bullish setup and

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you’re getting long on it, it may not work out in your favor there. You might be taking on an unnecessary loss.

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Now, you can have losses in a bull market for sure. But if it’s the market’s trending against you, why get into it?

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And so sometimes taking that time to think about, OK, this is a good trade setup, but does it make sense at this point in time to be getting along on it?

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And you have to be willing to pass up on good trade setups if that’s the case. Lucille also mentions that it these past two months are seasonally some of the toughest times for

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trading. I would agree.

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I don’t enjoy the summer months of trading all that much. I mean, I I trade through them obviously.

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Usually I have a vacation plan somewhere in there for like a week or so. But I don’t necessarily enjoy the summer months of trading because it’s such a low volume market.

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It can be very dull. The movements are very small, but over the course of the summer at least, I would say over the last

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10 years, most of your summers tend to be pretty good. You have that old expression, selling may go away.

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I wish they would just make the expression go away because there couldn’t be something any more

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misleading. Now what makes summer months at times very difficult is when you get a big batch of selling that

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comes in, you can have a massive dump in the market. You can see the share price drop 1 or 2% and then it steadily makes its way back up.

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And so those kinds of moments can be frustrating because it can run on your stop losses and take you

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out of the trade and then you just watch it melt right back up again. Summer months definitely are not the easiest they but they tend to be fairly bullish, at least over

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the last 10 years. From what I’ve noticed.

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Lucille is also up .03% across 18 trades over the past two months. During that time, the S&P is up 5%.

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She’s trying to figure out is that good? Should I be measuring it like that?

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I would say after 18 trades, I wouldn’t be measuring against the S&P 500. I think the fact that you’re at .03% is a good thing starting off and you’ve got a little bit of a

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profit to show for. It’s not much, but granted you’re not losing money.

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What would you rather be able to say? I’m down 10% or I’m up .03 percent, .03% going to get, you know, get you a toast at a cocktail

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party? No, but 10% to the downside, you might get some jaws to drop, but that’s not going to be the outcome

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you desire either. So .03% for your first 18 trades.

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I think it’s just good that you didn’t blow up the account because it’s very easy to jump into the stock market and really not realize.

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Especially like what she says, she’s got a pretty large trading account and it’s easy to get caught up and how much money you can make with that kind of account size.

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And so you start putting way too much money into it. And if you’ve had a couple of successful trades to start your trading journey off with, then you

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might be dealing with some overconfidence. The worst thing you can do as a new trader is to be overconfident.

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Even still to this day, I go into every trade realizing that it could blow up my account. Sometimes I will look at trades that kind of surprised me to the downside like Humana where it just

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recently took an 18% hit to the downside. And I, I will ask myself, it’s OK, if I was in that trade, how could I have avoided that?

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I’m not in the trade, I wasn’t in the trade, but I still try to role play some of those scenarios there. Could that have been avoided because every trade that I take has the potential to go

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against you in a big way. Stop losses are great, but there’s some elements to trading too that you can’t do anything about.

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If you’re in a stock and it’s trading at all time highs in the next day before the market opens, they announce that they’re going out of business or they’re filing bankruptcy or the CEO did

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something fraudulent, you don’t really have any power against that. So there is those cases.

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But that’s also why positioning and the position size that you take in a stock is so important because if something like that did happen,

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it wouldn’t necessarily ruin you. But good for Lucille here. She’s she’s at .03%, hasn’t blown up her account, only 18 trades in and she’s learning, she’s

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journaling what’s worked for her, what’s not worked for her, why she got into the trades. She’s gaining experience and that’s really what you want as new traders.

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There’s plenty of people out there and I’ve mentioned this a number of times in recent podcast episodes, but it’s worth mentioning again how often nowadays, and I, I see this oftentimes in

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bullish markets or markets where it seems like we’re never going to have a recession ever again. But these things tend to happen right before you get these recessions where you just have everybody

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selling a service. And I know I sell a service too, but it’s not like I’m a fly by the night person.

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I’ve been doing this since 2007, so I’ve seen my share of, of bear markets and so forth. But you get a lot of people, especially younger people.

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I shouldn’t say younger people like I’ve seen some older people too. I’ve seen people my age as well and even older than myself.

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They’ll tell you trading is easy. And every time I see that kind of an ad pop up, it’s like, oh, it’s so easy.

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You just make your money in the 1st 30 minutes. No, it’s not.

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And we shouldn’t expect it to become an easy, easy thing. Remember that old saying if it was easy, everybody would do it.

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It’s literally true. If it was easy, everybody would do it.

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Why was there so many traders in 2020 that were in the stock market? The same amount of people are not in the stock market as there was in 2020.

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It was because in 2020 everybody thought it was easy when you had the lock downs and everything started coming back and the stock market started coming back and people are getting their STEMI

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checks. They didn’t have their money, anything to spend on.

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And they heard from Joe down the street how they made all this money buying Royal Caribbean at $18.00 and they said, well, I’m going to do that too.

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And it just kept on rallying for a long time. It felt very easy.

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Those same people got wiped out when they got into the GameStop hype in 2021. Watching it go from 400 all the way down.

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I know they’ve had splits since then, but it went from like 400, you know, and dropped like what, 80–90% from there?

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So if it was easy, everybody would be in the stock market. But it’s not easy.

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It’s very frustrating at times, and it will test you to your core. So when I say be happy that you’re at .03%, is that going to pay for anything?

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Probably not. But again, you’re in the learning stages here.

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You’re not trying to get rich from the stock market. 18 trades in now comparing yourself to the S&P 500, I wouldn’t do that either.

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And here’s the reason why. There’s going to be times where you outperform even the most seasoned traders.

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There’ll be times where you outperform the S&P and there’ll be times where you beat the S&P. There’ll be times where the market’s just scorching higher and there’s really no way you can keep up

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with it unless you’re just going full tilt in your own portfolio and throwing risk out the window. But oftentimes where you make up a lot of that is when the market has a downturn because if the

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market pulls back 10% and you’re shorting the market or you’re in cash, you’re not taking that hit with the market.

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So there’s a huge level of catch up that’s taking place right there. And so just remember every moment you’re not supposed to be outperforming the S&P 500 every month,

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you’re not going to outperform the S&P 500 and there will be years where you don’t outperform the S&P 500.

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Is that ideal? No, but it’s a reality.

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It’s a reality because we’re humans and we’re not going to be perfect in our trading. Now when it comes to market performances, I find the bear markets for me personally and and other

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people will disagree because they have different strategies or approaches that they take with the market.

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But for me personally, bear markets are phenomenal because you have a lot of volatility there. You can do more with less.

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You don’t have to have like, you know, 100% allocation to the long side. You can be 10 or 20% allocated to the short side while the market’s falling and make a huge run

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because you’re benefiting from the higher volatility, for the higher price swings in the market. And so it’s not even just to the short side that you’re able to make money, but on those dead cat

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bounces provide unbelievable returns to the long side. And so even if you don’t even want to short the market in a bear market, the dead cat bounces

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provide incredible long setups. But you have to be careful. You have to still remain very disciplined with your risk management.

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You can’t just willy nilly and just like, oh, we have a green candle today, I’m going to go long. The market bottom is in because it doesn’t always play out that way.

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The summer months are dull. I’m not a big fan of them.

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I don’t like really the Christmas week or the last week of the trading year. Those tend to be a lot more fickly and a lot of outside influences that are affecting like

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tax harvesting and and so forth that can affect trades. Coming out of a bear market is also a phenomenal time because when that bottom gets put in, that’s

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where you see some of the biggest price gains of the new trend. Maturing markets, kind of like one that we’re in right now,

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they tend to get a lot more dull and boring as well because there’s just not as much movement on the daily charts.

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Last three weeks, for instance, very dull. You can’t get a lot of conviction out of the market.

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Yeah, you may not be falling, but you’re not getting intraday swings to the upside that really helped boost those swing trades of yours.

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And another thing that I would tell you about is swingtradingthestockmarket.com. Yes, this is my service that goes alongside of this podcast where you can get all my stock market

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research every single day from my daily watch list. I put a list of stocks that I’m looking to trade each and every day, plus my bullish and bearish

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master watch list that I curate all these trade setups from that I send out in the beginning of the week.

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And then on top of that, every afternoon I do a watch list review via video that I send out that tells you what I think is going on with these setups on the watch list, which once confirmed and so

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forth. Really a good feature plus you’re going to get updates on all the big tech stocks or mega caps like

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Eli Lilly, Tesla, NVIDIA, Apple, so forth and and that’s in video format too and you’re going to get stock market updates via video so really a cool feature that you can sign up for really cheap and it

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supports this podcast in the process. So how do you, how do you plan to be a trader?

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I think trying to go to a part time swing trader after one year of trading is going to be difficult. I think doing it after two years is going to be even more difficult.

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And again, my, my goal here is not to be necessarily inspirational and tell you that you can do it. And you know, you put your mind to it that it can happen. With the podcast here, one of my goals is

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to be as realistic and honest with you as possible because if I’m not doing it, there’s not a lot of other people out there that are willing to. A lot of other people will tell you, you can do this and

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you, you will do it. You just got to work hard at it.

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But there’s so many things that you have to see and experience in the stock market before you really get a feel for what it can truly do to you.

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Having been through numerous recessions now, you know, from 2008 in the dotcom bubble and 2020 and then the big pull backs in between all those.

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I have a lot more confidence heading into one of those that I’m going to be OK, that I know how to manage my portfolio in those times.

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But even still with trading, my returns are going to be different every year. My long term investing is going to be different every year.

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Even fixed income is different every year because I buy bills and I buy notes and bonds and I buy them with expirations in the near term.

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And for a while I’ve been able to make over 5 1/2 percent on those. But now those returns are dipping below 5% because the market has changed.

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And so the market’s always going to be different. The market’s not going to be the same year in and year out.

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I think it’s great to have side hustles and I’ve always talked about that because swing trading is going to have a lot of downtime.

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And if you’re not using that time, yes, you definitely want to use it for research and and so forth. And I use pretty much all mine on research.

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But if you have the time, you can do side hustles. And like you said in your e-mail, you have some rental properties that you’re able to take advantage

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of and that’s great. Doesn’t necessarily mean it has to bridge your entire income, and you would want swing trading to

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provide a lot of that for you as well. But going into it to feel that the only way you can be a successful trader is for it to provide you

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with all your income is not the right approach. So when you’re trying to plan your exit out of the culinary world as Lucille’s doing, think about,

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OK, what can that transition to? Yes, I want to become a swing trader.

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I want that to be a huge part of what I do with my time. But also, I know that you may go a week or two weeks without making a single trade because the

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market, it’s just not favorable for it. And I’ve done that before.

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Let me tell you, it’s slow. It’s very, very slow when that’s taking place because there’s not a lot of managing to do.

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You can be in cash for two weeks. Now, day trading is a little bit different, but I also think day trading is much, much more

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difficult to make a livelihood off of. Can you make money out of it?

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Absolutely. But you got to have a laser focus on the market.

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You got to be focused on it the whole time. And even then, you can over trade your account and cause a lot of problems for yourself. Now, Lucille’s smart for not using a spreadsheet to try to project her future profits because the market’s really unpredictable.

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You don’t know what it’s going to be from one day to the next. Generally you use technical analysis to project what you think it’s going to do.

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But when you try to equate that to profits, then you’re putting yourself in a position where you’re going to force trades that aren’t there because you’re like, oh crap, I’m short this week or I’m

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short this month or even short this year. I need to play some catch up.

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And what do you do? You start making trades that you probably shouldn’t be making.

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And Lucille knows this is because she’s listened to all the podcast and I’ve I’ve made that same comment before.

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But it’s worth for the people who haven’t heard the previous podcast to know that the spreadsheets can get you in a lot of trouble.

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I’ve done them before. And just from a personal experience, you start to alter your trading approach when you’re not

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meeting your expectations for what you should be bringing in each month. And then as a result, you’re imposing those expectations on the market that does not care about your

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goals or aspirations. So this was a good e-mail.

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I really enjoyed it. I enjoyed hearing about Lucille’s background and everything that she’s trying to do and and learn

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from. Send me more emails like that folks, ryan@shareplanner.com.

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I’d love to hear from you guys, love to hear the stories that you have the the background of your trading and and what your goals and aspirations are.

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And I can make a podcast out of it for you. This podcast thrives off of your e-mail, so keep sending them to me and make sure to leave me a

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five star review on whatever podcast platform you’re listening to. Those do mean the world to me.

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And check out swingtradingthestockmarket.com.

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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

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