Looking Back On Your Trades | Podcast Episode #452

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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 Swing Trading the Stock Market.

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In today’s episode, I have an e-mail for you from a guy. He’s a repeat writer to the show.

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Ask him about looking back on old trades and how do I gauge when to get out of a stock early? So that’s going to be the focus of this podcast episode.

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Like I always do, I give people a Florida redneck name being that I’m from Florida and I consider myself part redneck, not full-fledged redneck, but part redneck.

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So I’m going to give this guy the name Ricky Bobby. I don’t think Ricky Bobby was a Floridian, but it kind of goes along with the whole Florida redneck

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vibe. And you know, last podcast episode I did big Tom Callahan.

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So I’m maybe going along with these movie themes for a little bit here. Anyways, Ricky Bobby writes.

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Hey Ryan, writing to you again for some more advice on how to improve as a swing trader. I always hear traders saying that a trading journal, it’s extremely helpful to study and find where

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trades could have went wrong or to find where they were successful. I’m curious how to look back on those past trades and determine which ones were a bad trade and

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which ones were a good trade that went bad. For instance, I know that not every trade will work out as we intend to, but how do I grow as a

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trader to minimize the loss and avoid any bad trades? When studying trades, do I look at how it fits my trading strategy and how could I have minimized my

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risk by small profits or losses earlier on in the trade? Also on that topic, I’m curious what signals you take small profits or losses on.

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I know I’ve seen you take small profits if it breaks below the five day moving average, but what are some of the other signs that a trade may be reversing?

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Thank you again, Ricky Bobby. All right, that’s a good question, Ricky.

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Ricky Bobby. So looking back on one’s trades, I use a top down trading strategy.

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For those who’ve listened to the show for a while, know that I’ve I’ve mentioned that a bazillion times.

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I want to make sure that whatever stock that I get into that it aligns with the industry that I’m trading in and that the industry aligns with the sector that’s participating in the overall markets

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movement higher. That’s essentially the essence of the top down trading strategy.

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So when I look back at my past trades, I have that in mind. I have the top down trading strategy at the forefront of my thoughts because I want to look at how

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my timing of my trade pertains to the overall market. Because I think a lot of times our trades, when they don’t work against us, it’s often times because

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of the overall market conditions. I think you can have bad trades that turn out good because you happen to be trading in the direction

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of the market and good trades that turn out bad because you were trading against the market. And that could be a really frustrating thing, but it’s the reality of it.

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The overall market has a huge influence on individual stocks. So when I’m trading and I’m getting stopped out of a trade, for instance, it’s not so much was it a

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good trade or a bad trade. I feel like I’ve been doing it long enough now to where I’m, I’m pretty confident in like the trade

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setup that I’m doing that they’re quality trade setups. I mean, there, there could be outliers there where I was like, oh man, you know what I didn’t catch,

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you know, a particular level of resistance overhead or, you know, I didn’t draw the trend line as correctly as I would have liked.

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And that happens with trading and, and usually in hindsight you can spot that because you have a lot more price information to look back on because you have, you have the benefit of hindsight, right.

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So then what I’m really looking at is, was I getting in at a time where the market was going against me or was I understanding of what the overall market dynamics were?

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I think a lot of times when you look at it from that perspective, it’ll clear up a lot of your questions.

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So one thing that I would say, when you’re going back and looking at your past trades, how many trades did you take that we’re going against the overall direction of the market?

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Were you getting long on stocks when the market was pulling back? Now if you’re getting stopped out of trades where the market was increasing in value, where it was

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trending higher, let’s say there was a good series of higher highs and higher lows and yet you’re still getting stopped out.

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We’re at in that. Was it happening?

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Was the market maybe pulling back and creating a higher low? Yes, market still trending higher, but it could be, you know, having like a 5 day pullback or a

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choppy price action where it’s consolidating. And sometimes when the markets consolidating, individual stocks can struggle in those kinds of

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conditions. But let’s just say that the overall market was going up when you got into the stock.

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And if the success of the stock was hinged just completely on whether or not the market was going up or not, and you’re looking at your stock and it’s actually going down, then yet you have some

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questions to ask there. One of them would be is was the sector that I was trading in going up as well?

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And if the sector was going down, but the market was going up, well, then you probably had a sector influence that was influencing that trade to make it not work out in your favor.

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Or let’s say that the sector was OK. Well, what about the industry that you were trading in?

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Because often times you can have industries that are struggling within a sector that’s really hot. So you want to make sure you’re not just trading stocks within an industry that’s struggling.

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A lot of people look at that like with energy, they’ll see oils breaking out. They’ll see that the energy sector is rallying and they get themselves in the natural gas.

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They’re like, well, what the heck, It’s in the energy sector and it’s in one of the oil sectors. Well, it’s benefits primarily from natural gas, and natural gas stocks were not rallying.

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So I think it’s really important to look beyond the success of a stock just based off of what that stock did and compare it to what the overall market was doing because there’s a lot of outside

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influences that are impacting it. Now, if the stock goes down because it got downgraded, can you do anything about that?

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No, I had a stock this past week that got downgraded. JPMI was irritated as heck about it happened on Monday, the 1st day of the week.

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Like what a great way to start the week. Ryan, the JPM came out with a downgrade by Morgan Stanley.

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Thank you, Morgan Stanley. Jeez.

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But any case, I have a couple more stories about that trade too that will be able to incorporate into this podcast.

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But going into the JPM trade, did I know they were going to get downgraded? No, I didn’t know that.

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I didn’t have that. I mean, if I didn’t that, that would be insider information, which clearly nobody’s telling me their insider information.

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So that’s a circumstance that it’s a crappy outcome.

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I think I lost like 2% on that trade, but it’s not really something I have the ability to avoid. I mean, you get an downgrade, you’re just waking up to one of those, which is really like one of the

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worst things to wake up to in the morning.

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But also when I’m looking back on on trades, I really look a lot of times at where did I start getting into the rally at?

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And I, I often ask myself, should I have been buying stocks earlier than what I did?

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Was there signs that I should have picked up on? And maybe there wasn’t, maybe there was.

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But those are one that some of the questions I don’t care so much about, you know, was the stock that I got into a bad stock?

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Yes, I you can mismanage a stock trade, but I think the bigger questions are, is OK, did I take advantage of the rally as early as possible?

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Now I’m not talking about nailing the very bottom and getting in the first day of a new rally. I’m just saying when it becomes a little bit more obvious, did I get in early enough and when I

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should? Those are the kind of questions.

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Now when I’m getting out of a stock, did I get out? When I should?

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Did I hold on for too long? Was I trying to fight a market pullback and you know, you get a 2 door, three day pull back.

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Yeah, those things can happen. That doesn’t necessarily mean you have to get out of a stock just because the markets having a two

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or three day pull back. But if you start seeing like major levels of support getting violated and you’re still holding on to your stocks as they’re as they’re dropping and you’re losing the the profits that you had in the

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trade, that’s something different.

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And also what’s different swingtradingthestockmarket.com. swingtradingthestockmarket.com is going to give you all of my stock market research each and every day.

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With it, you’re going to get my daily watch list.

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This is a list of stocks that I’m looking to trade each and every day. I also provide a master watch list, a bullish and bearish master watch list that I send out at the

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beginning of each week. And that’s where I curate all my setups from.

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And then at the end of each day, I’m sending out a watch list review, not after the bell, but during regular trading hours.

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And with that, I’m telling you what I think about each one of the trade setups I took. What worked, what didn’t work?

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So check that out. swingtradingthestockmarket.com.

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They’ll take you to my SharePlanner website and it supports this podcast in the process. So I do appreciate that.

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You know, this past week we had a huge spike in oil and what I was looking for in oil looking looking at that particular sector.

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Should I have gone into that sector? And I looked at it multiple times throughout the week.

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And hindsight always provides you a little bit if you’re being honest with yourself, you can look at hindsight and and be able to figure out whether or not you should have gotten in or not.

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And I looked at at the energy sector broke out now for a long time, every single rally was being sold on energy.

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So there was a little bit of skepticism with the energy sector as well. I’m like, you know what, I’m not going to trust these, you know, two or three day rallies and and

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oil. And there was also a heavy declining trend line as well.

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But later in the week, energy did breakthrough that declining trend line and it did break out in a substantial way.

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So this is a prime example. It wasn’t even a trade that I took.

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But should I have gone into oil? So it’s something that I reflect on.

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Was there an opportunity for me to get long on it? And when I look back, no, there there really wasn’t.

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I know a lot of people played the oil, but every time I tried to play it, I could not get a reward to risk ratio that was in my favor.

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Oil stocks move fast when the price of oil is popping, the stocks are popping as well. And so by the time a lot of these stocks were breaking out, you were talking about 10 or 15% stop

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losses. There was just no chill.

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It was like a, you know, a three or four day rally that just went straight up. And so there there wasn’t good ways to manage risk.

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And so the way I wanted to the trade, it was through XLE. But even with XLE, the reward risk was in my favorite extremely overbought by the time it did

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breakthrough some of that resistance. So in a case like that, you know, being a little self reflective, I realize, OK, I shouldn’t have gotten into it.

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I did the right thing not getting into it.

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Now, that doesn’t mean that it won’t still go up another 1015%, but for me, the reward risk ratio wasn’t in my favorite to do.

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So now how do I look at my losses? One of the things I would look at is you need to look at the psychological ramifications of the

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trade. And when you’re looking at whether or not the stock trade that you made, whether it was unnecessary or necessary, ask yourself, was that trade based off of revenge like you had lost on that stock

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before? And you’re like, I’m going to make that money back. Well, that’s an unnecessary loss.

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And if you ended up making money on it was just a stupid trade that you got lucky on. And it’s not bad to get lucky.

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I mean, I love it when I get lucky on a stock. I talked about downgrades and it’s like you can’t do nothing about downgrades.

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I love it when a stock I have gets upgraded. Did I have it really any foresight into it getting upgraded?

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No, nobody does except the people making the upgrades, of course. But I do like it.

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So I mean, it’s, it’s good to get lucky too sometimes. Did you get into the trade because of FOMO?

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FOMO is is such a contagious thing. You see the market rally and you don’t feel like you have enough long exposure.

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So you start chasing after stocks that are already up five, six, 7% on the day. They’re well beyond, you know, an R3 pivot level or just extremely overbought.

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And so you start jumping into these trades. That would be an unnecessary loss if that was was the reason behind it.

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And what about the extent of the loss? How much did you lose versus how much you were expecting to lose going into it?

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Granted, you could have a news event that goes against you, gaps way below your stop loss, and you’re taking a much bigger loss than what you expected.

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That’s the reason why I stress position sizes because when that happens, you don’t want it to bury you or end you.

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So when that does happen, you can’t hold that against yourself. But did you ignore a stop loss?

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Did you lower the stop loss? That’s all signs of unnecessary losses or probably better put more than necessary loss in terms of

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what am I looking for when I’m getting out of the stock. Ricky Bobby has a lot of questions here.

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One of the things that I’m looking for is, is the candle. It’s candles aren’t a guarantee.

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I mean, you can get a nasty bearish engulfing candle pattern, but that doesn’t mean it’s going to continue selling off.

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I see bearish engulfing candle patterns, especially on the indices that just reverse higher back the next day.

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But it is a good sign if you’re starting to see them pop up, maybe a good reason to trim some of the profit off the top, maybe raise the stop loss a little bit.

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Another one is when you see like tiny bodies on the on the candles, like real small candle bodies, that’s the, the rectangular or you know, dashes, horizontal dashes depending on how small the body

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is. And then you start seeing the long upper shadows.

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That’s the line that’s protruding out of the candle body. When you start seeing those multiple, multiple times, you’re probably running into a little bit of a

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resistance somewhere there. So start looking on the chart.

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Is there some resistance there that I’m not aware of? If there is, take notice of it, react accordingly.

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I don’t like seeing multiple long shadows on my charts, especially like back-to-back to back. That starts to get me a little bit leery that there is a huge pocket of resistance or just a lot of

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sellers up there that are trying to get rid of their shares now. It’s easy to feel like you made a wrong decision.

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I talked about the JPM trade. That trade kind of annoyed me back on Monday.

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So I told you, you got downgraded. There’s a so short term rising trend line that it was holding on to, but there is also this little

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channel above it as well that started making me think that it was morphing into a bear flag pattern. And so you get the downgrade and it’s at two O 750.

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I think in the pre market somewhere around that area. Now I’ve seen enough downgrades to know that often times it leads to a much bigger wave of selling

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and it I wasn’t quite sure of whether or not it was just going to keep driving it lower. Well, I got out in the pre market and I’ve been doing that some here lately, but I’m not a fan of

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doing the pre market orders. But in this case I just, I had a good hunch that it wasn’t going to be at that same price level

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after the open. And sure enough it wasn’t.

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I think it gapped down to like 2O52O four somewhere around that area and I’m feeling pretty good. But then you know, the market was strong that day and the rest of the day that stock just kept going

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back up and went all the way back up the break even. So it was actually higher at the end of the day than where I sold it at in the pre market.

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You kind of feel stupid when you do that, but when you’re getting out of stock, it’s not just about that day.

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It’s about what the charts are telling you. So I mentioned that there was kind of a bear flag that was starting to form on the charts.

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Well, with that gap down, even at two O 7 in the pre market, it was confirming that pattern. It was making that pattern more likely.

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And so yes, it rallied back up to to break even at the end of the day, but you’re not getting out of it because of what it’s going to do just that day.

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You’re getting out of it because of what it’s likely to lead to down the road. And so if you give it time, often times you’ll find that the stock did end up going the direction

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you thought it would, just didn’t happen that day. In the days that followed, it did sell off more.

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So I was glad that I did get out of it. Another thing that I mentioned in oh, Ricky Bobby here, he he mentions it as well as the, the large

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body candles. You know, if we get a big red bodied candle and I’m trading to the long side, obviously I get a big

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massive candle that’s breaking below the five day moving average. And that stock had been previously, you know, riding up that five day moving average.

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Yeah, that’s usually a a a good sign to at least reduce my position size or go ahead and close it out all together.

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But when you’re also, and I’ll wrap this up with this, when you’re also looking at your trades, the trades that you took in the past, one of the things that I would not do is get caught up in like

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goofy analysis. I don’t know how other way to explain it, but I’ve seen some of the weirdest things in my trading

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career, especially in SharePlanner. I’ve seen some crazy takes on trades.

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It’s almost like card reading or something, like those people who, you know, that weird witchcraft card reading kind of stuff where they try to predict somebody’s future.

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It’s almost like to that level where they’re like reading cards or something where I’ll see like where people will say, hey, you know what?

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Every time I bought a stock at $10 and I got a cup and handle that confirmed after 3:00 PM in the afternoon, it turned into a winning trade.

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You’re starting to get into some kind of weird stuff there that I don’t know if there’s necessarily, I think it’s probably more coincidence than anything.

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Like I had one person one time that said that they always avoided any time I got on this pretty hot winning streak.

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Let’s say I got like five in a row. He would avoid the 6th trade every time.

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He’s like, oh, every time you, you get 5 in a row and on your 6 trade, it’s always a loser, you know?

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And then as soon as he did that, my 6 trade turned out to be my biggest winner.

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And he’s like, oh, why the heck? What was I thinking?

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I’ve seen people base their trades off of like what the moon’s doing, Like what if it’s a full moon or a Half Moon or whatever, You know, it’s positioning with the earth relative to the sun.

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I mean, I’ve seen some really weird stuff and I’ve not seen it actually work for people in the past.

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So I wouldn’t get too like goofy with the analytics and and try to make conclusions that aren’t really there because you got to remember like the market doesn’t care about about that analytics.

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You want to make sure that it’s based off of what you’re seeing with the market, with the sectors, with the industries, with the individual stocks and so forth.

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If you enjoyed this podcast episode, I would encourage you to leave me a five star review on whatever platform that you’re listening to me on.

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Check out Swing Trade in the-stockmarket.com as well. That helps to support the podcast.

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And don’t forget to write the show. I want to hear your stories.

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I’ve had some really good emails of late, so keep sending them to me. More than likely you will get a podcast episode.

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I would probably say less than 1% of the people who listen to these, actually way less. Probably like .1% of the people who listen to the podcast write the show.

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So there’s a very good chance that you’re going to get your own podcast episode. So let me hear your stories, tell me your background, tell me your stories, tell me your questions

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that you have and love to work something up for you here. Thank you guys and God bless.

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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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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.