Looking For Trades In All The Wrong Places | Podcast Episode #107

0:00
Hey, everybody, this is Ryan Mallory with Swing Trading the Stock Market. And today we’re doing the email that I received last week from the truck driver. I gave you a little bit of a preview about it, how this guy literally listened to 105 episodes in 3 days.

0:15
Guys, if you write me an email and saying, hey, I listened to 105 episodes in 3 days, I’m probably going to give you some airtime because that’s pretty awesome, man. I don’t think I could handle listening to myself for 10.5 days. I’m shocked that this guy was able to pull it off. Anyways, I wonder if that’s a world record too. 105 podcast episodes in 3 days.

0:34
There ain’t a lot of people that can say they did that. Granted, mine are a little bit shorter than per se, like Joe Rogan, but still 105 episodes, that’s pretty impressive. I’m also drinking, let’s see, what do I got on the table here today. I got this the other day from Total Wine. Again, this is not a product placement, not at all.

0:50
I just like to tell you about what kind of bourbon I’m drinking. This is a single barrel from Hancock’s President’s Reserve. It’s a bourbon whiskey. I like it, man, it’s pretty good. I think the proof is 88.9%. So what is that about, a little less than 45% alcohol.

1:09
Good drink though, I mean, I like it. I’m drinking it neat, I’m not putting ice in it. When I was there, I just said, hey, I’m kind of bored here, can you guys give me something that you guys are fancying? And they said, hey, try this Hancock’s Reserve. And so I tried it and it’s been pretty good.

1:24
So, you know, I think the price point on it was $45. I can’t remember exactly what the price was, maybe it was $60, I don’t know, but it was somewhere between $45 and $60. But in any case, enough about that.

1:39
We’re talking about Bobby Joe here today. Is Bobby Joe’s real name? No. I just like giving people a fake name just in case. I don’t know if you want to use my name. He actually said, I don’t care if you use my name, but I don’t want down the road somebody to look him up or give him a problem or maybe there’s unforeseen consequences of using his real name, so I’m not gonna do that.

1:58
So Bobby Joe is a truck driver for the Northern Slope in Alaska, right? He says, I found your podcast and my thinking has been transformed. That’s kind of cool. I mean, it kind of makes me nervous a little bit because, you know, I’m not sure I have that kind of an impact.

2:13
But anyways, I started with the latest, went back 10 episodes, and then jumped all in and listened to every single one of them in 3 days. I drive a truck on the Northern Slope of Alaska for 12 hours a day with plenty of time to listen. I’ve listened to your last two podcasts, the one about the pilot and the other about the doctor. I was invited into Robinhood by my brother for the free stock.

2:30
Man, it’s that damn free stock, right? Everybody gets suckered into it. It’s like one share of a random stock, right? But everybody gets into it and then everybody gets other people to get it so they can get it. I mean, it’s just crazy. I could care less about one free stock. I mean, they’re probably gonna give me, if I do it, like a 50-cent stock that goes bankrupt next week.

2:47
I was invited by Robinhood by my brother, talked about that, though it was cool, it was too easy to make bad trades. Exactly. People think I’m just a Robinhood bro hater, right? I’m not a Robinhood bro hater. I don’t like the Robinhood platform because they’ve glamorized it too much.

3:02
And it’s fun to be excited about trading stocks and to wish it was open on the weekends. I personally don’t, but I hear a lot of you guys do. I need a break from it. Weekends give me a break. I love the holidays because it gives me a little bit of an extra break. But it does, it glamorizes it and I don’t think a lot of people are taking the time to make trades.

3:20
They go and they say, hey, what’s up today? Oh, Ford’s up. I’m gonna go buy that. What’s down today? Oh, Ford’s down, I’m gonna sell that. They just, it’s just like hyperventilating. I’m not saying that’s the case with every single one of you guys out there, but there’s a lot of you guys out there that just press some buttons.

3:36
Press some buttons. And, yeah, I mean, the market makes it feel like you can get away with that forever, and the market’s going to give you a rude awakening at some point. And the reason why I say that it’s going to give you a rude awakening, it always gives everybody a rude awakening. OK? That’s why I’m a little bit cautious on this market right now because I know the kind of hell that this thing can unleash on people.

3:56
So he says, I used it for a couple months, got super lucky buying ConocoPhillips at 26 and ERI before the merger at 25, I think. Made some good coin. I also made some serious rookie mistakes like letting all my profits slip away because until I came across your podcast, I had no idea about stop sales or stop losses, as I like to call them.

4:14
Anyways, I lost like $500 and I realized I knew absolutely nothing about it and was just gambling. Exactly. This guy gets it. Bobby Joe gets it. Bobby Joe gets that if you’re not going into the trade with a plan and a reason of why you would get out of a stock that doesn’t work against you, you’re just gambling.

4:31
You’re just gambling your money away. You’re better off just making a fun trip out of Vegas if you’re gonna do that. You gotta play your trade out. You gotta know where you’re gonna get out before you ever get in. If the trade goes against you, always assume that the trade’s gonna go against you. I got into ABGO today. I assume that I’m going to be wrong on it.

4:47
I got into Twitter last week. I assumed that I’m going to be wrong on it. That’s why I have stop losses. That’s why I always know where I’m going to get out before I ever get in. And right now, I’ve been frustrated as hell with SDS. That’s the 2X Ultra S&P 500.

5:03
I swear I think I’ve traded this thing four times in the last like three or four days or trading sessions. And why is because every time the market starts showing a break, I’ve been adding this position because I think we’re on the cusp of a breakdown here. But then every time we start to break down, the Robinhood bros, the algos, everybody just gets like Jojo the clown and loses their mind and starts buying the dip again.

5:23
And then I’m like getting out. I’m not taking big losses on it, I’m not taking big losses at all. I’m taking small losses on them. But still, I just kind of get annoyed because I just feel like I’m just throwing a little bit of capital down the tubes by trying to make this play. And right now I’m in it too. I mean, I got sucked right back into it.

5:43
And again, I have a place where I’m gonna get out before I ever got into the trade. So I know if this trade goes wrong, and it very well could, I will get out at X price. In fact, you know what, I’ll tell you that. I got in at 16.27 on SDS on August 11th, 2020 for those listening 300 years into the future and just discovered this podcast and find that it’s still relevant 300 years into the future just as it is now.

6:01
But any case, you can go look back up and say, yeah, OK. So I got in at 16.27 on August 11th, 2020. I have a stop loss at 15.95. So we’ll see, we’ll see what happens here. So far I’m like break even, maybe a little bit up on the trade, so we’ll see how it plays out, guys.

6:21
But anyways, Bobby Joe here, he had some good trades, you know, he got in the COP at 26 ERI before they got into this merger at 25. That’s fantastic, man. I like everything I hear about that. But I would also say too, it’s like, OK, I like the fact that he said I got lucky because it’s a good way to stay humble about the stock market when you just look at it as luck that you made profits.

6:43
I mean, I do, trust me, I never look at a trade as being something special that I did. I just said, you know, good, it worked out for me. Yes, I use technical analysis and a lot of experience to decipher what the charts were trying to tell me, but in the end, I just assumed luck got me the profits.

7:01
And yes, I’ve made a history of making profits, but I still just consider it luck. But now if I’m wrong on the trade, that’s not luck. That’s just I got stopped out of the trade. My fault. Maybe I should give myself more credit, but I really don’t.

7:23
But I would also say too, OK, if he made some money off COP and ERI, were they good trades or were they just basically bad trades that you made a profit off of? Because you can have bad trades and still make a profit. And what would be a perfect example of just what I said, you get into a trade and you have no idea where you’re gonna get out if the trade goes against you. You just happen to make a profit on the trade. That doesn’t make it a good trade. It’s still a poorly designed trade that you just happen to get profitable off of. The problem is, a lot of people think that that’s a legitimate trading strategy of making crappy trades and thinking that it’s OK to make a profit off of it and that it can be sustained over the long term, and it can’t.

7:45
He says, I also made some serious rookie mistakes. I talked about that already about letting all the profits slip away. Until I came across your podcast, I lost like $500 and then realized I absolutely knew nothing. Chat rooms, message boards, forums. There was my experience with pump and dumps, although I had no idea at the time.

8:02
I do now. I needed change. I started by opening a Schwab account, which is much better than Robinhood, guys. OK, I don’t think they’re trying to glamorize the whole trading thing, though they may do that eventually at some point, but I don’t think they do that now. And he says opening the account was easy because I already had a 401k with them.

8:19
Harder to learn at first, but I managed to get my Robinhood account transferred over. Have you ever noticed that it’s always hard to transfer your portfolio over to a different one? I think they try to make it difficult. I kept the Robinhood for the buy-ask feature. I’m not sure what that is because everything has a buy-ask feature. And he says again, started buying crap and realized it was me who needed to change.

8:39
You were the catalyst, the fire, the motivation I needed. I started poking around Schwab and started finding all these neat tools. No idea how to use them, but cool nonetheless. So after listening to all of your podcasts, it occurred to me, I suffered from FOMO, which is the fear of missing out. Robinhood bro syndrome, yes, I think you own that phrase now, which I do.

8:56
Well, I don’t technically, but come on. I think I’m the only one that’s really throwing it around in a podcast and YouTube videos. And I have a shirt that you can go to teespring.com/stores/shareplanner, and you can get the Robinhood T-shirt. Stupidity, pride, he also said he suffered from, and most importantly, emotionally tied to each stock I bought.

9:15
Guys, a lot to digest there. The FOMO, the Robinhood bro syndrome, stupidity pride, and most importantly, emotionally tied to each stock. I would say that last one is what really gets a lot of people in some bad trouble being emotionally tied to each stock. I’ve been emotionally tied to a stock before. I mean, I had to break that habit, but I’ve been emotionally tied, especially early on in trading.

9:33
I didn’t want to sell anything. I just wanted to believe these things will go up and that I didn’t have to take a loss. There’s a blow to the ego when you start trading about taking a loss. The longer you do it and the more trades that you take a loss on, it’s not that big of a deal. You just take a loss, you go on to the next trade. I would say nowadays, there’s very little difference to me between a winning trade and a losing trade in terms of how it affects my psyche.

9:55
Yeah, I mean, if I keep on losing on trade after trade, or a trade, I told you I was kind of annoyed by SDS because it’s just kind of annoying me. But overall, I don’t feel a lot of emotional pain from losing trades. I’ve seen people who have subscribed to the Trading Block, they become very emotional, especially if I happen to have a couple of losing trades in a row.

10:13
I’ve seen them get very emotional about that. I have one person that would always text me and tell me how awful of a trader I was, but yet she stayed in the service for four to five years. She would text me that every time I had like a losing trade practically.

10:28
She was a nutcase. We’ll call her Karen, right? That’s the only mention I’ll give her. We’ll call her Karen. In any case, this guy, he suffered from the FOMO. That’s a big deal. That’s a big deal right now. I did a video on Apple last week and it was crazy, the amount of hysteria that I created with some of these people.

10:48
Some of their comments were just off the charts. They’re trying to tell me that after the split it’s going right back up to $440 and I’m like, no, it’s not going back up to an $8 trillion market cap right afterward. I mean, it’s crazy. People don’t grasp what $8 trillion market cap means. That would make it four times more valuable than the richest company that has ever been in existence.

11:07
Other people say, well, they’re splitting the stock because they’re wanting to raise capital to compete with SpaceX. And no, they’re not. The only people who benefit from the stock going up are shareholders, not Apple. And then the other thing was that a stock split actually raises capital.

11:23
It doesn’t do that either. Guys, I mean, I’m just perplexed because people put these opinions out there like they are fact. And if you tell them they’re wrong, they call you a clown for it. I’m like, no, giving you facts does not make me a clown. But in any case, the title of this podcast is Looking for Trades in All the Wrong Places.

11:39
And so I think that Bobby Joe here or was it Billy Joe? I’m not sure. I’m just gonna say it’s Bobby Joe now. Maybe it was Billy Joe before, but I think it’s Bobby Joe. He makes a couple of comments here later on, and it’s a long email, so I’m not going to use the whole thing here.

11:57
And some of it’s not relevant to a podcast, but he says that he has bought and sold these stocks like OZSC and TLSS. I’m not familiar with these. I’m not even sure I’ve ever traded them before. Not much, but enough that I was bummed I lost out because they dropped 50% overnight.

12:13
Yikes. I’m keeping the TLSS to constantly remind myself not to make that mistake again. Call it a rite of passage. Oh, by the way, I’m 52, never too late to learn. He said that every night I fire up the screener on Schwab and start looking for at least four trade setups for the next day.

12:33
First of all, I would say don’t try to just find four trade setups that you have to trade the next day or that you need to trade. A lot of people get into that mistake that they have to trade every day. I’ve gone over two weeks sometimes very rarely two weeks but I can go a long period of time and not make a single trade.

12:48
If the market’s not giving me a good reason to trade or good conditions to want to add more exposure to the market, I’m not going to do it. I don’t care if there’s good trade setups out there or not. I pass up good trade setups all the time because I’m not quite sure about what the market’s trying to do, and it usually proves out to be a good decision.

13:07
But if there’s ten good trade setups, follow ten good trade setups. I mean, it’s kind of harder to follow 100 trade setups or whatever, but ten trade setups are pretty much easy to follow. And remember this too, just because they trigger, and I’ve done articles on this, doesn’t mean you have to buy them.

13:28
If the market’s selling off and you have a stock that goes up and triggers, it doesn’t mean you have to go ahead and buy it. But be careful about thinking that you’ve got to find four trades for the next day because that’s what you want to trade every day because some days you’re not gonna have any reason to trade a stock at all, and you don’t want to trade them even if they’re breaking out, because so much of a trade is influenced by what the overall market’s doing.

13:48
So if the market’s selling off and you’re going to go ahead and get in at like 9:30 on a trade that’s breaking out, you could see the rest of the day result in a stock selling off the entire time. But it looks like this guy, he’s using stop losses. He says the last two weeks he’s had four trades fail, and two of those were FOMO trades that he had jumped into, but he said his stop losses are what saved him.

14:10
He’s doing good portfolio management. He’s decided, OK, I’m only going to trade with 5% or less in my portfolio for each trade. That’s good too. One of the cool things about commissionless trading that we’re seeing in the stock market right now is it allows everybody to get in. If you have a few hundred or a few thousand or a few hundred thousand, you can all jump in and play, and you don’t have to be penalized for taking trades or getting in and out of them.

14:33
You just got to make sure if you’re under $25,000 that you don’t fall for the whole day trading pattern flag, which is kind of stupid. You should be allowed to do whatever you want with your money, but apparently the SEC doesn’t agree with that. But what I am a little bit nervous about here with what this guy has talked about in his email, when he talks about some of the other trades, YEXT, FANE, URNL, NDC, PSO.

14:56
I’m gonna be honest, I haven’t heard of most of these. So I’m a little bit concerned that maybe he’s getting into some trades that are just low-dollar stocks and because he wants to trade with more shares that he’s getting into them. Don’t do that. You can get fractional shares now. So if Amazon has a better trade setup than a stock like Ford that’s trading at like $7 or $8, don’t choose Ford just because it has a lower share price.

15:14
You don’t want to be one of those people that do that because that usually doesn’t play out well. It’s OK now to get fractional shares. Anyways, he goes on to tell me, you know, great, great podcast, you know, I’m gonna start watching your YouTube videos next, simple advice. And that’s really what I’m trying to do. I’m trying to talk simple here because I need it to be simple for myself in order for me to succeed in the stock market, it has to be simple for myself.

15:31
If it’s not simple for myself, it’s not worth doing. So for all you guys, I want it to be simple too, because it doesn’t have to be complicated in order to make profits in the stock market. So the takeaways from here, don’t look for trades that are in the wrong places. And I feel like the one thing I would tell this guy here, I think he’s looking for trades in all the wrong places.

15:51
I think that especially if you’re new to trading, it doesn’t hurt to start off trading like just S&P 500 companies or NASDAQ 100 companies or stocks in the Dow or just all three of them combined. So that way you’re trading more legitimate stocks that aren’t going to go crazy, like he talked about at one point, he saw a stock that he was in drop 50% overnight.

16:17
Yes, that can happen in S&P 500 or Nasdaq 100 stocks as well. Very rarely do they happen though. So you’re able to get a better handle on the stock market. Yes, a lot of these stocks don’t go up a bazillion percent a day like these penny stocks do. However, if you’re going to make it in the long term in the stock market, most of my trades come from the NASDAQ 100, Dow, or the S&P 500, or some of the bigger market caps from the Russell 2000.

16:33
So make sure that you’re not looking for trades in all the wrong places. Yes, that’s a rip-off of some 80s song, I think, “Looking for Love in All the Wrong Places.” But yes, don’t look for trades in the wrong places. If you’re new to trading, try to stick with some of the more S&P 500, NDX.

16:54
If anything, go for stocks that have a market cap of like one or two billion dollars or higher. I’m not going to trade less than a billion-dollar market cap. Sometimes I will if it’s like 800 or 900 million, but not usually. And also, go back to your trades and make sure that your profitable trades were also good trades and not just trades where you threw risk to the wind but still managed to make a profit somehow off of them.

17:10
Make sure that you were going into them with good risk-reward setups and that you actually had a plan before you ever got into them, because if you didn’t, then you just basically rolled red or black at a casino table and happened to win. I want you to get out of that mindset. I want you to focus more on risk-reward.

17:26
That’s where the profits come from how you manage risk. It doesn’t come from how you get lucky and make a big profit off of the trade. It’s how you manage risk, because if you keep the losses small, the profits will take care of themselves. If you manage the risk, the profits will take care of themselves, OK? That’s gonna be it for today. Thank you. God bless.