One Bad Trade | Podcast Episode #130

0:07
Hey, I’m Ryan Mallory and this is my Swing Trading the Stock Market podcast. I’m here to teach you how to trade in a complex ever-changing, world of Finance, learn what it means to, trade profitably, and consistently managing risk, avoiding the pitfalls of trading. And most importantly, to let those winners run wild, you can succeed at the stock market and I’m ready to show you how?

0:29
Hey, everybody, this is Ryan Mallory with Swing Trading the Stock Market, and I got a good episode for you guys today. So previous episode, we talked about having a good history of trading decisions. This episode. We’re talking about how one bad trade can ruin a good history of trading decisions.

0:48
This isn’t from an actual email. This is actually from somebody. I know a close friend of mine and he’s always email me, or text me or call me, you know, about the stock market especially when you know things get a little bit hairy out there. He’s like, hey Ryan, what’s going on in the market here, man. This is a time to be buying is the time to be selling.

1:04
What do I do? And Always really interested, he likes to know what I’m doing. I’m gonna call him Silas, that’s going to be his name for this episode. I’m not gonna use his real name, but Silas is good old Florida. Boy named will use that for this particular episode and he is the ultimate Robin Hood, bro.

1:19
Not from the rastan silly, go up kind of thing. But just the mentality of, I cants a losing trade. I can’t get rid of a losing trade, that’s the Hallmark of a bad Trader. You have to be willing to get out of your bad traits.

1:35
And it’s really not a bad trade unless you let them to become a bad trade. When you let a losing trade, become a bad trade, that’s when you’re up a creek, losing trades aren’t always bad traits. Sometimes you can manage them really good, and that’s actually a good trade may not be a winning trade, but it can still be a good trade. I’ve had plenty of good losing trades.

1:52
I have losing trades all the time that are good and it’s the Hallmark of managing the risk. Knowing when the charts, tell you to get out to get out following your stop losses using risk reward and just really not being biased. That particular Charter that particular stock.

2:08
I also think to we get a little bit giddy about certain stocks we get giddy about Tesla, we get giddy about Neo we get giddy about Facebook or Amazon or apple or any of the things stocks when in reality a chart to chart a chart is going to tell you one thing it’s going to tell you it’s bullets going to tell you Bears you’re going to tell you it’s neutral.

2:25
But we start attaching these feelings with like a Tesla stock or would like an Amazon stock or Peloton or one of those solar stocks out there. It’s human nature to feel like a sense, Of attachment to particular stocks. And and I’m guilty of it too. Their stocks that I feel a little bit more interested in than others.

2:43
No doubt about it. But I have to let the charts through the talking for me. If I’m going to trade it, the charts need to show me that I need to trade it. So I receive a text from Silas the other day. And, you know, it goes back to probably a few months ago when the market was showing a little bit of a top.

2:58
Enos a short-term top, Enos it didn’t play itself out. It had a little bit of weakness, But ultimately, as we know the market went back up to all-time Highs. But in the process, I started shorting the market through some inverse ETFs, right? So I got an sh on the long side when I say shorting the market it’s really I’m using the inverse ETFs to do that so I got into sh and he at that time is hey what are you buying?

3:18
I seldom sh ago. I got to get into some of that too. I got to get in some of that. So he did he was like hey You told me when you get out of it and I said, yeah, I’ll tell you when I get out of it. And so I did tell him when I got out of it I actually traded it. Multiple times, some four wins some for losses. It wasn’t an easy trade by any means, but I ultimately got out the last trade for a loss.

3:35
I received a text from the other day is like, man, I’m screwed for holding sh well, yeah, you are because you continue to hold it, man. You can’t do that stuff. You got to go into the trade with an exit Point, especially if you’re short, man, markets, historically, are going to go back up and then he asks me, what do you think about getting on that MFA train?

3:51
No, psycho boy, you know? Oh, this is like a sub 10 dollar stock. It’s a extremely volatile. It was insanely volatile during the March April time period, but he asked me that. And I told him, I said, me personally, I don’t trade stocks under ten dollars. He says, give me a good one to look at I said, look at my face.

4:07
Riley nicely of late, but you have to play in trades out before you get in them. You just can’t go into him blindly. And I told him it’s like I don’t have any that I’m getting into today and how it’s true. I did, I said, I had previously gotten into Halliburton and it’s rocking today, sold a third of my position, you know, when I was writing that particular text and then you wrote me, Can he says I’m a 22 trades.

4:24
This year. 21 were winners. One loser. Sh I don’t know what to tell me. It’s not about the win ratio. I mean, when ratio is important, but if you’re not managing the risk, the one ratio means nothing. Absolutely nothing because here he is, he said, 22 traits. 21 of them are winners, but one of our losses and you want to know why he’s got so many wonders.

4:40
He won’t sell losing trades long. As I’ve known, this guy will not sell a losing trade and, you know, he’s got, he’s got this sh trade and he’s losing big on it. He wanted me to tell him when I was getting out. I told him, hey, I got out of it today, right? He didn’t want to hold the Stock forever. If it went out, that was his plan. But then once it came to the point of where he had to admit that he was going to lose on the trade, he couldn’t get out.

5:00
Why? Because he couldn’t admit defeat. And a lot of times it’s like this, with athletes. When it comes to trading, they are so bent on winning and he’s a good athlete. He comes from a family of athletes. But so often times when you’re hell bent on winning and life and were in sports, you try to take that same mentality into the stock market, and you just can’t do that and sports.

5:19
There’s really no reason to ever be willing to lose to fight. Out to the end. But in the stock market that’s going to kill you because there’s no like into the clock. It’s not like okay you lost in that trade will have a fresh game for you tomorrow. You start back from scratch. No, there’s not a season, there’s not a game.

5:35
There’s not a quarter, you hold onto a losing trade and there’s a good chance. If you don’t sell it, you’re going to just keep on losing and losing and losing and losing. And it’s that one trade that can wipe out a whole history of good trades. Before I go any further, I want to tell you real quick about swing trading the stock market. This is one of the means of which supports this podcast and it’s where I Provide you with all of my market research that I do every single day.

5:56
I’m talking about multiple updates on the stock market. Each week, I’m talking about updates. Each week on the all the Fang stocks that’s Facebook. Amazon Apple Netflix, Google Tesla, Microsoft, also providing my personal watch list. I’m providing you with my daily setups that I’m looking at.

6:13
I’m also going to provide the most interesting charts that I come across each and every day. If I find it interesting chart that I say, okay, maybe there’s a set up here. This is something that you want to be watching. Going forward, pay close attention to, I’m going to put it out. For you, but that’s through swingtradingthestockmarket.com, and help support this podcast, and appreciate it. If you go check it out and see what you think now back to Silas are as long as I’ve known him as being a Trader in the stock market.

6:33
And it’s not as full time job, thank goodness. He’s always bragging about how he’s never had a losing trade. And you know what it’s funny is he’s correct, but he couldn’t be more wrong for it. He couldn’t be more wrong for and why is because he’s never been willing to sell a losing trade. I kid. You not. He bought GoPro years and years ago when it was over $90.

6:53
A share it’s now trading at six dollars and 82 cents a share, and he dumped a lot of money into it. When I was going down, he don’t more money into it. He is doubling down. He was averaging a loser and he want to know what, he kept losing money. A lot of money. Why? Because he couldn’t take a loss now, what if he would have taken a loss at $80?

7:10
Okay, let’s say he took a big loss but he stopped at $80. Okay, well, he could have saved himself about, I don’t know, like, 74 more dollars worth of pain to the downside. Very recoverable, but that one trait wipes out a whole host. Of Truth and also goes back to the whole thing about position sizing.

7:26
You got to know how much money you’re going to be putting on each one of your traits. I’m not a big fan of saying, okay, I believe in this talk, I’m going to put 10 times more money in this trade than I am. In this trick is to me a chart, the chart I’m trading the charts, it goes back to like having this bias. Well, I just like apple so much.

7:41
I’m going to buy more Apple than I would of Halliburton or whatever. Now, here’s the thing. When the charts don’t show me that they’re willing to behave, right? And I’ve been an Apple for about the better part of this month. For the past, two weeks I’ve been liquidating more and more of my shares. Why is because the chart isn’t going anywhere?

7:58
Now it may still break out the charts, not breaking down but I have less and less confidence that it’s going to break to the upside. So I’m reducing my exposure into the trade because the charts are telling me to do that. But I didn’t get into Apple because I said, well, I really like apple. I like the iPhone 10.

8:14
I know it’s not going anywhere. It’s a good company to cook or some people say. Tim Apple knows what he’s doing. I’m gonna double my position. I know that that’s Gets a lot of people in trouble. You just can’t do that. You really can’t. Now I don’t know if you got an MFA. I’m really honestly scared to ask because I know what I’m gonna have to tell him.

8:31
Like dude, you should have planned it out and there’s a good chance that he did get an MFA and he didn’t plan it out. While the stock has been rallying of late at three dollars, a share, there’s a good chance that it could see further downside. And if it is, where is he going to get out? As you going to know, to get out? I don’t think he will 22 trades. 21, winners one lost this year, but he won’t count it as a loss because he didn’t sell it.

8:51
I disagree with that. You do have losers in your account. I’ve actually seen his count, he’s got some horrendous losses in his account. He’s got stocks that have gone down to like .0001 cents a share and they were trading at, you know, well above like 10 15 dollars a share at one point but they’ve just gone out of business but he still has got those shares.

9:10
Probably should just doubled down on him at them. But no seriously though, he can’t take any losses and it’s not a good thing. If you’re a Trader to have that mentality because that mentality you’re just giving money away to the market. Yeah, you may have 10 trades and You may have 15 trades in a row, but when you’re counting only the trades that you close out, and then you got a whole host of losing trades, that have no chance of ever really coming back, but you’re not selling them and you’re not counting those losers.

9:32
That’s ridiculous. You can’t do that. My bourbon for today, is Bulleit Bourbon. A lot of you guys are probably already had this one. It’s a really popular one at 45% alcohol. 90 Proof. It’s a Kentucky, Straight Bourbon whiskey. I’m pretty sure I’ve had this a few times. I think my brother likes it a lot and when I go up there, he’ll he’ll make me a drink using it.

9:51
But nonetheless, I’m gonna give it a shot. Here. I’d say it’s like along the lines of larceny Knob Creek. Buffalo Trace, actually think Buffalo Trace is a little bit on the harsh side, not a huge fan of it, but this one here, right along the lines of a Knob Creek or a larceny, it’s good.

10:09
It’s middle of the road. It’s known for having a good price point. I think it’s probably as good with your mixed drinks, like, if you’re making an old-fashioned or a man had it, as it is just drinking straight up. But if I’m going to drink something on the rocks or just neat, I’m probably going to go a little Better not no offense to Bulleit Bourbon.

10:26
I think it’s a good bourbon. I like it more for making mixed drinks. That’s just my personal preference but it’s still good on mean. I’m enjoying it right now. I like that right taste that it has to it. It’s nice. Its it comes across actually a smooth at first and it just has like a dis little consistent like punch, but it’s not too overwhelming.

10:45
It won’t overtake you at all. It’s good. I would, I would say on this one, I think on the last episode I gave Battleford Creek, like a 59, 9. I’m going to say, I’m going to give this like a 62. I think it’s good. I like the one that I did in the last episode. The Powder furred Creek gay guy gave that like a 59, I think this one is slightly better.

11:04
I give it about a six to still a very solid bourbon. I’m a experiment, a little bit with it on my old fashioned. So I’m still kind of partial to the Knob Creek, on my old Fashions, mainly, because it’s 100 proof. I don’t know if it’ll be as good because this is like 90 proof. I like a little bit more of a punch of my old old Fashions there.

11:20
So, back to my friend stylist here, guy kills me, man. I tell you, I I think that he could actually be a really good Trader. I think he’s pretty cool calm and collected but he can’t let these losers go man he has to hold on to him because he feels like there’s some kind of like moral Victory by never selling it like never gonna go up on you.

11:37
It’s like he’s got to be like that chick from Titanic, right? Rose Dawson, where she’ll tell him that she’s never going to let go. But then she lets go of them and let them sink to the bottom. He’s just got to do that with, like, GoPro, with SH and some of these other trades that he’s losin, why you gotta be like, look, I’ll never let go but my Art Celine, Dion Styles, gotta go on, that’s what he’s gotta do.

11:57
I hate to quote, Celine Dion and a podcast, but seriously, though, do to bring the illustration home here, he needs to let go. He needs to let these traits just sink to the bottom. Forget about him sink to the bottom without him, because if you continue to trade like this, and I know there’s a lot of listeners on my podcast that are in the same exact, but you can’t let go of the losers.

12:19
And the worst thing is, is when I get these emails saying, hey, I bought stock XYZ, Add $100, and now it’s at $40. What do I do? I don’t know. I don’t know what what? He supposed to say to something like that, because, if it goes down to $40 and you say, oh gosh, yeah.

12:36
I mean, it’s a big loser, you might as well sell it, you know, and just get out of the trade. Yeah, probably the best thing to do, but then it goes right back up, and you look like a moron, the guy could have made another like 20 bucks on the upside still lost, but he could have like, cut his losses a little bit more right by like a third and I’m just speaking hypothetically here.

12:52
But once you get to that point, it’s it’s almost too late. There’s no right decision. That’s why the right decision is following your plan. From the start. You have to follow your plan from the start. Before you ever get into the trade, you have to know where you’re going to get out, when it gets bad. At some point, the trades going to get bad. That’s why I always get out of every one of my trades.

13:09
I don’t get out of my trades because the trades are going good. I get out of it because you’re going bad now. I’ll take some profits along the way, but ultimately my exit is going to be because at some point, the stock finally started to pull back some and I had to get out, I expect every trade I make to be Royal loser.

13:25
And it’s that mentality that keeps me focused on the risk. The risk people, the risk, the risk, the risk. You gotta focus on the risk so again, Silas, 22 trades. 21, winners one loser. What’s that loser? Sh he didn’t get out of it. What does it do? It wipes out all your gains.

13:41
Winds are great, okay. I love having a winning trade but you are defined as a traitor by how you lose it. All comes down to how you, if you lose small, your profits in your winners are all that more greatly. Ernst. But if you lose big, your profits don’t matter. It’s just going to buffer a little bit of those losses.

13:59
And here’s the thing, a lot of those winners that he had, they were Royal losers, they come back. A lot of times your stocks will come back from losses. That’s just a natural propensity of the market. It goes up over time but for me sacrificing time and a losing trade is not worth it to me. I’d rather lose quick get out of the trade, put my money towards the next trade, see that it takes off and then my capital is actually increasing, because I got out of a stock that wasn’t doing anything for the time being, it was actually losing.

14:23
I took that money. I put it into a new trade. I planned the risk on that one. That one goes higher. And now I’m making money. I don’t want my Capital even if it does, eventually come back. I don’t want my Capital stuck in something that’s losing for a long time because it’s just opportunity cost. It’s what you could have been doing with that money.

14:39
Had you not been in that losing trade and had you not stayed in it? I mean, if this guy could win 21 out of 22, Tracy be a legend but know what’s happening is that he’s staying in it, long enough for it to come back and then he may be a winner on 21 trades. But guess what else he’s doing? He’s getting out as soon as it gets just a little Bit above breakevens like, oh, I made five bucks off the trade.

14:56
I’m getting out of it now but it’s a winner. I’m glad I stayed in it. No, you could have, like, got out for a small loss, avoided the whole draw down and you could have put it into a different trade. And I know there’s many of you guys out there that are like that, use like, well, I’ll just wait till it gets back to break, even I’ve heard that so many times, but that’s a horrible mindset to have in trading when you are dealing with a losing trade, if it’s losing, get out, if it hit your stop loss, that’s when you get out, that’s what you got to plan these trades out and when they do come back and you sell it, it’s for marginal gains.

15:20
But then when you get that one big loser, what is it’s like a 95% losers. Sighs. Maybe it’s 80% Loops, or maybe it’s just a 50% loser, I shouldn’t say just a 50%. Loser, 50% is freaking huge. But nonetheless it wipes out all those marginal gains that you had in a whole bunch of other traits. So remember, one bad trade will wipe out a history of good, trade decisions.

15:38
What do you do? You have a good history of making good trading decisions without that one bad trait, because one bad trades will do it every single time. Guys. If you enjoyed this podcast, please make sure to leave a review and the Apple platform for podcast or if it’s on Spotify.

15:54
By or pod Bean or any of them, just make sure to leave some feedback. I really appreciate all the five stars that you guys. Give me. It means the world to me. This is what I do for a living. I trade, I talk stocks, I love doing it so I really appreciate your support. I love helping you guys and teaching you guys.

16:09
I love taking your emails. I was probably a little bit harsher on stylist today, but it’s probably because I’ve known this guy for like eternity. So I don’t feel too bad. You probably hear it. Get a good laugh out of it and I’ll probably be the front of one of his jokes one day but any case there’s a Learn from this.

16:24
Make sure you hear what I’m saying? Thank you guys and God bless. Thanks for listening to my podcast. Swing trading the stock market. I like to encourage you to join me in this airplane or trading block where I navigate the stock market. Each day with Traders from around the world with your membership.

16:40
You will get a 7-Day trial and access to my trading room including alerts via text email and WhatsApp. So go ahead sign up by going to shareplanner.com trading block, that’s www.shareplanner.com/trading-block and follow me on SharePlanner’s, Twitter and Instagram, and Facebook, where I provide unique market and trading information every day.

17:01
If you have any questions, please feel free to email me at ryan@shareplanner.com all the best to you and I look forward to trading with you soon.