The Impact Of Free Trading Commissions | Podcast Episode #67

0:00
Hey everybody, this is Ryan Mallory with Swing Trading the Stock Market. I appreciate you tuning in and hearing what I have to say week after week. And this has been a really crazy week, and I’ll, I’ll get right to it. I’ve been doing a lot of work with the swing trading Trading Block. I’m trying to make it better, more encompassing of different trading strategies and a bigger focus on market education. So I’ll be sending an email out here in the not too distant future explaining some of those changes and what you can expect. From the Trading Block going forward.

0:15
So if you haven’t seen it yet, be sure to check it out. Uh, there’ll be some changes in the price, but of course, if you’re a member of the Trading Block currently, nothing will ever change for you. So, I look forward to rolling those out. Uh people are already starting to see some of the changes now, but I’m gonna do a little bit more of a tutorial and an email, explain what those changes are, how that’s gonna help you become a better trader, and more of a self-made trader because ultimately, You don’t want to be dependent solely on me for your trading success.

0:31
You don’t want to be completely dependent on my ideas and my, my um. Trajectory on. What I believe the market’s going to be doing in the days and weeks ahead, you want to be able to come to the conclusion yourself. You want to be able to develop your intuition, your abilities as a trader, your chart reading, and, and so forth, so that you’re doing it on your own. And there’s been a lot of people that’s come and gone through the Trading Block over the 10+ years that I’ve been doing it. That have been able to become their own self-made traders.

1:04
So I’m excited about rolling out these changes. Stay tuned for it, be checking your email box. If you haven’t, just go to SharePlanner and sign up for one of my free things. Go to the free resources at the top of the page, click it, you’ll get free resources. You’ll also get an email. Uh, request and you can put your email in there and you’ll be good to go.

1:20
Now, how about our podcast? What am I gonna be talking today? Well, I’m gonna be talking about a contrarian market. What do you do when the market just seems to do the exact opposite of what you think it’s going to do? We have that right now.

1:38
And I’ve done a lot of podcasts on low volume markets. Yeah, we have that too right now. But I want to talk about this one particular tendency of the market, and that is to be contrarian. And when the market’s acting like this, it’s easy to get whipsawed. You see this market sell-off, you get short. Next day the market rallies, and it gaps up in rallies. So then you get rid of the short and then you get back long, and you’re feeling good, OK, finally, I’m on the right side of the market, but then the next day, it sells off again.

1:54
So you get short again. And then all of a sudden the market rallies and it’s really frustrating. I mean, it’s, listen, it’s happened to me. It’s happened to me a lot and. I don’t like it. I feel like I’m getting whipped around a little bit right now, but the one saving grace that I have going for me is that I’m not overtrading my account. I’m not adding just tons of traits.

2:11
So check this out. On Friday of last week, I bought Twitter, didn’t really do too much. Then I, uh, saw it rally on Monday. I, I was, I finished a little bit higher on Friday, rally a little bit more on Monday, but the candle on the overall market didn’t look right to me.

2:27
It looked like it was setting up for a sell-off. I knew that if we had a big sell-off, Twitter was probably going to be the victim of it. As well as a bunch of other stocks too. So I went ahead and sold Twitter for a 1.5% profit. I hated doing that because I, I like to give my stock a lot of room to run and a, and a chance, not so much in the stock loss, but as much opportunity before a stop losses hit.

2:44
To make its big run, you know, if it’s gonna go up a few percent or even 10%, you know, I want it to have the opportunity to do that because it stinks when you get stopped out and then you see the market take that stock up like 15-20% after you get out. So I do like to give it some some time and space to do that, but not this time.

3:00
I saw the candle on the market. I got out of it. It was a bearish candle, so I get out of it. Out of Twitter and I go into the next day, uh, 100% cash. I didn’t want to take on the overnight risk because there, it’s very easy for the market to gap up and so I didn’t want to take that on.

3:17
And then of course, the, the market gap down, so, you know, had I gotten short on the market, like using a inverse ETF like SPXU or SQQ, I would have done pretty good.

3:40
So I get The market to open the next day, it’s opened way down. It trades way, way lower too, and then all of a sudden it starts rallying back and back and back and back and then I get. Uh, the opportunity to, to use that rally intraday rally to get short on the NASDAQ.

3:58
So I use SQQQ, which is a 3 to 1 inverse ETF of the NASDAQ. So if the NASDAQ goes up 1%, I’m gonna be down 3%. If it goes down 1%, I’m gonna be up 3%. So, the NASDAQ kept on falling and it closed at the lows of the day.

4:27
It looked like going into the day before we knew what the futures price action was gonna be like. That having closed that day at the Lowe’s, the market was probably gonna sell off today and keep pushing lower.

4:46
But no, we recycled another Chinese headline saying that China was open to a partial deal, which I swear we’ve had that freaking headline hit the market every day for like the past week I’m thinking.

5:08
I mean, it’s all the time we see that stupid headline. China wants a partial deal. We get that. You, it’s been regurgitated like 15 times and every time you pump the market on it.

5:30
So it happens again. So I, I, I wake up, you know, uh, you know, 5:30 this morning, I’m looking at the S&P 500 up plus 20 points. The Nasdaq’s up over 70%.

5:51
So the profits that I made, which is about 2.5% in SQQQ the day prior, it’s gonna be pretty much wiped out today. And it did. I mean, I pretty much traded a little bit lower overall in that position, about 3% lower on the day.

6:10
That sucks. Now I didn’t get out of it and, and maybe we strike a trade deal tonight and we gap even higher tomorrow on the NASDAQ and the S&P 500 and I lose a little bit more and get stopped out of it. That’s very possible.

6:28
But I also know too when you have these contrarian markets. Selling because the market’s going up one day and then buying, uh, or, or buying, uh, let me start over. Selling because the stock market. Is going down one day and buying because it’s going up the next day, that’s gonna cause you to get whipsawed around and if you look at the price action, it’s all over the place.

6:50
But the broader trend going back to the October highs, which, you know, it’s not a lot of days, but if you look at it from a 30 minute chart. The The NASDAQ and the S&P is actually in a pretty impressive down trend on the 30 minute chart.

7:09
So today is kind of like a higher high for the market per se. So I didn’t get out of my position. I, I held it overnight. I’m pretty much flat on the trade right now. We’ll see where it takes me going into tomorrow.

7:24
But the takeaway here is this, you have to avoid trying to fight the urge to trade every little move, and these moves are really small. They’re not really big. Yes, today was a big rally, but I’m saying just as a whole, you’re seeing some really small moves.

7:42
On an intraday basis, so that meaning like once the market opens, it doesn’t really move that much. It’ll move a lot overnight, and that’s what it did today. I mean, it really didn’t move much from where it opened up the day at.

8:04
If you take a look at the market too, going all the way back to January 2018. We’re pretty much at the same exact spot we were 22 months ago. We haven’t really moved that much.

8:21
We had a huge rally, I think of like 7% or so, if I remember correctly, back in January of 2018, and everybody was like, man, this market’s off to an incredible start. It’s gonna be a great year.

8:42
And then February hit, it was a nasty, nasty sell-off. We haven’t really moved since those January highs from 2018. Yeah, we’ve established some new all-time highs along the way and since then and everything, but the market keeps pulling back to where we were at back in January of 2018.

9:00
There really hasn’t been a lot of change. So that means a lot of sideways price action. There’s a lot of moves above and below where we’re currently at, but ultimately, we haven’t really moved.

9:25
And so we get close to the all-time highs or 1 or 2% near it, we start having these like low volume meltups. And then we have a sell-offs on increased volume.

9:46
We saw it in May, we saw it in August. You have these big. 3-4% moves in the stock market, it’s on huge volume, and then we just kind of like melt our way back up after those sell-offs on very low volume.

10:10
It’s kind of mind boggling because there’s not a lot of interest in the buying, but at least definitely not to the degree that there was selling just a few days prior to those, those meltups.

10:32
But there, but there is enough volume to just basically kind of lift it and it’s not so much that there’s a ton of buyers, but there’s an absence, there’s there’s basically an absence of sellers in the market, and that’s what we have kind of right now.

10:49
We had a huge sell-off yesterday, but then today we just kind of like meander our way higher but it’s not on any big volume. It’s just, it’s kind of like because the market’s not selling off its rallying.

11:07
And that’s kind of like one of the bigger frustrations right now with this market and for a lot of traders is that The market only puts together sizable rallies once it sells off.

11:28
You don’t ever see like a 70% rally on the Nasdaq and a 40 or 50 point rally on the S&P 500 after it’s already made all-time highs. No. It takes the only way you get a significant rally is for the market to sell off 2 or 3% 1st, maybe even 4 or 5%, and then all of a sudden you start to see, see like a significant move in the market, but until then you don’t see anything.

11:45
So some quick takeaways from this podcast here. One, don’t overtrade your account. Don’t try to take advantage of every little move higher and lower because it will rack up trading commissions which. Should be a little bit more in your favor now because trade commissions are going away, so you can’t be getting destroyed by the trading commissions anymore.

12:01
However, you do. Get penalized for not showing enough patience in the market when we’re whipsawing all over the place here. You get up when you be down, and you get down when you should be up, the market’s acting contrary to what you actually think it’s going to do.

12:21
Trust me, I was surprised as anybody that we gaped higher today. You look at how the, actually, I shouldn’t even say that because I’ve seen this unfold itself so many times over the past year and a half where you think, OK, technically this market is selling off. There is no way this thing is going up tomorrow, or even like by like a smidge and then it goes up 1.5%.

12:38
I mean, you you just see it all the time, and it’s getting more like blatant every time we see a sell-off. It’s just an immediate buyback. But if you do that, then the next day it goes down. So this contrarian behavior out of the market, you can get whips out all around by trying to be long on the days, it’s long and just be short when the when the market’s dropping.

12:56
So, you have to kind of Endure some days when the market’s not working in your favor, and, and a lot of times it’ll work out in the end there if you can just kind of deal with the, the market fluctuations on a day to day basis.

13:13
So that’s gonna do it for today. I appreciate you joining in. Like I said in the beginning of this podcast, lots of changes happening to SharePlanner, and there’s gonna be a lot of changes between now and the end of the year. I’ve got a lot of stuff I’m rolling out, a lot of exciting stuff, stuff to make you a better trader and the changes to the Trading Block is the first stage of that.

13:31
So stay tuned, be ready for all sorts of exciting new rollouts to happen and You guys hang in there with this market. We got China, we got the Fed, we got Donald Trump and his tweets. We got all sorts of stuff that it’s constantly ripping the market higher, selling the market lower.

13:51
Endure folks, be disciplined, use your stop losses, and this too shall pass. Thank you. God bless.