The Trading Block | Podcast Episode #77

0:00
Hey everybody, welcome to Swing Trading the Stock Market, and today is a special edition of this podcast because We’re gonna talk to you about the trading block. Now, what is the trading block you say? Well, the trading block is the name change. We used to have the trading block in the share planner. Personally, never really liked the name.

0:16
Created by somebody else that, that used to work with SharePlanner. It was good. It worked. It worked for almost like what, 10 years? Felt like that name needed to change a little bit. Kind of wearing on me. Being from Orlando, I kind of felt like, I don’t know, like I’m going to to SeaWorld and I’m watching Shamu splash the audience, right?

0:33
They had those little seats there, it says splash zone. You might not want to sit here if you don’t want to get wet. That’s how I kind of viewed this flash. So yes, I went through a name change and believe me, doing a name change, even on a service, it’s a lot of work. You got to change links, you got to change, uh, everything. There’s just so many things you got to change, branding, all that stuff.

0:51
So, Over the Christmas break, I went through a lot of the rigors of doing that, but I also coordinated it too with some major changes to the trading block. And that, they’re not even actually changes, they’re improvements. They’re improvements. I, I used the word changes loosely, they’re improvements. I’m really wanting to make this a better experience. It’s been a great experience for the past 10 years.

1:07
I want to make it better. And this is why. Free commissions, right? We had free commissions come about and the, and the brokerages with Thinkorswim, with Schwab, but basically everybody, Fidelity, uh, ETrade, you name it, they have free commissions. And so I’m trying to change that all around, uh, and try to make it more to where I have a, a, a, a far greater amount of trades that I’m making.

1:28
Now, I know it might make you a little bit busier, but I’ve also made changes to make it easier for you in that regard as well. Let’s talk about these changes. First off, the number of trades, the number of trades have changed. In the past, I’ve always had about 3 or 4 trades open at a time. Now it’s going to be a whole lot more.

1:45
And the reason why I was doing it only like 3 or 4 in the past is because not all traders are the same. Not everybody’s working with the same amount of capital. If everybody was working with the same amount of capital, it’d be a whole lot easier. But, but it’s not. Some people are working with millions of dollars. Some people are working with just a few $1000. If you’re paying 6 to $7 on a on a trade, and you’re trading like 15 stocks at a time with just $10,000 in your account, you’re never gonna make it anywhere because you’re just gonna get eaten alive with the uh cost of trading.

2:13
So, So that’s, that’s one thing with, with free commissions now, you can, you can be a $10,000 account or a $20,000 account, and you can manage your positions in a very similar way as somebody that might be trading with a few $100,000 right, and wants to spread it across multiple positions.

2:29
Now granted, if you’re Trading with a $5000 account or a $10,000 account and you’re putting an Amazon position on, which is almost $2000 per share. Unless you can buy fractional shares, yeah, that one might be hard to to trade with. But as, as a whole, if you’re trading like AMD, for instance, $49 a share, if you’re trading CGC, it’s $21 a share or Etsy, $46 a share, or even like something like Netflix, which is $330 a share, right?

2:58
If you’re trading with like a $50 to $10,000 account, you can trade those, right? You may not be getting a ton of shares on Netflix, but in the end, you’re spreading your risk out across a greater number of trades. And why this is important is because then all of a sudden, You don’t have to put all your eggs in one basket. You don’t need just to rely on just the 3 or 4 trades that that I may be trading or some or or that you’re trading.

3:21
Instead, you can cast a broader net and, and, and be able to trade, trade a little bit differently. You don’t have to keep the risk as tight because you’re not dealing with as large a positions of capital on a trade. If you’re trying to trade 15 to 20. Uh, stocks at a time or even 10 to 15 stocks as or versus, you know, like, like 3 or 4, so.

3:41
Now there’s a lot more positions. The other thing that I think is really cool too, and this is worth mentioning is, is being able to have a better and more healthier balance of long positions or short positions. So right now, there’s about Uh, 16 long positions in the portfolio, if I remember that correctly, maybe 17.

3:57
But anyways, there’s 3 short positions. Short positions aren’t killing me. I’m kind of just leaving them out there. They’re I think one of them is even profitable right now, believe it or not, in this kind of crazy market. But It allows me to have a little bit of a hedge there, a little bit of a starter starting point there. If this market does turn south, I can start building on those.

4:14
But if you’re only trading 2 or 3 or 3 or 4 positions at a time, well, let’s say you have 3 stocks in your portfolio, and you’re allocating $10,000 apiece to them. Well, if you have 11 of them in there, then all of a sudden you’re one of them in there is short, you’re, you’re 33% short and only 2/3 long assuming that you’re fully capitalized.

4:37
That’s very difficult to maintain because that That one short position is going to eat into those, those long positions and any gains they might have if the market continues to rally higher. And and obviously you want that if you’re net long, you want the market to push higher, but it may do so at the expense of that short position that eats into the profits of your two long positions if they if if it’s gains outpaces.

4:58
The other two trades, so. It provides a lot of flexibility. The other cool thing is trading stocks in such a way that allows you to take half off the table, right? I still trade equal amounts on every trade, right? I mean, give or take a few bucks because you can’t get up to the penny or anything like that.

5:15
But for instance, beyond me, under the trading block, I would have gone out for an 8% profit. And I probably wouldn’t have traded it because it would have been too much risk for, for that much capital, right? I would have probably been like a Home Depot or McDonald’s or something like that. But with the trading block, you have a lot more flexibility because you can cast a broader net.

5:33
You can have different levels of of varying risk. You can have your Home Depots and McDonald’s and you can have some of your more less risky stocks, but you can also have a basket of higher risk stocks. You can have like an Etsy or you can have a Shake Shack or an Uber or Beyond Meat.

5:51
So, But let’s say under the old system I did get into beyond me. I would have been out at an 8% trade because I’m trying to make sure people aren’t that are using the services to maybe follow my trades, they aren’t getting eaten alive with commission costs. I don’t want you to get, you know, like, because it’s very easy to do.

6:08
Even if you’re trading with a couple $100,000 it’s easy to get. En alive with commission costs because those 6 $7 trades and then like, you know, 14 $15 for a, for a round trip, that really eats into your gains if you’re doing that, you know, you know, 3 or 4 100 times over the course of a year, you’re not gonna have a lot of profits.

6:25
But then again, All the brokerages going commission free. It did change the game so much for retail. And it’s a good thing. Yes, they’re still making their money on the sides. I know that that some of the antics that they do and everything like that. But in terms of just trading. It’s a whole other ballgame because now those commissions are not, are not penalizing you for a higher frequency of trading.

6:47
So now Beyond Meat, at the beginning of this week, I sold Beyond Meat for an 8% profit, OK? That was good. But I kept the other half and I kept letting it run. It ran up. Over 50%. I didn’t get out at 50% of profits. I wish I would have, but, um, it got halted and then it sold off a little bit. But I got out at 37%.

7:03
And that was because I was able to add more layers of risk management to my trades now going forward because I’m not worried about, you know, a, a trade killing somebody because you’re, you’re taking off. Half the position and then letting the other half run, but you’re also increasing your total commission costs by 50% when you’re doing that.

7:19
So like right now, there’s a number of trades on the books that that have only half positions in them right now because I’ve already booked half half my profits. You’ve got Royal Caribbean, you’ve got Uber, you’ve got Shake Shack, you have um What am I forgetting here?

7:40
Uh, you have Visa. And that you already had it with Beyond me and a few others. So it’s, it’s really cool how, how this is, is able to, to help people and these changes, not even changes, but improvements too. The trading block, also known as a splash zone formally.

7:58
But yeah, they’re, they’re going to further enhance your experience as a trader, make you a more profitable trader, make you better risk managers, and it’s not always going to be half, maybe sometimes it’ll be only a third that I take off the table. I’ve also wanted to make this a more standardized, more direct experience.

8:15
And so what I thought would be the best thing for me to do is to roll out the, the evening newsletter called the trading block newsletter, right, evening newsletter. So it comes out every night, sometimes it comes out right after it closed. Sometimes I want to see what the futures do at night. If it’s a very unpredictable, I may even wait till the very next morning, early next morning to see what the overnight futures did.

8:34
But anyways, what it does is it summarizes the day’s actions, the stocks that I got into, the stocks that I got out of, the stocks that I’m still waiting to trigger, the stocks. Uh, that I’m the new ones that I’m gonna add to the watchlist for a possible entry, but I also provide the entry point, the idle trigger point.

8:50
Uh, the trigger is the one, is what I use for, for saying, where, where do I want to get in? What’s the trigger price? Where do I pull the trigger? Uh, The trigger price, you have the stop loss that I, that I want to use. At first, I thought maybe giving two stop losses out, I felt like that only confused matters.

9:07
So I only, I stayed with and and the reason for two stop losses was to give you different options depending on your risk. Risk tolerance, but I decided just to stick with the, the standard risk rating that I had added as well to this new service and the risk rating provides you on a scale of 1 to 0 to 5, how risky of a stock is it, you know, from a stop loss standpoint, from also just a historical volatility standpoint, where do I where do I rate that stock and, and, uh, So 0 to 5.

9:35
So what that does is that helps you know, OK, what kind of trade are you? Can you, do you want to trade just all like 4s and 5s in terms of high risk stocks or are you a person who only wants to trade ones and twos and maybe a dash of 3s? So you can, you can base off base your new trades off the stocks that are, that are going to fit into your category.

9:55
Maybe it’s just, you know, you want, you’re, you’re pretty young and you have a long time before you retire. So you want, you want to take some bigger risks in life. So you’re going to say, OK, I’m going to trade mainly anything that’s a 3 or higher. That’s what I’m going to trade. So that’s what the risk rating does. So it gives you a better idea of how to tailor what I do to your own personal preferences.

10:15
And because it’s going to come out the night before or on the rare occasions, uh, the morning before, you’re going to get more notice up front. I’m providing you all the details up front. Uh, it provides more standardized and easier to follow a method of trading. Um, at the end of the day, I typically make some adjustments based off of what I put in the newsletter.

10:31
If stocks are falling apart or stocks are running too much, I may take 50% off the table, or if it’s reached its stock loss, um, may take that off as well. So again, free commissions really frees us up. It makes it a whole lot easier for traders like yourself and I to um to, to better manage the risk and to provide you with a better service through the trading block.

10:52
So in the end, What really changed? The name of the service changed. OK. It was the name of the service that changed, that was, that was the big deal, uh, in terms of big changes. Everything else was improvements. Everything else was improvements. I wanted to enhance your experience, not take away from it.

11:10
Um, even for like the auto traders, I don’t deal with the auto traders anymore, but what I do do is I, I provide a method for people to go through their own auto traders and, and you can establish a, uh, your own agreement with them where you’ll forward my alerts to them.

11:25
That works great as well. I think, I think that’s some people are already doing that, you know, and it’s fine. So, So you can still use the auto trading. I’m not going to deal with the auto traders anymore. I just, that’s one thing that I just kind of want to disconnect from, but I don’t stop you guys if they want to ask me, Hey, are you using the service?

11:42
I’d be more than happy to tell them, yes, but in terms of me actually sending emails telling them what to buy and sell, I’m not, I’m not doing that. I’m simply, um, that’s the only thing that I’m taking away from it. And there wasn’t a lot of people that use it, most people want to trade for themselves, and I applaud you for that.

11:58
Um, but everything is really improvements, the name changes from the splash zone to the trading block. And The things that are improved is the the risk management, how it has much more standard, standardized and more notice upfront with the evening newsletter called the trading block.

12:14
Surprise there on on on what I call the evening newsletter. And of course, there’s going to be a far greater number of trades, better balanced to the portfolio between longs and shorts, and uh it allows us to take, you know, a little bit larger stock losses too, because, you know, for, for one, I’m, I’m trading more stocks, and that means that it’s going to be spread out across more capital, but I think it’s in the long run, it’s gonna be great.

12:36
It’s already been great. You look at already some of the trades in the portfolio that have been made. You have Shaq, it’s up 12%. You have Beyond Meat that was made, that made 37%. You also have Etsy right now that’s up 11%. You have a whole host of them that are up, you know, 34567, 8%.

12:53
You have Nuon that’s up 10%. Splunk, that’s up 9%, Visa that’s up 9%. You have Uber that’s up almost 16%. Royal Caribbean up 15%. So there’s these, these were gains that couldn’t be had under the trading block in the previous system.

13:09
And when they were had, it was a very rare occasion. They weren’t, they weren’t as common as what you’re seeing right now. So, uh, big changes, great changes. I’m really excited about it and, uh, if you haven’t signed up for it yet. Check out their trading block. Go to www.shareplanner.com/trading-block.

13:26
And go ahead and subscribe. It’s a free 7 day trial. I think you’ll like it. It’s really good. A great community of traders, people throwing out their ideas outside of mine, and sometimes I take their ideas and use them as my own. I think they’re great. Hey, if somebody’s got a good chart and a good trade setup, I’m gonna take it.

13:43
I’m going to use it, man, because guess what, at the end, I want to make profits just like you guys do. So, um, yeah, so if there’s a good profit out there, I’m going to take it. Check out the trading block, guys. I I I I like the improvements. I like the name change too, and I think you will as well.