Trading Real Money in the Stock Market | Podcast Episode #123

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.

0:25
You can succeed at the stock market, and I’m ready to show you how. Hey everybody, this is Ryan Mallory with Swing Trading the stock market. I got a good email for you guys today. I have a, uh, 19 year old guy with aspirations of full-time trading, and so, Gonna be nice, gonna give him some father advice.

0:44
I have a 12 year old. It’s like 7 years younger than a 19-year-old, right? So I can, I can be like more of like a father figure in this one. I’m, I’m 40 years old, just turned 40 just a couple of months ago. So I’m like a young 40 year old, but still nonetheless. I’m twice this guy’s age. So I’m gonna like put on the, the father figure hat here and bestow some, some wisdom to this person here.

1:05
All right, so the whiskey tonight is gonna be from the same family. It’s gonna be a whistle pig. Last episode I did the whistle Pig 15 years. This one I’m gonna do the whistle pig 12 years. And so this is the bottle, again, I’m not so bougie where I just go out and buy a whole one of these bottles. I found a nice little sampler pack, Total wine, again, they’re not sponsoring me.

1:22
Should they be sponsoring me? Yes, they should, but they haven’t yet. So maybe one of these days they will. For now, I’m doing the people’s work. I’m doing this. For free and benefiting total wine in the process. So, OK, anyways, I’m gonna pour this in. We’re gonna try it out. It should be pretty good.

1:37
You see it, man, this thing’s got a nice color. It’s nice, dark, rich. I like it already. I’m not using ice. The reason why I don’t want to use ice is because I feel like this is, this is good stuff. This is good stuff that I don’t want to dilute. All right, so let’s go ahead and give this a try here. Wow, I didn’t see it going that way.

1:53
Man, that’s pretty good. It’s a, it’s, it’s got a harshness, but the harshness, it feels good to the soul, man. It really does. Like it just, it, it like it, it waken you up. It makes you more aware, like brings you into the moment, gives you a zest for life. This is good. Oh man.

2:09
Not as, not as, um, dynamic as the last one. Remember if you remember when I talked about the whistle Pig 15. It had like a, a strong harshness and also like this really nice flavorful sweetness to it at the same time that I couldn’t really explain. But, but this one, it’s got more of a harshness, less of that sweetness.

2:27
And and I didn’t really give you guys the information on this one. Again, it’s whistle pig, it’s 12 years, 12 years old, it’s 43% alcohol, which makes what, 86% proof, and then it’s wine cask finished and it’s Canadian rye whiskey. So I didn’t. I realized this is a Canadian rye whiskey.

2:43
Any case, pretty good stuff. And sorry, I had to lift my glasses up because I’m getting old. Not that old, like 40, like you wouldn’t want to die at 40. That would be considered like dying young, but my eyes, it’s like as soon as I turned 40, my eyes went to crap. I don’t get it, but it did. So I’m having to live with that. Uh, but yeah, this, this stuff, this is good.

3:00
I’m gonna get a 461. I don’t think it’s that bad of a drop off from the 15 years. It’s not as good. But it’s right up there with it, man. I mean, if I had to choose these two things on the shelf, yes, the 15 is better. I’ll buy this one just because it’s probably gonna save me a few bucks.

3:15
Solid though. Whew. All right, so let’s talk about this email here because we got it from a guy who did not give me a name and I didn’t even come up with a name beforehand. So let’s go with Butch. Butch is gonna be the name. I may have used that name in the past, not quite sure, but I’m gonna go with Butch, Butch.

3:31
And when you, when you say Butch, you you can’t just say Butch. It doesn’t work that way. You gotta, you gotta get really, you gotta dig down deep and you gotta say butch. Like you got a butch. You gotta put that emphasis on that B. So Butch says, hey, Ryan, your videos and podcasts have been so helpful for me.

3:50
Thank you so much for putting out great free content. And I do. I put out a lot of good content between my podcast and my YouTube channel. I took a little bit of a break this past week from the YouTube channel, just, just because I didn’t want to get burned out from it. There’s a lot more work that goes into the YouTube channel, it gets me a little bit more exasperated at times because I find myself up late at night and I just, I need to catch up on a little bit more sleep this past week and this weekend.

4:12
So I just said, you know what, I’m gonna take a week off, chill, relax, because I, I don’t want to get burned out from it where I don’t enjoy doing it. But any case, lots of good free content. He says, I’m new to trading and I’ve been paper trading for a couple of weeks now, seriously. And so, seriously, I, I’m trying to figure out what he means by seriously, like in terms of like routine because it’s one thing to wake up and the market’s open and you’re like, OK, what am I gonna trade today and you just like look at what everybody else is trading and jump into it.

4:35
So hopefully, he has like a bit of a plan, a strategy and stuff that he’s coming up with. But he’s only been doing it for a couple of weeks now, so I’m not gonna have like huge expectations that he’s found the holy grail in the stock market because nobody has. He says, I am 19 years old and trying to make this my full-time thing.

4:51
OK, that’s cool, man. That’s, that’s a, I’m, I’m glad you’re aspiring. Um, we have to be patient though when we’re doing these things. You can’t just say, I’m gonna be a full-time trader because I’ve put a couple of trades together. I’ve done this for a few weeks and I think I got it together because more than likely it’s gonna send you right back into the Employment line. He says, I have a flexible job and have low expenses, so that is good, but I am trying to see when I can stop paper trading and do this for real.

5:14
I had, and he puts in quotes, I had made about $100. I’m guessing that’s through paper trading, but then a trade gap below my stop loss and I lost $120. I am playing with about $5000 in paper trading. I was wondering what a good number was for me to make before I am ready to do it for real.

5:33
I was thinking about doubling my money would be a good number, but do you think that that is difficult or easy? I am not sure what percent the average person makes on a trade. It’s funny because a lot of people are fascinated with doubling their money in the stock market as if that’s a, that’s a realistic goal. People double it. I just don’t think it’s a realistic goal to have for every year because the stock market is very difficult, and the more money that you’re trading with, the harder it’s gonna be to double your money.

5:55
You look at those hedge funds and stuff that they’re training like billions upon billions of dollars of people’s money, they’re not doubling their money. Why is that? Because there’s too much risk trying to take that. If you’re trying to double your money, you’re taking on a lot of risk. What I try to tell people to do is like, hey, you may double your money, but just look at it from a trade by trade standpoint.

6:13
It’s not so much about how much money you can make from the stock market. It’s about how consistent that you can be in your profits, how consistent can you be in making consistent profits and extracting those profits from the stock market on a regular basis? Because if you’re not able to do that, then you really shouldn’t be trading full time now.

6:30
Butcher, he has a little bit more of a problem here because I think there’s a little bit of a false sense of reality going on a little bit. Um, he’s 19 years old. He’s just started trading for a couple of weeks and so he’s probably got this like euphoria going. I was like, man, this would really be cool to do for like full time and there’s a lot of people out there that do it.

6:49
And let me tell you, the people who do it full time, we’re, we’re some miserable people, OK? We’re, we’re very skeptical about society, about life. Trading, because you see so much from politics to life to how it exposes your own views on money, on fear, on greed, it really brings out the rawness in your humanity.

7:10
I hate to say it, but there are very few things in life that will bring out how bad of a human being you can be as trading. And the reason why I say that is because it really brings out your views and your fears and your greed as it pertains to money. So when he tells me he’s like, hey, I’ve been trading for seriously for a couple of weeks, well, that’s not really enough time, that’s not enough.

7:31
Of a sample to say whether or not you’re ready to do this full time. And then when he goes on to say, hey, I’ve been doing this with paper trading, well, that that’s definitely, I mean, you gotta start getting into a regular money. Here’s the thing, paper trading is easy. It’s always gonna be easy. You can’t determine about yourself whether or not you’re going to be a good trader if you’re only paper trading.

7:51
And the reason why that is is that there’s no fear, there’s no greed. I talked about, uh, this in the trading block a couple of weeks ago. Kid down the street comes up to me, he says, Hey, Mr. Ryan. I was like, Hey, how you doing, buddy? And he says, he says, we’re doing stock market chapter in class right now for social studies or I don’t know, is government, I don’t know, something like that.

8:11
Uh, but anyways, he was like, I need some good stocks. And so now you guys listen to this podcast and he was like, OK, he probably gave him some good blue chip stocks, some stocks that had risk, high reward. Heck no. I gave him the most miserable high risk stocks that I could possibly think of because if I’m in a 5th grade project and there’s no money on the line and it’s all fake, I’m going as high risk as I can freaking go.

8:33
Yeah. So I told him to go buy some Hertz. I said for him to go YOLO on, on Nicola. I said, throw a little Neo too. It’s, it’s at all-time highs, but man, buy it. And he says, well, we gotta come up with a rationale for why we have to buy these things. It’s like, stonks only go up. He says, Excuse me?

8:48
I was like, stos. It’s like stocks, it is stocks, but you call its stocks. He says, oh, OK, Mr. Ryan, I got it. It’s like, I really like what you’re saying here. I, I get what you’re saying. It’s like, OK, cool. So it’s funny, I’m, I’m training this kid that’s like 11 years old with this deep manly voice and I’m like talking in a real high pitched voice.

9:07
So it’s like the roles are reversed here. But anyways, maybe that’s what happens when you start talking about stonks, you’re like voice gets really high. Guys, this whistle pig, I’m a fan. I’ve got another bottle of whistle pig that I’ve had for a while, but it was like, uh, it wasn’t near the quality of these, these two other ones that I reviewed. I can’t remember what it was.

9:22
I think it was maybe like the 10 year, which I think is what the one is for next podcast episode is a 10 year, but this 12 and 15, man, these, these things are just dynamic. I’m already out, and I’m not gonna give myself a refill because I don’t want to get fat, man. I, I actually googled earlier today as like, hey, can you like lose fat from drinking whiskey?

9:41
Because that, that sounds like a really good dieting plan. There’s actually some articles that say you can’t, but, uh, there’s also some things that say, no, no, you can’t. I’m gonna just go ahead and say I’m not that lucky of a human being to actually like something that will not cause me to gain weight. So I, I believe the stuff that basically says I’m gonna, you know, blow up into a blimp if I keep drinking this stuff.

10:00
So I’m only just still gonna drink this one here. I’m not gonna drink anymore until I do my second one, my second podcast that is later this week. So, hey, I’m good, man. Just one is all I did. Now, Butch here has a good thing going for him in the sense that he has a flexible job and he has low expenses, so that’s good. I think it’s important if you’re gonna go venture out on a full-time trade and that you keep your expenses low, that you don’t try to live an extravagant lifestyle like you see a lot of these people on the internet portray themselves with like girls in bikinis and Lambos and a big mansion.

10:27
I don’t, I don’t have any of that kind of a lifestyle. I personally try to keep my expenses low, and I, I try to live within my means. I don’t, I definitely don’t, uh, pay for cocaine and hookers like I think some of these other people do. So he also talked about how he had made about $100 but then it got below my stop loss and lost $120.

10:44
This was with the paper trading, I’m assuming here, and, uh, the guys, that’s, that’s, you can’t make an excuse for that. I mean, that just happens with trading. It’s, it’s not abnormal for that to happen. I’ve had plenty of stocks get below my stop loss. That’s gonna happen. There’s nothing I can do about that and the stop loss won’t prevent that.

11:00
But nonetheless, it’s still part of your trading, it’s still part of your profit and loss. I mean, you just got to deal with it. Um, so I don’t think you could say, well, I would have made $100 but lost $120. And now you can’t do that. You got to include it all in the picture here. He says, I am playing with about $5000 in paper trading. I was wondering what a good number would be for me to make before I’m ready to do it for real.

11:17
I am thinking about doubling my money, would be a good number, but do you think that is easy or difficult? I am not sure what the percent of the average person makes on a trade. So, hey, before I forget to, go to swingtradingthestockmarket.com. It’s a Patreon account that I have where you get all my market research each and every day.

11:35
You’re gonna get the S&P 500, the Russell, and the NASDAQ updated a couple of times a week. You’re also going to get updates on the Tesla stock, the Apple stock, all the Fang stocks, that includes Facebook, Amazon, Apple, Netflix, and Google. You get the Microsoft, and you’re gonna get my watchlists, OK?

11:53
So multiple times a week, I will do. In fact, after this episode here, I’m gonna update my watchlist. That’s gonna be for both bullish setups and bear setups. So depending on what side of the market you’re on, you have a watchlist that you can work from, the stocks that I think are most bullish or most bearish and they’re setting up accordingly.

12:09
And I’m gonna give you the most charts of the day. So make sure you check that out. It helps support the podcast. It helps to continue to grow. I appreciate everything that you guys do. Now, back to this email here. There’s so much stuff going on with this email, but I’ve talked about this in previous episodes about, you know, becoming a full-time trader when you’re a part-time trader.

12:27
Focus on being a good part-time trader. That’s what I said in previous podcasts. That’s what I’m still sticking to here. I did a three-part series. I highly recommend that Butch goes back and listens to those. I’m guessing since he is a fan of the podcast that he’s done that, but you gotta be a good part-time trader and there’s no dollar amount that’s going to say, OK, once you’ve achieved this much money or this percentage return, you’re ready for the big leagues.

12:49
And you gotta figure, if you’re making, let’s say you make 100% a year trading with paper money, I would say cut that down by 50%, and that’s probably your real return if you’re lucky, and I’m probably being optimistic. Maybe it’s 10%. The reason why is because emotions of greed and fear have so much to do with your success as a trader that you’re not going to experience that as a paper trader.

13:13
It’s huge that you experience that. Now I can’t tell you where you go from paper trading to real money trading. I can’t do that. Now I can say this, I think that the barrier has dropped that allows people to trade with less money because there’s no commissions anymore.

13:30
I don’t know how after this election if we’re gonna have a transaction tax that would blow the roof off of the stock market, and not in a good way, it would pretty much crash the market if they do a transaction tax. But there’s talks about that anyways. I think that’s gonna be very difficult. I think Wall Street has a huge pull over the politicians.

13:46
I think they say that, and I don’t think it’s ever going to get implemented because Wall Street will always have the last say on that kind of stuff. They’re, they’re, they’re in the pockets of these politicians. But anyways, trading with $5000 in paper trading, you know, he’s talking about going to full-time trading.

14:02
Look, you’re never gonna understand trading in its most realistic form until you’re trading with your own capital. That’s just, that’s just a matter of fact. Now, whether you’re ready for that or not, that’s, that’s a totally different answer. It’s like people, they, a lot of times will ask me how much should I place, I’m working with a $100,000 portfolio, how much of that money should I put on each trade?

14:20
I can’t tell you that. It all comes down to strategy. It all comes down to your risk tolerance. Some people, if they’re trading with a $100,000 portfolio, they can only afford to put $2000 on a trade because they can’t handle the anxiety and risk that comes with each individual trade that they put $2000 on.

14:37
So they can’t go more than $2000. If they put $10,000 on it or 10% of their portfolio, they’ll, they’ll lose their mind. So you got to really base it off of what you are capable of handling from a risk tolerance standpoint. And the same is gonna go for going from paper money to real money.

14:53
It’s gonna really depend on when you’re comfortable enough to do that. You know, doubling your money, you do that in paper trade and that’s not going to be at all indicative of whether you can do that with real money. In fact, it’s gonna be so much harder because when you actually see the real dollars going away and they’re not coming back and you’re getting stopped out, yeah, that’s where fear and that’s where greed really starts to hit at you.

15:14
It’s taken me a long time to grapple with those emotions because it’s just not something that if you can do it in paper trading, you can do it in real money. You can’t. Paper trading is so much different. It’s really not even fair. It’s almost like Tom Brady playing Pop Warner football. It’s kind of like what you are when you’re paper trading.

15:32
It’s like Tom Brady going out there. Yeah, he’s gonna like, he’s, first of all, he’s gonna look like Michael Vick out there running around with those kids. Second of all, he’s gonna be able to do whatever he wants. He’s gonna be great. In fact, you could do Tom Brady against the entire Pop Warner football team, and he’s going to probably win. Not probably, he will.

15:49
It’s like that’s that much of a difference between going from paper to real money. So you can’t really make a decision as long as you’re paper trading about where you’re at in your trading journey because it really hasn’t started yet. Now, I think that paper trading does have its perks and does have its usefulness.

16:05
It really does, because it’s going to teach you a lot about order entries. It’s gonna teach you a lot about the different orders. It’s gonna show you at times how fast the market can move, how, how fast it can go against you. It’s gonna show you a little bit about how you the position sizes in your portfolio, but it’s not gonna necessarily show you, you know, how quick it is or how slow it is to get filled on a stock or a particular stock.

16:27
I would venture to say it’s been, I can’t, I don’t even know the last time I did something in a paper trading account, but I would guess that if you have a bid and an ask price, you can get filled right away on a paper trade. I would have to guess it is because it’s not really actually filling it, is it? So it’s all like simulation, so there’s no shares that actually have to be sold to you.

16:45
You can just like pretend. So it’s all pretend. Your emotions aren’t there, the risk isn’t there. If you make a big trade, you just added numbers to a fake account. So in terms of understanding the functionality of the stock market, what it’s like to place trades and so forth to a certain extent, because again, you’re not actually having to buy or sell from somebody, but it’s gonna show you a little bit more of the mechanics of the stock market if you’ve never done it before.

17:09
But at some point, if you’re serious about it, yes, I think you should definitely educate yourself and at a time when you’re ready to go out into the real trading world, then you gotta make sure that you have your junk together here. You gotta make sure you know what your position sizes are. You’ve got to be committed to using stop losses or some kind of risk prevention technique that will keep you in the game.

17:28
And if you’re doing this for the first time, whatever money you commit to the market, assume it’s gonna be lost. Very few traders have I ever met have not blown up an account before. Successful traders have not blown up an account before. It happens to us all. We all have, because that’s part of the learning process. You have to go through that and if you haven’t, then you’re never gonna really appreciate the real risk that’s out there in the stock market.

17:49
So Butch, I think it’s awesome that you are wanting to make trading your full-time thing. And I think it’s good that you have a flexible job because it allows you to observe the markets on a day-to-day basis. That’s gonna teach you a lot about price action. That’s a solid thing. But what you want to do is not get the cart ahead of the horse.

18:04
Is that the right way the saying goes? Don’t get the cart ahead of the horse. You’re 19 years old. You’re not in a rush to have to be a full-time trader. If you have a good paying flexible job and everything, enjoy that job, use it to your advantage because it is flexible, so it’s gonna allow you to be able to observe the stock market and keep that job as long as you can until at some point it gets to where you’re making so much more money trading for yourself than you are at this flexible job.

18:23
Because with this flexible job, it’s allowing you to trade part time without having to commit to the risk that comes with being a full-time trader because going from part time to full time trading is very much like going from paper trading to just regular trading. There’s a whole other set of risks. When you’re worried about whether or not you and your family are gonna eat because of your trading decisions, yeah, that’s gonna add a whole other element to it.

18:39
And whether or not the mortgage is gonna get paid, stuff like that. There’s a lot more that goes into full-time trading. So instead of going from like trading paper money and then trying to figure out when you can go from paper money to full-time trading for a living, let’s focus first on going from paper trading to real money and then being a successful trader at real money part time.

19:08
And I think if you do that, look, you can’t rush the process. You’re not going to be there in one year. You’re not going to be there in two years. It’s going to take time. And I know there’s a lot of dudes on Facebook and Instagram and they’re telling you about their system and if you buy here. I saw some guy advertising on Facebook yesterday.

19:24
I kid you not. He’s telling you about this secret method that he has of buying on these lower bands and selling at these higher bands and that when it touches the lower you buy and when it touches the higher you sell, and I’m thinking to myself, he’s using Bollinger Bands. That’s all he’s using.

19:40
And he’s selling this as like he’s like some kind of genius at the stock market. No, he’s just scamming people using somebody else’s methods. It’s crazy. But there’s a lot of these like charlatans out there that’ll try to scam you thinking that, oh, if you just follow my simple to use process, you’re going to make all the money you could ever ask for.

19:56
And that’s not how it works. You gotta go through the experiences, you gotta go through the work and you got to really fight your way through some very difficult and dark moments in trading. So, Butch, I don’t want to throw water on the passion that you have for trading. I really don’t, I want you to have a realistic understanding of what the stock market is and how it works.

20:16
I’ve been doing it for about 29 years now. I’m 40, I started when I was 11, so about 8 years younger than you were, and I sucked at it when I was younger. I was lucky. I had no idea what risk was or anything else, but I was trading real money, believe it or not, and the reality didn’t hit for me until I was about 20 years old when the NASDAQ.com bubble crashed.

20:34
So there’s a lot of experiences for you to experience. There’s a lot of things that, I mean, if you’ve only been trading for 2 weeks, the biggest sell-off you’ve seen was what we got in September. If that, because that was like September, I mean we’re more than 2 weeks into October. So, you haven’t really seen how downright nasty this market can get and not only how downright nasty this market can get, but what it can do to your emotions, because what it can do to your emotions as a trader is beyond anything you’ve ever seen before.

21:00
The only reason why I’ve been able to get really good with my emotions and with my dealings with fear and greed is because I’ve seen a lot of stuff in my lifetime trading in the financial markets. I’ve been through the recessions. I’ve been through the dot-com bubble. I’ve been through this pandemic. I’ve been through the 2008 Great Recession.

21:18
So I have, I’ve actually seen my share of bad times in the stock market and what it can do. And what’s actually funny is that the pandemic crash that we had back in February and March didn’t really freak me out that much from a trading standpoint. It really didn’t. I was just more worried about, gosh, I hope I don’t run out of toilet paper before this pandemic ends and I can’t get any toilet paper.

21:39
I hope they can get that production process back. In fact, I even installed a bidet. Is that how you say it, a bidet? I got that sucker off of Amazon. I was like, heck, I’m not going out in the woods. I gotta have something. So anyways, if you guys like this episode, I’d encourage you to go on to Apple.

21:56
Most of you guys listen to it on Apple or go to whatever platform you’re listening to it on. Subscribe or make sure to leave a review or 5 star review. That would be awesome. I always appreciate it when you guys do that. So many of you guys have done that already, and I just encourage you guys that haven’t done it yet to do it.

22:11
If you have any questions, send them to me at ryan@shareplanner.com. I get all of your emails, guys. I really do. I know that if you send me a podcast question and I don’t reply to it, that’s probably a good sign that I’m going to make a podcast episode out of it, OK? And if I haven’t done it yet and you sent it to me before September, shoot them to me again, because there’s a good chance I might have missed it.

22:30
I got a little bit more organized in my emails, so if I missed it, send it to me again and I’ll make sure to make it. Thank you and God bless. Thanks for listening to my podcast and I encourage you to join me in the SharePlanner trading block where I navigate the stock market each day with traders from around the world.

22:49
With your membership, 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/tradingblock. That’s www.shareplanner.com/tradingblock, and follow me on SharePlanner’s Twitter, Instagram, and Facebook where I provide unique market and trading information every day.

23:11
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.