Profits Don’t Come When You Want Them To | Podcast Episode #47

0:00
Hey everybody, this is Ryan Mallory with Swing Trading the Stock Market. In today’s episode, I’m going to talk about how the profits don’t always come when you want them to. What do I mean by that? Shouldn’t I always be cranking out profits always at the same consistent rate day after day after day?

0:16
No, no. In fact, there’s gonna be some dry spells. So, You have basically 3 types of markets and then there’s subsets of those 3 types of markets, and we’ll, we’ll get into as many of them as I can right here off the bat. I don’t want to spend the whole time talking about it, and I want to keep this podcast short enough to where I don’t bore you to death either.

0:34
The first one obviously is a, a bull market. You know, you can have subsets of where the bull market is one that’s coming off of newly established lows following a huge bear market. Or you can have one that’s just steadily marching higher in, on a regular and consistent basis, or you can have one that’s kind of getting toppy and frothy at the top, right?

0:54
So that’s your first type with its subsets. And then you also have a bear mark, and it’s the exact same thing except to the downside where you have just a, a consistent. Stream of lower lows and lower highs on the chart, so it, it’ll bounce, but it’ll also go back down.

1:09
But when it goes back down, it’ll go even lower than than the previous lows and then it’ll bounce but not bounce as high as it did before and then drop back down. So there’s your definition of a bear market you have. That start at the top of a previous bull market and then you have it to where it starts to mature quite a bit and you’re just getting a consistent sell-off.

1:28
We haven’t really seen a, a huge long sustaining bear market since 2009. Outside of that, the, the closest thing we had to one was 2000. In 18 quarter 4 because we were sold off for about 3 solid months there in the stock market and that was actually probably best defined if you were looking at it like on an hourly chart or a half hour chart to look at the steadiness and the consistent selling in the stock market during that time.

1:56
And then, of course, you have a sideways market and nobody likes those, and that’s usually where you have the hardest time making the profits. That’s where the profits don’t come at the rate that you want it to. I think you can make even more money in a bear market than you can in a bull market, and then in the bull market, you can do just fine as well. But when the market starts going sideways, even if it’s just for a few days or a few few weeks or, or maybe it’s for a few months, I remember back in 2015, we had just, it was just a constant sideways market and it was It would just drive you nuts.

2:24
Now, this year, the market’s way up and so it’s been a bull market off of those lows that were established back in December 24th of 2018, and then since then, we’ve just been pushing higher ever since. But the month of April and even for a lot of March, it was a very sideways trading action.

2:41
There wasn’t a lot of volume and there wasn’t a lot of reason to push the market higher. And until yesterday, where the market rallied almost 1%. The month of April was really flat. I mean, it was, it was moving higher, but it was moving incrementally higher with horrible breadth, and it wasn’t doing it with any gusto per se.

2:58
But now yesterday, it did rally. It broke out of our trading range and everything rallied with it. Advancers outpaced the decliners 3 to 1, and that was huge. Now, when it comes to my trading, I always try to be profitable on a monthly basis. I feel like if I can be profitable on a monthly basis, no matter what the market is, that over time, my gains will just consistently compile on itself each and every month, and it’ll, over the course of time, over 5, 1015, 20 years, being profitable on a monthly basis will lead to incredible gains.

3:30
Does that mean I’ll always be profitable on a monthly basis? No. I mean, there’s been times In the past where I haven’t, but I feel like I’ve learned a lot during those times and, and I’ve gotten really good at making myself a much more profitable trader on a monthly basis. In fact, I would say it’s been about almost 40 months.

3:45
I gotta add them up. I gotta count the months again, but I think I’m around like 38, 39, maybe even 40 months of profitability in the stock market here, uh, straight. So I haven’t had a down month in almost 4 years or going on 4 years. That’s, that’s awesome in my opinion, and that’s something that That I continue to build upon.

4:00
My goal is to never have a down month again. Um, can I say that’ll certainly happen? No, I, I’m, I’m human, so I think there will be a time where, where that might happen, but I, uh, I’m definitely, that’s my goal each and every month to be profitable. Why do I not say weekly? Why don’t you, Ryan, try to be profitable each and every week?

4:17
Well, I do. I definitely try to, but there can be a lot of things that go down in just 4 or 5 days, depending on how many days the market’s open. If it’s a holiday week, it’s only open 4, sometimes only 3.5. So to be profitable each and every week can sometimes be a challenge. In fact, this month alone, I have not been profitable each and every week.

4:35
In fact, the first week was an absolute monster for me. I had two bad trades. I had one in Boeing that cost me about 3.5%, and then I had one in Roku that cost me about 4.7%. Did I do something wrong on those trades? Well, No, I didn’t. I followed my trading plan.

4:52
I did it right. I got hit with some news events. I got hit on Roku for a stupid Amazon news piece that really didn’t make too much sense. And then the Boeing, they just had their own problems and I was trying to play the balance and I got hit with a negative news piece. Hindsight, if I knew those were gonna happen, would I trade them? Absolutely not. I mean, nobody has that privilege of hindsight, but if I, if I was the one special person that did have it.

5:12
No, I wouldn’t have traded. I wouldn’t trade any losing trades that I knew I would eventually have. I would trade only winners. So I got, I got hit on two trades, and that amounted to some, you know, hard losses there. Now, in the eyes of me, I was like, those, those are small losses. That’s not much, but that’s where I, that’s where I get my edge. I keep my losses small.

5:28
I keep my losses small because I want to maximize the size and the, the impact of every winning trade that I have. If I have big losses, or if I have average size losses compared to what others out there experience, then I’ll just have average results. But when you manage the risk, when you keep that risk tight, and you can still have a 50 to 60%.

5:50
Conversion rate of winning trades, then you’re doing something pretty spectacular there. And so, on the weekly side, yeah, there’s gonna be challenges each and every week, but over the course of a month, I actually feel like that you have enough opportunity there to figure out what the market’s trying to do and to, and to get on the right side of it without putting too much pressure on yourself to make a quick and rash decision.

6:10
Did you see, I can’t force the market to do anything. It can go up, it can go down, it can go sideways. It can rally 300 points one day and crash 1000 points the next day for no reason at all. I can’t force my will on what I want it to do, but I can look at the charts and I can see what it’s trying to do, what it’s wanting to do, and follow that lead, follow that direction.

6:29
Will there be unexplainable moments in the market that makes absolutely no sense to me? For sure. For much This month, I have had to be extremely patient with the market, even when it was like inching up and we’d be up like 1% overall in the market. The market was up 1% and I was flat or I was trading lower on the month.

6:45
I had to be patient. I couldn’t just thrust my will of what I wanted. I wanted profits, OK, but the market wasn’t giving it to me. It didn’t matter what I was trading, I was getting hit with bad news. I was getting hit with these, uh, trades that just wouldn’t go anywhere. But then towards the end of the month, you started seeing where the market was consolidating at, at the highs and, and getting ready to test the all-time highs, and then it broke out yesterday.

7:06
And when it broke out yesterday, all of a sudden, all those profits started coming to fruition where I was up in a month. I had made up for those bad trades in the beginning of the month in Boeing and Roku, and now I’m sitting on some decent solid profits overall, and that’s, that’s what you have to do in the stock market. You.

7:31
You have to follow the market’s timing and when you have a sideways market where there’s just not the kind of profits that you’re hoping for, and you don’t see the momentum and there’s not the volatility, well then you have to be patient. You have to wait it out. You have to give yourself the best chance to let this market eventually figure its way forward.

7:48
Stay consistent. Don’t all of a sudden change your. Strategies wildly, you know, in terms of how you manage risk, in terms of how you manage reward, in terms of how you use your stop losses.

8:03
Stay consistent. Always keep the risk tight. But if you start getting frustrated and say, you know what, I’m going 150% margin because I just need one day. If I can go 150% or 200% margin and, and take on all this extra risk, but if I just have one good day, it’ll make it all worthwhile.

8:22
I’ll get out of it the next day, I promise. You know, you start making these promises to yourself. It’s crazy, but traders do it all the time. And then all of a sudden, you have a down day and you just completely wipes you out. And why? Because you didn’t stay consistent. The market has this impeccable ability to catch you off guard, to know when you’re at your most vulnerable point.

8:41
And is that picking on you personally? No, it’s not. But the market behaves in such a way that it creates these kinds of responses out of you to do stupid things. When the market’s not going your way, when it’s not moving, you think, well, if I just add a whole bunch of extra positions on there, I can actually get some profits out of this market.

9:00
No, don’t do that. You stay consistent to your trading strategy, to how you manage risk, to how you manage profits, to this type of trade you, you trade. If you all you is trade large caps, and you’re good at it, and you’re frustrated with this market not really moving the large caps, but you always see these stock, these small caps always running, but you are a horrible trader at small caps or you just don’t specialize in it.

9:16
Don’t all of a sudden forsake the large caps and go with small caps. Don’t do that at all. I mean, stay within your, your genre or your, your area of expertise so that. You know that what you’re doing is putting yourself in the best position to profit going forward.

9:31
The market will eventually change. You will eventually adjust to what it’s trying to do, and you’ll be fine. That’s what happened to me here in late April. So know your market, know your strategy, but more, more importantly, and stay consistent, stay true to it. Know your risk, know your personalities.

9:53
Yes, and I say personalities and plural because depending on the market, we all have a different personality. I mean, when the market’s rallying and our positions are rallying, we’re a lot more happier than when we’re still long and the market’s dropping. It doesn’t feel good. People start throwing things and stuff, but, so know your market, know your personalities, know the risk on how you’re supposed to be trading regardless of the market that you’re in.

10:11
And don’t get so heavy on the positions. When you start doing that, when you start getting too, too busy adding new positions to your portfolio all the time, you’re putting yourself at a risk of just taking on some enormous losses because you’re too top heavy. The market’s not giving you enough action to justify the number of positions that you have open.

10:28
You shouldn’t be that long. You shouldn’t be that short, depending on the market. So, know your market. Know your personalities and don’t expect the market to always give you the profits that you want when you want it. It’ll give it to you in its own timing.

10:28
That’s gonna be it for today. If you guys have any questions, always feel free to email me, ryan@shareplanner.com. I’d love to hear from you and see what you have to say. Thank you and God bless.