Setting Your Swing Trading Expectations | Podcast Episode #495

0:00
Hey everybody. This is Ryan Mallory with shareplanner.com’s, Swing Trading the Stock Market. In today’s episode, we’re going to talk about setting expectations as it pertains to your swing trading. A lot of people have expectations when they go into it and then those expectations are kind of blown up into smithereens when they actually start getting into the going from the paper trading to the actual trading itself with real money.

0:21
And then the difficulty in the realization of that difficulty puts into doubt being able to ever achieve any of those expectations. So that’s what we’re going to talk about with that and it and really this podcast episode should allow you to walk away having a little bit more comfort with swing trading and not feeling the pressures of having to meet certain expectations.

0:41
So for this episode, and I’d never use people’s real names. I always use a fake Florida redneck name. For this episode, I’m going to call this person Betty because I don’t want to use their real names. The reason why I’m using Betty is because I took my boys to Waffle House for the first time just recently and Betty was our server.

0:58
So this is a shout out to Betty from the Waffle House for being an incredible server to us there, man. She was on top of her game. I, I gave her like a big tip. But by the way, who knew that Waffle House? You go to the Waffle House and it’s like 50 bucks for three people.

1:16
I remember that back in the day, I think I could eat for like 10 bucks for for three people. I mean, it was it’s nuts. I mean, I’m, I can say the same thing about Denny’s too. I mean, he used to have the dollar 99 Grand Slam breakfast and I thought that was great. But any case, Betty from the Waffle House writes I right.

1:33
I love the podcast. I’ve been listening like crazy ever since I discovered swing trading at the beginning of the year. I’ve been paper trading for the last few months while I build up cash for an active account. I have lots of questions. Any or all I’d love to hear about on a podcast I don’t feel like I have.

1:49
Here’s number one, I don’t feel like I have a good grasp on how many trades I can expect to take in a given week, month, or year. It makes me nervous when all I see is longs or shorts. Do you have a target ratio of long to shorts at any given time? My goal is to make this a profitable side hustle, but again, I don’t feel like I have a good grasp on what my goals should be in terms of taking profits, win rate, etcetera.

2:14
I’m sure you’ve already made a podcast on this, but I don’t think I’ve listened to it yet. And finally #4 all I want to do when I injure a trade is stare at the chart all day until it makes a move. Any tips on being so attached to the charts? I do want to say that I understand the answer to a lot of this is it depends.

2:33
That’s an old economic statement, by the way. If you ask an economist what will happen, and they’ll often tell you it depends. I know that because I studied economics. And if you guys been around the stock market for any length of time, you’ve probably heard economists get interviewed and they’ll say it depends.

2:51
But because they tend to not want to commit to one thing or another, they’re usually always looking at various variables. In fact, I think Jerome Powell says it depends a lot. Any case, without getting sidetracked by that, Betty wraps up by saying I just wanted to open up the floor to you to hear your thoughts. Thank you, Betty from the Waffle House.

3:08
Now, I like I like this particular question. It’s been a long time since we’ve had a hodgepodge of questions and and here we got a ton of them to go over and answer. By the way, and I’m not trying to ramble too much, but forgive me for on the lateness in some of these podcasts here.

3:23
Life has been really crazy of late. I’ve moved my family moved, they all came with me thankfully moved. That’s that’s always a pretty big endeavour trying to pack up everything and it wasn’t even something we’re planning on doing Saturday morning drive.

3:42
I told me and my wife we were in the car. I was like, hey, you want to go look at this house that’s for sale. Sure enough, made a mistake of going inside, falling in love with this good old country home and buying it. So now, well, I was talking about chickens and goats. And so that when that finally happens that that’ll be some interesting life expansion into to new endeavors.

4:03
But doing that and there’s a lot of lot of work to be done too on the place, but doing that daughter just got married. That was pretty exciting. And, and I got to tell you, she asked me to walk her down the aisle and I, I have to say that that was probably next to Mary and my wife and becoming a father.

4:25
That has to be like right there at that level. I mean, it was just such an amazing moment. I know it’s about her. She’s walking down the aisle. I’m just escorting her down. But I couldn’t get enough of it. I mean, it was just such a special moment for me. But in any case, I, I will get to these questions here now.

4:43
So Betty, the first question Betty asks is I don’t feel like I have a good grasp on how many trades I can expect to take in a given week, month or year. There’s really shouldn’t be an expectation. And that this is not a, it depends kind of a thing. It’s a matter of fact. You should not have a expectation for it.

5:00
And really it’s market driven. How favorable are the market conditions? I’ve gone weeks without making a trade and I don’t really blink an eye at it anymore. Before I felt like I was being lazy and it wasn’t necessarily because I was being lazy. Usually during those times I’m doing more research and work than ever before, but it feels that way because you’re not pulling the trigger on it and, and the trade in black.

5:21
Sometimes I, I, I, I probably assume that people are wanting me to make more trades than I often times do. But what, what’s the driver there is that the market conditions are not favorable. So I was able to short the market on, on different occasions when the market fell during the April sell off with, with everything tariff related there got to a point when I covered those positions that I wasn’t going to keep shorting just because the market was still falling.

5:50
I had to wait for that market to provide a better opportunity. And it took a while for that to happen. It started to bounce and I got a, a, a little action off of that initial bounce that day. I think we’re up like 9%. I got into SPY before it made that move. And all of a sudden I’m like, whoa, you know, I think he made some comments that, that the market really liked and it changed the whole narrative on the market, put a bottom in and it was off to the races from there.

6:11
But you have to wait for those moments. Market doesn’t always afford them, especially in the bearish markets where the volatility gets really high. You’re, you should be trading less and, and more volatile markets. And the reason why I say that is because the volatility is high. You don’t need as many positions to be able to make a return. And the more positions you have in a highly volatile market means the, the, the more fluctuation there is going to be in your portfolio.

6:33
And really, yes, you can make a lot of money, but you can lose a lot of money and you don’t want to be just being tossed about. And because in bear markets, there’s going to be, you know, rip your face off rallies and there’s going to be just absolute insane sell offs that make you think that the world’s ending. And you don’t want to be heavily hit when you’re on the wrong side of one of those moves.

6:55
So doing less with more, doing more with less. I almost miss bungled that one up. Doing more with less is the key. In a bear market, you want to let your positions, a smaller amount of positions do the heavy lifting. So in a bear market, I may only have like one or two positions.

7:11
In a bull market, I can have 5-6. And just recently I think I had like, I don’t know, it’s like 9 or 10. And so you, you really want to make sure that in the bear markets, you’re not cash is a position. And a lot of people don’t agree with that, but it truly, truly is because it shows the confidence that you have in the overall market.

7:31
So in a, in a scorching hot market, yes, I will have a lot more positions. I’ll have less of my cash on the sidelines. In a market where there’s more questions or where we’re starting to pull back and things are starting to look iffy, I might scale that back some order to stop losses will dictate that I have to scale it back some.

7:48
And so then my, my overall position is not as large in terms of equity exposure as it was before. The other thing that that helps to drive that is that a lot of my trade breakouts and so forth will not be validating. They will not be triggered into an actual trade.

8:06
And so when that happens, I’m not taking positions either because they’re selling off rather than rallying. So much of your, your portfolio success is going to be hinged on the overall market conditions. So if it’s a poor market, most of your positions are likely to go down and a good market, most of your positions are likely to go up.

8:22
The influence of the overall market on stocks individually is huge. And so skipping down to what? What question was it he he asked here? Number two, he says it makes me nervous when I see a lot of longs or just a lot of shorts.

8:41
Do you have a target ratio? I don’t, I don’t usually have a ratio of stocks. There’s times where I I could have some long positions and equities and then I have like a short on the SPY. That’s possible. But usually that’s like a transitional phase where I’m starting to shift from being bullish to bearish and just one of my positions haven’t hasn’t been closed out yet.

8:59
But but what I would say is that my cash position is going to dictate how bullish I am. So it’s almost like it’s really an equity to cash position ratio that I’m, I’m talking about. And you know, I may be like 90% long, 10% cash in a very strong bullish market.

9:19
And when things are starting to get a little bit leery, I may only be 40% long, 60% cash. And then when the market starts selling off, I’m doing less with more. I’m doing more. Keep messing up on that one. I’m doing more with less. So I may be like 30 or 20 or 30% short, 70% cash, but I’m not, I don’t think you’ll ever hardly see me get 100% short.

9:41
That’s just not likely to ever happen unless we’re just in this really prolonged extended sell off where the set that the shorts are just continuing to, to sell off and and at that, we haven’t seen that in a long time. So you look at the March 2020 sell off, what was that like 5 weeks?

9:57
You look at 2022, that was a pretty long extended sell off. But then the one that we had this year in 2025, that was maybe a month. So you don’t get when, when you’re short, you want to assume that the whole world is working against you to make you wrong in your, your outcome in your trade.

10:14
That’s when you’re short because everybody wants that stock market to go up. The politicians do, the Federal Reserve does the, the, the, the powers that be, the hedge funds, the institutions, Wall Street, they want the market to go up. So when you’re short, you’re short against not only against the market, but you’re short against the world too.

10:32
So assume that there’s going to be some nasty dead cat bounces. Even if they don’t hold it still rock your portfolio and ultimately stop you out. So be aggressive about taking profits and a bear market. Also going back to number one, that when he was talking about he doesn’t know how many trades that he should be making on a regular basis, I would say don’t chase the numbers.

10:52
Don’t feel like you have to make 5 trades. And this is kind of expounding on what what I talked about earlier. Don’t feel that you have to chase those kinds of games. Don’t feel that you have to chase a certain number of trades every single day or every single week. People do that and they say, I’m going to make 5 trades a day.

11:08
But then if you’re able to make 2 and your goal is to make 5, but those trade, the trade quality is not there to to justify trade 3-4 and five. What are you going to be doing? You’re going to be justifying trades that you shouldn’t be getting into. And so then all of a sudden the quality of your trades goes down.

11:25
So don’t set numbers for that. I would say in a given year, I probably make about somewhere between 140 to 200 trades per year. That’s about it. Not a ton. I, I think probably this year it’s a little bit less because there was a, there was a large waiting period there when the market was selling off.

11:40
And then when sometimes when the market rebound was in question #3. My goal is to make this a profitable side hustle. But again, I don’t feel like I have a good grasp on what my goals should be in terms of taking profits, my win rate, etcetera. Sure, you’ve already made a podcast on this.

11:58
I probably have. I mean, I’ve, I’ve talked about a lot of those things that link, but I don’t think it’s bad to to repeat because one, if you’ve already heard it before, it’s good to reinforce those questions, those thoughts ’cause you might have forgotten about it. And two, if you may not have gone back and listened to previous podcast episodes.

12:16
So I don’t really mind talking about it again. But before I do that, make sure to go to shareplanner.com and check out the self-made trader. This is my flagship course. This is going to teach you everything that I know. It’s over 25 hours of video instructions from me personally and I filmed it myself. I edited it myself, made sure it was exactly the way I wanted it.

12:34
Even the the write ups and the questions and the activities that go along with it was all designed and done by myself as well. It’s only about four years to build this. You can literally see me age from beginning to end. I don’t know what happened in the last four years, but I definitely aged. I guess I got older, but check it out.

12:52
The self-made trader. Go to shareplanner.com, click on the Academy at the top and check it out. I think you’ll like it. I think it’ll revolutionize your trading. And let me know if you have any questions about it too. You can e-mail me ryan@shareplanner.com. So #3 again, the question was my goal is to make it a profitable side hustle.

13:11
But the win rates, the position, the rate in which you take you, you take victories at is in question for him. Well, that all comes down to the reward risk ratio. How many dollars are you making for the amount that you’re risk? So if you’re only making a dollar for every dollar you lose, you need to have a higher win rate than 50%.

13:32
I always aim for two to one, try to make at least $2.00 for everyone. That means if I’m 50% right, and I think historically I’m about 57% right, I’m going to do much better than than on on a regular basis. So if I’m making 2 to 1 and I’m winning 50% of the time, I’ll have a good win rate.

13:52
I don’t really worry too much about how much money I think I can make on the trade. It comes down to the reward risk ratio. So sometimes it may be a slower moving stock. Let’s say I’m getting long on TLTI, don’t even know what trades at at these days, but let’s say 100. Let’s just say $100 to keep it simple and I’m getting in at $95 or I’m getting in $100 and put in my stop loss at 95.

14:13
Well, if I only think that it can go to 105, that’s really not the best, best reward risk ratio doesn’t fit my profile. That’s a one to one reward. But if I can say, OK, I think you can go to 105 and I think there’s a clear level of support at 97 1/2.

14:29
I’ll take that trade all day. It’s not as an exciting of a trade and I’m not getting caught up in the dollars. I’m just simply looking at it from reward risk ratio and you know, whether it’s a stock that I’m taking a 5% risk or a 7% risk on versus one that I might be only taking 2% and the reward risk ratio needs to be the same.

14:48
Now trying to hit that reward side of the equation gets much more difficult with the larger the stop losses because you need a bigger move from the market to be able to justify that trade. So you take for instance, a trade that requires a 20% stop loss and I don’t trade stop losses with 20%.

15:06
But let’s just talk about that for a second. If you do that, then you’re looking at having to have a 40% return on your trade or else you can’t really justify that. Yes, if it hits 40%, that’s great. I mean that’ll cover up a lot of bad trades. But if you’re wrong, you just took a 20% hit.

15:22
And let’s say you know, you’re putting 20% of your capital down on the trade, OK, you just took, you just took a 4% loss against your overall portfolio. That’s a pretty significant hit, not really one that I want to try and recover from. So it all comes down to now I, I’m not against people making 40% on their trade.

15:42
That’s great. I’ve done it before. It’s wonderful. But it comes because I, I took a pretty small risk. And so that reward risk ratio multiplied by tenfold. And instead of taking, you know, a four 4% loss, you know, and, and making it or an 8% gain, I ended up getting like a 40% gain and, and only took A at the expense of possibly taking a 44% loss.

16:05
So it all comes down to that reward risk ratio. If let’s say your reward risk ratio is 10 to 1, you don’t need a 50% win rate. You could probably get by with like, I don’t know, it’s probably like a 15 or 20% win rate.

16:21
I mean, it just all depends on, on the reward ratio. Risk reward ratio #4 All I want to do when I enter a trade is stare at the at the chart all day until it makes its move. Any tips on not being so attached to the charts? Yes, if you’re a day trader you should be attached to the charts because you’re looking to make moves very quickly.

16:38
But swing trading is a multi day process. I’d tell people my average swing trade goes from a couple days to multiple weeks. At best it goes three months and that would be that. I got in the day after its earnings report and sold before its next earnings report. And that rarely if ever happens. But it’s not uncommon for me to hold a stock for a month or two months.

16:59
And it’s not uncommon for me to get stopped out within a few days. I like to lose fast when slow, So what doesn’t make much sense is for me just to stare at the screens at a specific chart all day long. That means I’m probably 1 trained with too big of a position size because the outcome matters far too much and I can’t take my eyes off of it.

17:20
Or two, I have the wrong expectation for that trade that I think I’m supposed to get rewarded right away. I mean, I have, I have a trade that that I’ve been in GTX. The thing is a roller coaster intraday. And if I am constantly staring at the charts, I’m going to be making decisions based on these intraday moves when the trade’s really about a multi day process.

17:40
So you have to look at it from a multi daytime view and not just at the moment like, oh crap, it just dropped $0.10. You know, I’m, I’m getting out of this thing. Something’s wrong. No, that’s just an intraday move. That’s just noise. So you don’t want to get caught up in having to watch these charts all the time.

17:55
Again, if you’re scalping or if you’re day trading, yes, you got to watch the charts. If you’re swing trading, no, that doesn’t mean that you don’t watch it throughout the day. I watch my charts and I look at my stocks all throughout the day, but I’m not glued to one particular one. I’m just not staring there expecting at any moment it’s going to move. Now it can move and it can’t move against you.

18:12
I had a trade just recently Applied Materials AMAT and got downgrade. So I made a quick move to the downside. I took like a 566 percent loss, I think on the trade and that I think that was one of my worst losses in the last few years alone. And that stopped and but there was nothing I can really do about that.

18:28
And it hits my stop loss. That’s why I talk about stop losses because if the stock does make a sudden move and it goes against your interest, you want that stop loss to kick in and you’re out of the trade. So hopefully I didn’t give you anything that just felt like, and it was a it depends answer.

18:45
I thought these were all good quality questions from Betty at the Waffle House. And one of the things you got to remember is, you know, setting expectations, the number of trades or how much money you’re supposed to make or how often you’re supposed to win when you’re you’re setting expectations that are not rooted anything market related.

19:02
The only thing that I would say is is that win rate needs to be a certain percentage when you’re looking at your reward risk ratio. And when it comes to the frequency of your trades, you can’t push the trades. You got to let the market bring that to you. And that also goes for the the long short ratio, or what I like to call it, the long cash ratio, because the the cash, the amount of cash that you’re holding in your portfolio should be a reflective of the overall conditions of the market in your confidence.

19:29
And them. If you enjoyed this podcast episode, and I hope that you did, please make sure to leave me a five star review on whatever platform you’re listening to me on. If you’re on YouTube, make sure to like and subscribe and let me know down in the comments below. What, what are some of the expectations that you have a that you struggle with personally? I want to hear about those.

19:45
I also want to hear from you as well. Send me your questions so I can make a podcast out of it. I tell people all the time I don’t get enough emails from listeners and I want to hear from you guys. If you have a whole bunch of questions you can’t narrow down, just shoot a whole bunch of questions out of and we’ll do like what we did for Betty here and make a. Podcast episode out of it.

20:02
Meantime, check out the self-made trader at shareplanner.com. That’s gonna be my flagship course where you can get everything that I’ve learned over 30 years of trading. It takes you from beginning strategies all the way through advanced strategies. Really, really cool stuff. Think you’ll like it. Thank you guys, and God bless.

20:20
Thanks for listening to my podcast, Swing Trading the Stock Market. I’d like to encourage you to join me in the SharePlanner Trading Block where I navigate the stock market each day with traders from around the world. With your membership, you will get a seven day trial and access to my trading room, including alerts via text, e-mail and WhatsApp.

20:37
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, Instagram and Facebook where I provide unique market and trading information every day. If you have any questions, please feel free to e-mail me at ryan@shareplanner.com.

20:58
All the best to you and I look forward to trading with you soon.