When Should I Sell My Stocks | Podcast Episode #460

0:00
Hey everybody, this is Ryan Mallory with shareplanner.com’s Swing Trading the Stock Market.

0:04
In today’s episode, we’re going to be talking about when to sell my stock, when to take profits on a trade.

0:11
And it’s a a very unique situation to where you ride the stock down. You were taking a lot of losses.

0:17
And then you say to yourself, if I can just get back to break even, I’ll get out of the stock. But then instead of getting out of break even, which most people do don’t do, they actually keep riding it higher and all of a sudden they have a lot of profits and they’re worried about the bigger move.

0:31
They’ve forgotten the fact that they were way under on the stock and instead just focused on what might be going forward.

0:37
And we have that right now going on with Bitcoin. So today’s e-mail comes from a guy who is in the Bitcoin stock right now and he’s trying to figure out what to do because he’s been in it for a while. He’s been underwater on it for a while.

0:51
And now he’s sitting on a lot of profits. And instead of getting out of break even like he originally promised himself, he’s letting it continue to ride.

1:00
So is he doing the right thing there? Is he doing the wrong thing? That’s what we’re going to get into on this particular podcast episode.

1:07
So instead of using his real name, I’m going to give him a Florida red nickname, a good old name of Phyllis.

1:12
Phyllis is a good Florida red nickname. Why do I use the red nicknames?

1:15
I grew up in Florida. I don’t want to use the real identities just because they may not want their name out there 10 years from now.

1:21
So I try to conceal it for them and don’t want to use the real identities.

1:27
That’s pretty much what it comes down to. So for this e-mail, Phyllis writes.

1:32
Hey Ryan, love the podcast. And I’ve listened to probably about 80% of all the episodes so far.

1:37
Right now I’m in one of the wildest trades I’ve ever participated in. I jumped in Bitcoin at 69,000 in June.

1:43
Yeah, I know, perfect timing, right? Watch it tank down to 48,000 in August.

1:49
And now post election it is sitting pretty good at 93,000. I did a horrible job of managing the risk I would say, having my struggle here explained to you back when I was underwater I kept telling myself just get back to break even and I’ll sell out.

2:15
But now I’m watching this climb higher day after day and that old promise I made to myself is like a distant memory now.

2:21
Every time I hover over that sell button I get hit with the fear that I’ll be the guy who sold Bitcoin right before it really mooned.

2:30
The rational part of me knows that I should take profits, but there’s this voice in my head saying what if this is life changing move that everyone talks about.

2:39
I’m up way more than I ever thought I would be, but somehow that’s make it harder to sell, not easier.

2:45
Could really use some perspective on this, especially when the risk management has been such a disaster. Thanks for all the wisdom, Sincerely Phyllis.

2:50
PS Never thought I’d be stressed about making too much money but here we are.

3:01
It’s so funny how the more money you make on a trade the harder it is.

3:09
You say to yourself, OK, if I had a stock go from $100 to $200 a share it would be a no brainer man why?

3:11
What would I be upset about? What would I be stressed about?

3:16
I’m up 100%. But when you find yourself in that situation, it’s not that simple.

3:22
You go from a from $100 a share to $200 a share and all of a sudden you’re thinking, does it go to 304 hundred?

3:32
What if I’m on the cusp of something very, very special here and I can’t afford to get out? I mean, anytime I’ve been up really big on a trade, that’s the first thing that goes through my mind.

3:37
So clearly Phyllis is using no risk management.

3:46
He let the stock go from, he says here, what was it about 6869 thousand? Yeah, 69,000 all the way down to 48,000.

3:52
So that’s a $21,000 drop, assuming that he bought one Bitcoin, probably didn’t buy one Bitcoin, probably a far less than that.

4:04
But if he did buy one Bitcoin, that $69,000 position went down to $48,000 and then it goes back up to 69,000, which is where he said he would get out at.

4:10
But instead it’s like, OK, let’s see how how far this one wants to run. And it really has moved.

4:18
I mean, it’s gone from that breakout level of around 68,000. I’ve been trading in a channel going back to like March of this year.

4:25
It was a long channel, had a slight decline to it. And then in August, it the floor fell, fell out from underneath it.

4:32
And then it rallied off of the lows to be able to stay inside of that Channel, even though intraday on August 5th, it broke below it.

4:37
And then it continued to trade sideways for a few more months. And then obviously we know what happened post election.

4:46
Trump gets elected and then this stock or not the stock, it’s the the the crypto just go straight up.

4:53
I mean, it was it was already showing some signs of wanting to do it beforehand, but right before the election it pulls back.

5:08
What was it about like the down to like 67787 there that was on trying to find the date here. Oh, 11424.

5:18
So yeah, right before the election pulls back to that, that 60, seven, $68,000 mark.

5:23
And then it was like a perfect pullback of the breakout level, which is what a lot of breakouts will do actually.

5:28
They’ll, they’ll pull back to the breakout level that they initially broke out of.

5:35
They’ll it’ll retest it, see if it can hold and if it does, then it gets a strong bounce to the upside.

5:37
So that’s exactly what we’ve gotten here with with Bitcoin. It’s just gone straight, straight to the moon essentially.

5:47
I mean, exactly what he’s talking about here. He’s afraid of that happening.

5:53
It’s already happened. Whether it goes higher here, nobody really knows, but the, the move going from like 67 to to 9293 thousand in just a matter of like over a little over a week. It’s been incredible.

6:04
I mean, if you get in at 60 at 67,068 thousand and then it goes up to 9293 thousand, you’ve made like over 20% there. You can sell a good chunk of your profits there. Let’s say if you only, you know, put in $10,000 in it, I shouldn’t say only that’s still a lot of money. Put $10,000 into it and it goes up, you know, from this move here, it goes up to like, you know, 1314 thousand essentially like a 30% move. You can take the profits off and at least you’ve taken a, a good chunk of, of your exposure off the table or you, you can even go further than that and take, take more of your overall position off the table.

6:53
Maybe instead of it having like a $13,000 position, you know from where you got in with about a $10,000 position, you knock it down to like maybe $7000. And essentially you’re almost cutting your position in half, but only, but still having 70% of your original. So there’s a lot of things that he could do here, taking some profits off the table when your emotions get high. And, and here’s the thing to it, when people are writing the show, their emotions are usually pretty high at that point.

7:19
Their, their emotions aren’t, aren’t really, really chill because they’re writing the show. There’s emotions, there’s a lot of confusion sometimes. That’s usually a good indication they got a lot of emotions for the trade, taking some profits. When you do that, it does take some emotions off the table.

7:36
I get it that, you know, you may be worried about, well, what if it continues to go higher? I’d still like to be able to benefit from the whole position.

7:42
But here’s the other thing that I would say is, is that one trade, when it comes to trading, 1 trade should not make up your entire success story as a trader.

7:50
If you’re going to be a successful trader, it’s not going to come down to 1 trade. It’s going to come down to a history of making good trades.

7:56
On the flip side, you can have a history of bad trades or, or just one trade that defines you. So a successful trading career will be defined by many trades by by not just one, but by many. Because you’ve had a history of making good calls, good decisions, you manage the risk appropriately.

8:16
A bad trading career can be defined by 1 trade and that’s what you don’t want to have happen to you. But but here he’s worried about it mooning.

8:23
It’s already moon for the most. I mean, you go from 68,000 to 92,000.

8:28
Everybody in the their mom right now is talking about Bitcoin and, and whether or not they’re in it at that point you have, you have to realize there’s a lot of euphoria already in the stock.

8:39
So again, it comes down to you had a good trade here, you know, in terms of results, I think the risk management was horrible.

8:47
I wouldn’t recommend it, but overall it was a successful trade. Some other other thoughts put a put a Bollinger band on this sucker right now, if you put a Bollinger band over the Bitcoin, it is way, way outside of the of the Bollinger band.

9:07
I mean it’s way outside. It’s been running like four days hot. So a lot of times when it gets, and for those who don’t know what it is, most people will refer to it as being like a 2 standard deviations off of the 20 day moving average, right.

9:25
So price is 2 standard deviations off of what the 20 day moving average has been. That is a significant, significant move right there.

9:34
And when price gets out of the outside the upper Bollinger band, there tends to be a little bit of a reversion to the mean there.

9:41
So if that happens, yes, it can run outside of it, but typically is what I’m talking about. If it pulls back, do you do you really want to be holding a stock that goes back from 93,000? Let’s say it comes back down to just break even where you originally got in it.

9:53
You’re going to be hating yourself. The the amount of torment you will cause yourself if Bitcoin comes right back down again is going to be substantial. You will be extremely angry and so you want to avoid that.

10:06
You want to think about the emotions that goes along with your trades. You don’t want to be taking massive losses or even losing massive profits because you didn’t manage the risk or because you got too greedy.

10:19
It here’s the other thing about the the Bitcoin breakout. It got almost to three standard deviations out.

10:26
When it gets to three standard deviations, it’s almost guaranteed that it’s going to pull back at that point. And it’s a very rare occurrence.

10:35
But when it does happen, it’s it’s pretty significant. So keep that in mind.

10:44
And the history of of Bitcoin is pretty wild in itself. I mean, I’m I’m looking at a chart here.

10:48
You don’t have to, but just looking at some of these moves, I mean, you go back to let’s just go back to 2020.

10:55
This was trading at 9000. It goes all the way up to 64,000.

10:59
It was a pretty good moon shot. If you see a similar move like that here, yeah, that that would be what that would that would essentially like take it to, I don’t know, would it be like 600 something $1000?

11:14
So or no, Would it be No, it’d probably be like 360,000. So you have you have that spectacular move initially, that was when it was it was still on people’s radar, but not like it is now.

11:26
It goes from 65,066 thousand back down to 28,000. So that’s a pretty big move there.

11:34
You’re losing over half the value. Then it goes from, you know, the 28,000 mark and it within a few months it’s back up to 69,000.

11:45
Then it crashes all the way down. Over the course of the next year, it goes back down to 1515 thousand where it starts to base, breaks back out again.

11:53
Over the course of 2023, it runs back up to 74,000. So there’s some pretty big moves and pretty big pullbacks too.

12:01
We’ve yet to see it have a dramatic move and not pull back. OK, So the, the chances that this move here where it’s gone from 6768 thousand all the way up to 93 almost 94,000 and there’s not going to be a pull back of some kind.

12:15
And if there’s a pull back, you can take that same money that you made and buy more Bitcoin because it you you’re buying at a lower price than where you got out at.

12:23
So I have a whole lot to say about this guys.

12:30
But one thing I would tell you is make sure to check out swingtradingthestockmarket.com. Or you can just go to shareplanner.com and you can get a look at all the different services offered to you there with it. You’re going to, you can get, you can get all my stock market research and that’s going to include daily videos, not only just my watch list and the stocks that I’m looking to potentially trade, but I also review the watch lists and each day and tell you like, hey, this is what’s working with this is what’s not working. This is how I’m approaching this particular trade setup.

12:59
I also sent out a master watch list at the beginning of each week, a bullish and bearish one that show you where I’m going to be getting my trade setups from.

13:07
Plus on top of that, I do mega cap updates and overall stock market updates as well. So all video format, really cool stuff.

13:15
Really good way to to know what I’m thinking on the markets on a daily basis. And in the process you’re supporting this podcast, which I’m trying to do videos again for.

13:27
I haven’t done them in the past much, but I’m trying to give it another run. I think sometimes it’s I, I got to kind of sometimes ignore the camera because then I feel like I’m just talking to the camera and it feels more like a, a YouTube video.

13:37
So I have the camera on, but I’m not really paying too much attention. So hopefully that doesn’t weird you out at all.

13:44
But so like I said, you know, you’ve had this big move in Bitcoin, likely to do it again. You have the Bollinger Bands, you overlay them.

13:55
You can see it’s overextended and the fact that you’re feeling like this where you’re talking to yourself and saying, OK, what if, what if this is the beginning of something big?

14:02
Usually when I start thinking about how much money that I can make on a trade, like let’s say on the, on this Bitcoin trade, I get, I take it from 69 to 93,000 like, oh man, what if it goes to 200 now?

14:16
And when I start thinking like that, that’s usually a bad, bad sign for me. That’s usually that I’m, I’m getting irrational that I’m not focused or thinking about the risk.

14:26
I’m just thinking about how much money I can make. And I talk about that from a dollar watching standpoint.

14:31
When you start dollar watching, you’re thinking about, oh, if the stock does this or if it does that and I can get this kind of money, then I can buy that or I can, you know, pay for the mortgage or I can pay off a car or I can.

14:41
I don’t know what do what do people like? I can go for me. It would be, hey, maybe I’ll go use it for a fancy pizza oven.

14:49
I love, love upgrading my pizza oven. I actually have a pretty good pizza oven right now, but the Ghazni those are pretty sweet.

15:00
Let’s see here. What else do we have to talk about?

15:05
It’s it’s so easy and and this is one thing I would try to say too. It’s very easy for traders to get caught into this.

15:12
You get into a a trade you you show a lack of risk management. You’re not using stop losses and this case buying at 69,000 watching it go down on August 5th as low as like 48,000.

15:23
So you’re, you’re taking a substantial loss at that point, could have been a lot less if you would have just manage the risk.

15:29
And ultimately you could have played the breakout again because it was in this channel for the better part of 2024.

15:36
You could have played it right, not only when it first initially broke out, but you could have played it again when it retested that breakout level and and moved higher from there.

15:41
So you could have played it on on both occasions.

15:50
But instead, you used a lot of resources mentally watching the stock go from 6869 down to 48. And then you’re telling yourself, no, when it comes back to 6869, I’m going to go ahead and get out of the trade.

16:01
But of course you don’t do that.

16:04
So you’re showing, even though it turned out good for you, you’re showing a lack of discipline on both ends of the trade.

16:09
I, I don’t like the whole idea if I can just get out at break even that I think that’s a, that’s a lazy approach to trading.

16:16
I think that one, you plan your trade before you ever get into it. You make sure you know where you’re going to put your stop losses before you ever get into it and you may manage your trade accordingly.

16:23
If you get stopped out, you honor that stop loss and you get out. You don’t move it down lower, you don’t ignore it, you get out.

16:28
But anytime you say you’re going to get back out at break even, guaranteed that if it goes back up to break even, you’re not getting out at break even.

16:38
And and then here here’s where it gets kind of like complicated and weird. It gets back up to break even and let’s say you do take the profits and then you watch was just what happened thereafter on on Bitcoin.

16:54
Then you stayed in this trade thinking that it was going to go higher when you initially got in at 69, it goes down to 48 and then you say OK, I’m going to get out.

17:03
If it gets back to 69, you get out at 69 and then a few days later it’s trading at 93. And you just spent 7-8 months in this trade.

17:12
Actually, I think he said he got into it at June, right? OK, so it’s like 5 or 6 months, but it had been in this channel for since essentially going back to March. So that’s about 8 months.

17:23
So you’ve been in this trade all this time, been underwater 95% of the time, actually almost 100% of the time based off of when he got into it.

17:34
And then it gets back to break even. You get out and then you see it goes straight up.

17:38
So then what do you think you’re going to do the next time? Well, I’m not getting out of break even. And then the next time happens, you’ll wish that you did get out of break even because it goes right back down again.

17:46
You see how being undisciplined in your trading can wreck havoc on your mind. Because if this was me and I had gotten back out at break even and then it balloons to 93,000, I would be irate, incredibly irate, probably as irate as I was when I got stopped out of LinkedIn the day before they got bought out.

18:07
And yes, that that is a true story. But I was disciplined at least in that.

18:11
And I could look back on them and say, yeah, I missed out on a 60% move, but I was disciplined. And, and I sound a little salty about it.

18:19
I am. It was like what, 10 years ago or I don’t know how. How long did Microsoft get bought out by LinkedIn? I think it was like maybe not ten years, maybe it was like 7 or 8 years ago.

18:29
But yeah, I was, I’m, I’m still a little salty about that.

18:38
Think about this too. Why is Bitcoin going up? Obviously it’s made its move post election.

18:42
Trump won the election and stocks like Bitcoin or not stocks, crypto, the crypto cryptos like Bitcoin, stocks like Tesla, they’re all moon shooting.

18:55
I think Tesla went up since October 23rd something like 61%. I don’t think they’re they’re necessarily selling more cars as a result.

19:06
If anything, there’s a potential that there could be a blowback on Tesla that that people who are into EVs may not like the fact that he’s gotten so involved in politics.

19:15
And as a result, they’re not going to buy Tesla. Maybe they’ll buy Rivian or something from a from a car standpoint, an EV car standpoint.

19:26
And that could hurt, hurt the stock. But it’s running right now because Trump won the election.

19:32
So I think there’s a little bit of a euphoria there, a misplaced euphoria, just like with Bitcoin. If, if anything, I would say there could be a little bit of a misplaced hope in Bitcoin right now.

19:49
Just like I explained in, in Tesla, everybody’s like, OK, Elon, you know, closely aligned with or with with Trump. And that’s going to be good for the stock.

19:55
But it may not, it may alienate some of the customer base. On the flip side, people who were buying Bitcoin might have felt that.

20:09
If Harris had won, that the dollar might have deteriorated further or that we were going to continue spending. Now, you know, there’s like this Department of Government efficiency and so forth to where if they actually do get the houses matters in an order and they can cut spending and they can get closer to a balanced budget, that might actually hurt Bitcoin.

20:32
So there’s a lot of scenarios there that you have to consider and assuming that it’s just going to moon shot go to $1,000,000 a coin it it’s not going to likely happen in the here or now.

20:40
I don’t want to say ever because there is some pretty wild runs that Bitcoin has made.

20:51
But just taking the odds standpoint, I, I personally, if I was as low as 48 and now I’m looking at almost double that at 93.

20:58
Yeah, it might not be a bad idea to go ahead and close out that that trade there or at least take some profits off the board.

21:08
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21:11
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21:19
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21:29
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21:31
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21:36
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21:40
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21:45
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21:50
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21:58
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22:05
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22:16
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22:25
All the best to you and I look forward to trading with you soon.