Making That Money Back | Podcast Episode #196

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 Trade in the stock market in today’s email that I am going to answer is a sad one. It’s a heartbreaker, in fact. This gentleman has gone through some frustrating times in trading and has the losses to back it up.

0:45
So we’re going to talk about this guy today and the name I’m gonna give him, the Florida Redneck name like I give everybody because I don’t want to use their real names is Duke. And Duke writes, Hey, Ryan, I just found your podcast a few days ago after losing $15,000 of my $40,000 trading account on Smile Direct Club.

1:06
That simple SDC for those keeping track at home. Admittedly, I was being stupid and thought I had found the next GameStop while browsing through Wall Street bets. I thought it was going to keep running. I didn’t have stop losses set and doubled down when it kept going lower. After this massive loss, I pulled all of my money out of every position in my portfolio and stopped trading.

1:27
That’s a panic move. I found your podcast and have been binge listening every episode. I now understand my mistakes and will no longer be taking part in the pump and dump meme stocks. My issue is that now I’m extremely afraid to see any red at all in my portfolio, yet on the other hand, I find myself trying to get back my losses as quickly as possible.

1:47
I’m so paranoid to the point where I set my trailing stop loss no more than 1% every time I trade. And I still find myself trying to get in at the bottom instead of waiting for it to break through resistance before I buy like you suggest. It’s to the point where I almost feel like I should just stop trading completely for a while because I am so emotional about it.

2:07
It’s currently 6:30 p.m. where I live and I have been working since 6:30 a.m. because I want to make this money back so badly. I guess I’m just asking for advice. I’m at a loss and I don’t know what to do. Thank you, Duke. And before I get into this any further, make sure to go to swingtradingthestockmarket.com, where you can get all of my market research that I provide to my listeners each and every day.

2:32
swingtradingthestockmarket.com, you’ll get all of my analysis on the S&P 500, the Russell 2000, the NASDAQ 100. You’re also gonna get updates each week on all of the FA stocks plus Tesla, plus Microsoft and my weekly watch lists, plus.

2:48
The list of daily setups that I’m following each and every morning and the most intriguing charts that I come across each and every day. So check that out. swingtradingthestockmarket.com. Now, what am I drinking? I’ve almost put this whole podcast off the entire week because I really don’t want to go down memory lane with this whiskey, and it’s not a good whiskey, folks.

3:07
It’s Southern Comfort, 35% alcohol, 70% proof. I’ve got some bad memories about this one. It looks like piss, OK? It’s another one of those pissers for a whiskey. I mean, if you’re gonna make a whiskey, don’t make it look like something you just scooped out of the toilet.

3:24
And Southern Comfort’s cheap, man. It’s cheaper than Jack Daniel’s. It’s disgusting. I have some bad memories with this from when I was younger. I haven’t even been able to handle the smell of it. But today I’m going to do it. All right, so on the smell, I would say.

3:42
I’m picking up notes of formaldehyde on. The taste? Oh my gosh. It’s like, I’m picking, basically, this is what I’m picking up. I’m picking up notes of a flat coke that’s been sitting in the back of your car in the Florida sun for the past two weeks and you pick it up and you drink it.

3:58
That’s the kind of taste, that’s what I’m experiencing when I drink Southern Comfort. And the finish, it’s not hot, it’s not smooth. It’s disgusting and it’s one of those things where you gag all the way to the bathroom. And then you find yourself sticking your finger down your throat just to puke it back up into the toilet because you cannot handle it.

4:16
It’s that disgusting. For a score, I’ve really debated whether or not to give this one the worst score of all time. I’m gonna give it a 0.0016, which is 0.00001 higher than the all-time lowest score of Ravens lace.

4:36
At least this thing didn’t come in pink. That was the differentiator. It came in piss, probably better look than the whole Ravens lace thing that came in pink. I don’t even know what that was about. This one is disgusting. Southern Comfort, if you have it, flush it down your toilet.

4:52
I think it’s the most disgusting drink I have ever had. And here’s what’s even funnier. It says it’s in a category of 1. It sure is, actually, it’s in a category of 2. And on the back, it actually says the flavor of whiskey made comfortable. It was the furthest thing for comfort on my end.

5:07
It says sweet, smooth, and delicious, unlike any other. You got that right, in terms of unlike any other. Try your comfort with cola. They’re actually telling you to try it with something else, like it can’t stand alone on its own because it’s that gross. At least that’s my take from it.

5:23
That’s what it was for me when I tried it. It was disgusting. I would never ever. Wish anyone to try that. And the only reason why I have it cause I bought it like 78 years ago and I’ve literally not touched it one time. All right, to the podcast here.

5:39
We’re gonna go piece by piece through this email. Duke says, I found your podcast. I’ve lost $15,000 of my $40,000 trading account on Smile Direct Club. So that’s a huge chunk. That’s basically 37% of his account lost on Smile Direct.

5:56
What does that tell you? He’s trading a massive amount of money on SDC way more than he should be. So that’s gonna be his first thing. He’s trading way too big a position sizes, and I can tell it too because at the end of the email, he’s getting very emotional about it.

6:12
He’s talking about how he’s been up 6, 6:30 in the morning. He’s scared. He’s putting in way too tight a stop losses. That’s all indicative of the experience that he had trading far too large on STC. And for those who aren’t familiar with the chart.

6:36
This is a stock that in the beginning of 2020, went from the $15 range all the way to like 3 to $4. And that’s mainly in part due to the whole COVID sell-off that the entire market experienced. And then it marched higher, went from $3 to $4 all the way back up to $16.

6:56
And that was in February of this year. And ever since February this year, it has been trending lower and now it’s at $6.76 as of this recording. So, huge sell off. Clearly he’s not using the stop losses. That’s a big problem too. And I’m not trying to pile on to him, OK?

7:18
What I’m trying to use is, uh, some tough love with him and also for the listeners that are finding themselves in similar conditions or similar situation because there’s a lot of you guys out here listening right now because you’ve made some of these mistakes and look, I’m not getting mad at you about it because I’ve made these mistakes too in my past.

7:34
This is how I learned. I didn’t have a mentor. There wasn’t podcasts and YouTube videos when I started trading. I had to learn all this stuff on my own, picking up some books, yeah, hit or miss on the books, but overall, I had to really dig deep into why I was not trading well.

7:54
And so the benefit to Duke here is he has somebody that’s literally doing an entire podcast for him on his behalf. And yeah, Smile Direct, that’s one of those Wall Street bet stocks that a lot of people have hopes in. I keep seeing a lot about it all the time. People are asking me about it. People are showing a lot of hope in this particular stock, but your hope can only take you so far.

8:15
The stock has to actually perform. And just because you are hopeful about a stock going up doesn’t mean the stock is going to reciprocate those feelings. In fact, most of the time a stock does not reciprocate the feelings that we have for it. I’m in a stock right now, unity, up about 10% on the trade.

8:37
My hope is that it keeps going up and up and up, that one day I’ll see this thing up 100%. Now that’s my hope. Is that the reality of it? No, I’ve taken a little bit off the table because I know that my hope is misplaced and that my hope can’t be what guides my trading. Instead, it has to be based on reality and facts and what’s normal for the stock market.

8:53
What we saw in GameStop and AMC as long as I’ve been trading, that’s one of the craziest things that I’ve ever seen in the stock market. And so when you’re trying to trade these massive outliers and thinking that it’s going to keep repeating itself, that’s where you’re going to get yourself into trouble and stuff like SDC it’s being pumped on these message boards and people.

9:10
We gobbling it all up thinking that, yeah, this, this is here is going to be the next one. This is my ticket out of town and you can’t trade out of desperation in the sense that I need to get rich off of this. I need to pay off my debts with this one. I need to pay for my kid’s college or my mortgage or my next apartment rent that is due.

9:29
Trading has to be done in isolation from everything that you’re doing. And so this guy’s account’s gone from 40,000 down to 25,000. And he wants to make it back up. Is he wrong for wanting to make it back up? No. Everybody wants to make up money that they lost in the stock market. That’s just a simple matter of the fact.

9:46
Is it the right approach? No. One of the best things you can ever do is to be honest with yourself in trading. If you had $40,000 a few months ago in the stock market and now you only have $25,000 the $15,000 is gone. It’s gone. You have an account now of $25,000.

10:03
And as traders, we have to be willing to accept reality. Instead, what most traders are thinking about when they take a loss is they see the $40,000 as point A and now they’re at point B and they need to get back up to point A. No, $25,000 is the point A. That’s your new reality. Point B is what are you gonna do with that $25,000 going forward?

10:21
Are you gonna make good trades? Are you going to show the discipline? Do that, manage the risk, Lord willing, that money will climb higher. Maybe it’ll get back up to 35,000 in a year or two, or maybe it’ll get up to 50,000. Maybe at some point down the road, you’ll look back and it’s like, man, what a journey that I was on.

10:47
I started off, lost a lot of money, but I stuck to it and over these years, I’ve made all that money back and more. And that’s, that’s a point B. But the thing you don’t want to focus on is where you used to be. It’s kind of like. Those guys that you see at your 10 year high school reunion, or the guys that you meet at the gym, and they’re like, yeah, I would have been in the NFL today or yeah, I had a full scholarship to Alabama, but, you know, my knee gave out on me and I wasn’t able to, uh, play.

11:08
Man, it stinks. If I didn’t get injured, I’d be in the NFL today. They’re living in the past, man. They’re still thinking that they have that talent, that they have that ability when they don’t. There’s a reason why they didn’t make it to the NFL and there’s a reason why they didn’t make it to the college. Football program of their choice. For the same reason.

11:25
There’s a reason why somebody loses $15,000 from going from $40,000 down to $25,000. They had a very bad trade and there was a lot of factors that played into it. And so the new reality is just like for the gym guy or the guy at the high school reunion, his reality is the fact that he’s not playing football for a living. Your reality as a trader has to be.

11:44
I have $25,000 in my account. That’s your reality. What are you gonna do with it from here? You’ve got to forget the past. You learn from the past, for sure, and that’s what we’re doing with this podcast. Learning from the past. Everybody’s getting a chance to learn from the past. And in this podcast, a person who’s lost 40,000 going down to 15.

12:03
Now, he’s already learning some of his lessons. What does he say? He says, I understand my mistakes and I will no longer take part in pump and dump mean stocks. That’s one of the mistakes. But it’s also concerning is that he’s afraid to see any red in his portfolio. What that means is that he’s got like, I don’t want to call it PTSD, but, uh, it’s more like some trauma, OK?

12:20
He has some trauma to where what he experienced in the past, he’s afraid of it happening again. It’s a good to have. That caution when it comes to the stock market, but you can’t, can’t let that overtake your trading decisions either. You’re going to see red in your portfolio, you’re going to have losing trades on a regular basis.

12:40
As successful traders, you’re always going to have losing trades. If you have trades that lose 45% of the time, you’re doing a pretty good job. If you’re winning 55% of the time, that’s a pretty good job. Even over 50%, that’s a good job. Heck, I know some traders that are profitable and they only won 30% of the time. But you gotta be willing to see the red in your portfolio.

12:58
The difference is, is that how are you gonna manage that red? Are you going to let the red get even more red by letting that stock sell off and not follow any stop offs I can tell you. Somebody that goes from 40,000 down to 15,000 is not using stop losses, or if he does, he’s just. Ignoring them or not paying attention to them.

13:14
So, except the fact you’re gonna see red. You may go from 25,000 down to 24,000 because you may have a string of losing trades and that’s OK. We’re all gonna have strings of losing trades. What also concerns me too is that he’s using trailing stop losses, and I see a lot of people do that after they’ve experienced some losses.

13:34
They want to make it as mechanical as possible to where there’s like, you know what, I’ll just set my stop loss, and as high as it’ll take me, that’s where I’ll get out. But the problem is, and I’ve talked about this just in a recent podcast episode about trolling stop losses, and I would encourage anybody listening to go back and listen to that particular podcast about trolling stop losses because I do get into it in quite a bit of detail.

13:56
The problem with the 1% stop loss or any stop loss for that matter, and I’ll get into the 1% in a second, the stop losses ignored some critical support levels where it probably should be a little bit lower than where it’s trailing at. Stop losses are made to be put below key support levels, so it requires you to evaluate your charts on a regular basis to figure out where do I need to be putting my stop losses at right now?

14:12
Am I hitting some resistance that says, go ahead and take the gains now? It’s not pushing through the resistance like what you’ve seen in Amazon for like the past year? And the whole thing about using a 1% stop loss, whether it’s trailing stop or just a regular stop, is that you’re not giving yourself much wiggle room.

14:35
You’re expecting the stock to be perfect, the technical analysis to be perfect, and our technical analysis is not perfect. There’s so many times when I draw a trend line that there’s very subtle differences in how you can draw that particular trend line. All of them are right, but there’s some fluctuation behind where should that trend line and what point should that trend line be connecting, and that can be the difference of 1 or 2%.

14:53
So I really do believe as traders we have to give ourselves a little bit more room. Typically on my trades, I’m somewhere between 4 to 6% on my stock losses because I want to give myself a little bit more wiggle room, but because of 1%, you can be out instantly in that. I mean, the stock market can practically fart a 1% stop on you.

15:09
So it makes me think that this guy, Duke, Is using that 1% stop loss to avoid taking any losses at all. And if you do that, you’re probably gonna take more losses just because you’re trying to be perfect and you can’t be perfect. You just gotta be accurate. You gotta be consistent.

15:34
You gotta be consistent with how you manage the losses, you gotta be consistent with how you manage your trades. And the other thing too, and I think I just talked about this one in a recent podcast episode as well. Uh, I think it might have been the last one that I just did, but talking about where he gets in right at a support level.

15:49
Even though there may be resistance right above, you need to see whether or not a stock wants to hold that support before you start getting long on it because it may just slice right through support. Support’s meant to be broken just as much as it’s meant to be held. What we’re trying to play is play the brakes and play the hold, but in order to do so, we need confirmation.

15:49
Now, the final part, he, he’s talking about he’s been up for 12 hours. I don’t know if it’s because he’s been working at work work or working on the stock market. He wants to make that money back. We’ve already talked a lot about not focusing on the money back, but where you’re at right now and trying to go forward with good consistent trades. Forget about the $40,000 that’s a loss. 15,000 at least.

16:07
You got some left over, work with that going forward. Now, emotional trading, you don’t want that. You don’t want to be emotional about it. It’s not bad to take time off, especially when you’re young in your career as a trader. Take it off because I, I know I’ve used a lot of football examples, but because I watch a lot of football.

16:24
I like football. I don’t really, I watch other sports too, go Astros, but. Football is my bread and butter, and I, I played football, so I, I feel like there’s a lot of examples that I can use with football, but One of the reasons why you see a lot of new quarterbacks when they get drafted, at least it was more so in the old days. I know now they throw them right into the, into the fire, you know, with the Wolves and everything else, but back in the day, they used to let a quarterback sit for 1 or 2 years before they let them start quarterbacking and taking over the starting duties.

16:49
Why was that? It’s because When you go from college to the NFL it’s a whole other league. These guys are getting pummeled. Everybody’s faster, everybody’s quicker. Everybody was the best in their schools and college, and now they’re being drafted into the pros. They were the best of the best of their conferences. And so, It’s very similar to that with trading is that just like in football, they’re trying to protect that confidence.

17:11
They don’t want somebody to just get destroyed before they’ve had time to develop. You take somebody like Ryan Leaf and Peyton Manning, both of them were traded in the same draft year. I think they were traded back to back, in fact. Ryan Leaf from a physical standpoint was probably more talented than Peyton Manning, but Peyton Manning had a better head on his shoulders.

17:32
Ryan Leaf was very talented physically and he turned out to be one of the biggest draft busts. He went to San Diego and he had a horrible career. Now, had he been brought along slowly or had he taken time to develop and not just had his confidence crushed, he might have been a completely different quarterback.

17:49
And that’s as a trader here. Duke is feeling a lot of pressure and feeling very emotional about the money that he lost. And so sometimes it’s not bad to take a step back. Take time to let yourself develop. Go back and, and review your trading plan, your strategy and your approach to trading, and what are you gonna do in this situation and that situation?

18:08
How are you gonna manage losses? How are you gonna manage winners? Are you going to scale out of position or go all in and go all out? You gotta ask all yourself those questions and make sure that you’re level-headed when you pull the trigger on that next trade. So to wrap this up, what are our takeaways here?

18:24
One, you’ve got to manage position sizes. You can’t put all your hopes on a particular stock and you can’t go off of your hopes and dreams for what you want to make out of stock loss. You gotta have it based in reality. It’s OK to hope that a stock goes through the roof, but it’s much different when you base your trading strategy off of a stock going to the moon and, and colonizing Mars.

18:43
Second of all, you can’t look at the money that you’ve lost and the stock market. You gotta look at where you’re at now and move forward. What is your plan going forward and Be consistent, manage the risk, let the profits take care of themselves, and you’ll be fine.

18:59
But you can’t live in the past and you can’t keep worrying about the money that you did lose because as a result, you’re going to probably lose more money trying to make up that money that you just lost. You’re going to take bigger bets in the future because you need to make that money back. Remember, if you have a portfolio that’s worth $1000 and it goes down to $500 you lost 50%, but in order to make that money back, you gotta double your portfolio.

19:20
You gotta make 100% on a trade. So you gotta remember that it causes you to take much bigger risks in order to make that money. And if you’re feeling too emotional about the trade, take a step back, relax, take a breath. There’s another day for trading. I think there’s like some 240 something days of trading in a year.

19:37
I can’t remember what the exact number is, but there’s plenty. There’s plenty for you to profit off of. If you enjoyed this episode, I’d encourage you to leave a 5-star review on. iTunes podcast app or Amazon or Spotify or whatever you listen to, make sure to subscribe. Make sure to check out swingtradingthestockmarket.com.

19:54
That’s what supports this podcast and keep sending me those questions, ryan@shareplanner.com. I love tackling them. I like getting into the high grass and into the weeds with you guys, trying to make sure that we’re doing our best as traders to be profitable in the stock market long term. Thank you guys.

20:09
God bless. 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, email.

20:27
And WhatsApp. So go ahead, sign up by going to shareplanner.com/tradingblock. 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.

20:44
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.