Trading Depth Interview #11: Ryan Mallory — Watching Stocks Fly Like SpaceX
Living next to Cape Canaveral in Florida, Ryan Mallory immediately sparked our interest with the engaging life story of a successful trader. He’s eager to watch rockets take off as his stocks do. Ryan is a swing trader which gives him a mental freedom from everyday trading.
Nevertheless, this episode’s hero does trade every day since trading is his passion. Enjoy the interview with the creator of Share Planner.
Ryan, while reading through your short answers, I was particularly interested in your early experience, especially getting the inheritance. I was wondering how you used that money. What choices did you make?
So, there was this lady that raised my mother, and when she passed away in 1991, she left me and my three siblings $5,000 each for college. And I’m the youngest of four kids. I was the one who was not going to college at that very moment, so my dad thought it would be great to put the money in some kind of a mutual fund or stock.
It was the 90s at the time, right at the cusp of that huge rally that the market went on, probably one of the greatest rallies of all time. So, it was really good for an 11 year old to be in that situation where the market just kept going up by leaps and bounds, and my dad was telling me what the share price was, what shares and stocks were, and what it meant to diversify. Overall, he told me these basic things, not so much because he thought I’d be doing this one day, but because he was just trying to educate me a little bit.
It kind of really sparked my interest in the stock market, and I remember being in the 5th grade and the teacher would bring in a newspaper every day for the class to read, and I was reading the business section instead of the sports section or the comics. I was looking how my 2-3 stocks were doing, and it was crazy because every day during that time, it seemed like the market was just going up really fast.
I didn’t realize at that time that I was actually learning how to do the charting of stocks. I was pricing out stocks and getting the feeling of what it meant to read price action and to understand it better without even realizing I was doing that.
That’s interesting. So, I guess, the idea of SharePlanner emerged in these early days when you were growing up?
Essentially, yes. And I worked in Corporate Americafor a while but I wasn’t really crazy about it. I remember thinking about what I’m gonna do so that I don’t have to work at this job for the rest of my life. I went back to my trading, and, at that time, I was just out of college, and I hadn’t been trading much in college and the early part of my career.
So I started working at it again, doing it for years, trying to trade my way out of Corporate America to do it full-time for myself. Along the way, I was going to document all my trades through this website I created. Basically, at that time, it was a simple blog called SharePlanner, and it was getting a lot of attention, people started to follow it each day. As a result, I found myself taking these long lunch breaks, using my vacation time to keep the site updated with relevant content. Eventually, coupled with trading and wanting to develop SharePlanner, I quit my job.
Nice! When did you take a shot with your initial investment of $5,000? Was it just before everything collapsed? The Dotcom bubble?
Yes, that was a great lesson that I learned out of the Dotcom, and it kind of demoralized me because my first experience with the stock market was during that time when the expectations were incredibly unrealistic and nobody thought anything would ever go down again. I mean, people just got really wrapped up into it and they thought they were better than they really were because there was so much forgiveness to the market that it simply couldn’t go down and could double overnight with the Dotcoms and everything else. So, I learned that the downside of the market is that you have to be able to manage and control risk.
So, when the market bubble finally did pop, I lost a lot of that money, and it taught me that markets go up, but they go down too. You have to able to manage the risks. You need to avoid the market fluctuations and the drawdowns associated with trading stocks.
The last lesson that new traders could learn was the Bitcoin bubble, the recent one, in 2017. I’m asking you about cryptocurrencies because I saw some posts about Bitcoin on your blog. Are you just wondering about crypto assets, or do you actually trade some of them?
I don’t trade the cryptocurrencies, but I get a lot of questions about them, and I do find it pretty fascinating. I think they chart pretty well, Bitcoin* particularly, and that’s the one I’ve paid the most attention to. It tends to follow technical analysis pretty well, but the problem is the volatility associated with it, and you have a lot of people that are trading cryptocurrencies that have never traded stocks in general, or anything else for that matter. So, that is probably same as the situation with the Dotcom bubble in the 90’s, when young people were getting into the market for the first time, not really having the grasp of the ups and downs.
The cryptocurrency also has been interesting because I remember being in a little coffee shop back in December, and this guy came up to me. He saw some charts on my screen and asked me, “Do you trade cryptocurrencies?”. I said, “No”. And he replied, ”What are you trading then?”. Like there was nothing else I could possibly be trading. So, I said that I trade stocks, and he asked me what I think about Bitcoin. I said, “Well, if you are in it, I think you are gonna lose a lot of money in it pretty soon, and I wouldn’t be touching it”, and he got really combative with me verbally, saying, “You are crazy! I don’t know why you’d think something like that!”, and I said, “Well, the fact you are taking such a hard reaction to me just saying that further validates my point”.
You can go back to my old posts to earlier this year when it was peaking out, and I was saying that it was going to go down to $6,000, and so far it has done exactly that. Like I said, it does follow technical analysis pretty good, I think the volatility makes it a bit difficult. I believe shorting it is almost unbearable to do, and I just don’t see my ability to manage risk properly on the cryptocurrencies, not that some people can’t, but it all goes back to the risk tolerance. I think for me, the technology behind it, like the wallets, account safety, does not seem very secure. Your account can be hacked, and you can lose everything, sometimes not even being able to trace where your money went to.
Exactly. Well, anyways, let’s go back to traditional markets. In one of the answers, you mentioned that in future we might see the battle between the Wall Street traders and retail investors. How do you envision this battle? Is it like hedge funds and high-frequency traders against the crowd?
Well, let’s look at the last 30 years. You know, people pretty much had to do everything through the brokers, call them up, saying they wanna buy stock ABC or XYZ, and there was a very difficult technology gap between what the retail investors were able to do versus what somebody was doing on a Bloomberg Terminal. But the gap continued to shrink to where now traders, depending on the kind of software they use, or the platform they work from, can place trades at lightning speed and bypass financial advisers, and I think the model of financial advisers is kind of outdated, and they will continue to become less and less needed too. So the gap between the Wall Street and what traditional retail traders are able to accomplish is going to be negligible.
How did you personally start trading? Did you ask a broker to do it for you or did you do it on your own?
I mean, when I first started off, I was just a kid. Now, when I started doing it with SharePlanner, I’ve always done online trading, and I’ve seen the technology change quite a bit from when I first started doing it through TD Ameritrade. Then ThinkorSwim came about. I thought they were a pretty big game changer, and then they got acquired by TD.
Now we have some new ones, and we are seeing a lot more technology improvement. Also, they are challenging the traditional model of $7.99 a trade or $10 a trade that you will get from your bigger brokerage versus doing it from Robinhood where they are doing commission free trading, or Tastyworks where they charge you a few bucks for opening a trade, but free to close a trade. So, there are a lot of really cool models out there that people can take advantage of, and that is what I’m excited about.
What software do you use?
I use TC2000 by Worden, and it’s great. I’ve probably used them for 10 years and they are continuously improving their technology. I think it’s really important to find something that you are comfortable with. I think TC2000 has been great for me, but it might not be great for somebody else. Luckily, there is a lot of good options out there, like Finviz, for example, that people can take advantage of.
What about your working schedule? Have you already traded earlier today, for example? What does your schedule look like?
Yes, I would say most of my trades are usually in the morning since I run a service where people can trade together and work together, and they can also follow my trades in real time. But then, there are times like yesterday when I bought Baidu, and then Twitter in the afternoon and that turned out pretty good.
So you are pretty flexible with your schedule?
Yes. I don’t have a fixed schedule, but I would say 80% of my trades are usually done in the morning. I wake up about three hours before the market opens, and I get a lot of my research and work done during that time. However, I also go to bed pretty late, so I guess I need to figure out how to get a little bit more sleep.
That’s important! By the way, how do you relax? How do you relieve stress?
Well, I started playing piano when I was in the third grade, and that is something I’ve always enjoyed doing ever since, especially the relaxation that comes from it. Besides that, I do a lot of fishing, being so close to the beach and having lots of friends with boats. So, that’s what I do a lot.
You have also mentioned shooting and cooking. Does that mean you go hunting?
Yes! I grew up hunting with my dad. I don’t do it as much lately, but I enjoy going to the range and firing off a few rounds. It’s actually a pretty good stress relief too. And yes, I like to cook some. It’s not something I’ve always done, but over the last 4-5 years I kind of picked it up and I really enjoy it.
I see you have a pretty good balance between work and hobby, and I guess it goes back to psychology and controlling your emotions. Do you devote special attention to psychology when you teach or write your blogs?
Absolutely! I think the whole psychology of trading is immensely important. In fact, I would say success in the stock market is probably 90% mental and 10% the actual stock that you trade. The thing is that people will tell you that you should not have any emotions when it comes to trading, and I think that is totally false. We are all humans, and we cannot get rid of emotions, but it’s about how you handle those emotions.
So, if you are feeling like you have to get out of some positions, but there is no technical reason for it, you should not be following what the emotions are saying, you should be following what the charts are showing.
What does the word “trader” mean to you?
I think a trader is a person who manages risk. If you are not managing the risk of a trade, the profit does not matter. So, if you manage the risk and you trade what you see, managing emotions, then the profits will also take care of themselves. It does not take a genius to find a winning trade, but it is about how to manage the losses because the ego is a huge problem in trading.
So, as traders, we have to manage our egos, because nobody likes to lose, nobody likes to regret something. Instead of looking at it through that lens, we have to realize that losing is part of the process. Let’s just keep our losses small since we are gonna lose along the way, so that when we are right and do hit those big trades the profit more than covers the losses.
What about the social role of a trader? What do your friends think about your profession, and do you even care what others think?
I don’t worry too much about it. Some people will ask you a lot of questions, trying to figure out how a person does this for a living and does not have a traditional job. I think, especially now with the Internet and how it has advanced the traditional mindset of what a traditional job is, there is nothing too shocking about it.
The people that know me have always known that I’ve traded, so, I think there is no issue for me in that sense. Another thing would be if a person decided to jump into trading after he or she had been working in a completely different sphere for 20-30 years. In that situation, I could see that there might be some social stigma.
What would be your tips as a professional swing trader? For example, for someone who wants to go from day trading to swing trading.
I would say never trade earnings. That is a really popular thing to do, and people love it, but earnings are almost impossible to predict. Even if you know what the actual earnings are going to be ahead of time, and you can base your trades off of it, you still may not be right, because a lot of times a company will crush its earnings and still go way down. So to me, earnings are like going to Las Vegas and choosing black or red.
Overall, not trading earnings would be my biggest tip there. The other one is to always use a stop loss. Don’t go into a trade without doing everything necessary to prevent a major loss.
What are your plans for the future? Will you be trading for a long time?
For me, I go back and forth between wanting to retire one day versus enjoying what I’m doing also. I love seeing the success with SharePlanner, and that is a big deal for me too, but I also enjoy trading. It’s something that I’m good at, something I’ve done well over the years, and something that I wanna continue to do.
Could you say trading is kind of a sense of life for you?
Yes, for me it is. It definitely gives me a sense of purpose, and when you are good at something, you just enjoy doing that. For example, look at Tom Brady. He is 41 years old and still does his job. He could retire now and still be one of the greatest quarterbacks out there, but he doesn’t because he loves what he does. So, it has to be something really fascinating for me in the future to do it over trading.
Where to find Ryan:
Check out the SharePlanner website.
Follow him on Twitter: https://twitter.com/SharePlanner
Subscribe to his YouTube: https://www.youtube.com/user/shareplanner
- We are all humans, and we cannot get rid of emotions, but it’s about how you handle those emotions
- Never trade earnings
- When you are good at something, you just enjoy doing that