Trading the market is a lot like being the manager of a baseball team.
Hear me out…
First off, both trading and baseball is a marathon – not a sprint.
As traders, we can’t let one single trade made or break us. We need to compound winner after winner, all the while making more on our winners than we lose on our losers.
Baseball’s much the same. A baseball team doesn’t need to sweep every 3-game series 3-0. But going 2-1 more often than 1-2 will show itself in the standings.
There are also many different ways to play; many different “schools” of thought on how to win games. Whether it’s analytics, long ball hitters, defensive specialists, pitching power, etc… Everyone thinks they know the way to win.
At the same time, any truly successful trader — the ones that make careers out of it — are the ones that specialize and focus on the style of trading that gives them their edge. (For me, that’s unusual options flow, which I showcase the power of every day in my Trade Room.)
Baseball, like trading, is also a game of risk and reward. Yeah, you can try to steal that base. Or you can forego hitting for singles and swing for the fences every time you’re at bat.
But if you’re halfway through the game and down a few runs, why take that risk?
That’s why this year, with my personal stock account down, I’m back to playing small ball: Trading smaller, looking for smaller profits, and taking those profits sooner.
Back when the market was booming and my account was soaring basically every single day, I was going for home runs, and I was hitting them frequently. I was like the New York Yankees, with power hitters looking to change the game with just one swing.
With a strong bull market… a strong lead… you can afford to take risks like that.
But you must remember with big swings also comes big misses… And a lot of strikeouts (Yankees fans can tell you all about those).
Home runs in trading are the same way. Those are big, sexy, exciting wins. But they can also get you in trouble if you swing big and miss, adding another L to your portfolio and wallet.
Small ball is different…
For the baseball fans out there, think of it like old school baseball: Leadoff man gets a base hit, steals second base, advances on a bunt, then scores on a sacrifice fly.
That’s the kind of small ball I’m playing with the market lately. That’s why I’m taking smaller trades in signals I believe in, not getting too greedy, taking profits when I have them, and stacking up small wins again and again.
That’s why we’re 3 for 3 on official signals from the last couple weeks…
PDD, NIO, and BEKE all hit our first profit targets for around 50%, then we sold the remaining halves as soon as value started to drop, allowing us to exit each trade with a relatively small but decent winner.
Once we start stacking up gains like these over and over and the market becomes a little less volatile, it’ll be time to start taking some big swings again.
There’s no right or wrong way to play the game, but if you’re tired of warming the bench and watching from the stands, click here to join our team of Kings today.
Now, let’s take a look at the lineup for this week’s watchlist.
The Kings Corner Weekly Watchlist
Here’s your batting order for this week:
Caesars Entertainment Inc (CZR)
Robinhood Markets Inc (HOOD)
ImmunoGen Inc (IMGN)
Meta Platforms Inc (META)
My free trade idea is to:
Buy META November 11, 2022 $100 calls (for $1.30 at the time of writing).
Remember, we won’t be tracking this free trade idea on any online portfolio. So, if you take it, you’re on your own.
And in the spirit of small ball, if this idea makes profits of 50% or more, you should consider getting out of it for a decent gain.
And if you make money on this or any idea shared in the Trade Room this week, email me at TradeKings@banyanhill.com and tell me all about it.
Kings, on 3… 1, 2, 3, KINGS!
Editor, Kings Corner