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Small Ball For The Win

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Hey Trader,

I've talked before about how trading the market is a lot like being the manager of a baseball team.

Here's what I mean…

First off, both trading and the Major League Baseball season 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 when possible…

But at the very least, we need to make more on our winners than we lose on our losers.

Baseball's very 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.

You've got the power players—teams like the New York Yankees and Los Angeles Dodgers that will spend upwards of $300,000,000 per year on player salaries. These teams will put their faith in superstar caliber players to make big plays when it matters most.

Then you have teams like the Baltimore Orioles who are predicted to spend just over $50,00,000 in 2023 payroll. This team will rely on the young talent of their up-and-coming farm system to win games, taking advantage of younger players and their cheaper salaries.

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 swing for the fences and try to hit a home run every at bat...

Or you can choose to play safer and hit singles, take pitches, steal bases, etc… This strategy is called playing small ball.

And after the month of February we just had, with my personal trading account down, I'm choosing to play 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 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 (Yankee fans know what I'm talking about).

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 how you dig yourself out of a trading hole, folks.

And once we start stacking up small gains 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 there is something to be said for playing it smart when the situation calls for it.

Til next time.



Regards,

Andrew Keene

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