When it’s better to be a tiny fish than a huge whale

***Two Notes before we begin: (1) Today is Friday, so if you have any options expiring today (I have quite a few) pay attention & adjust as necessary. (2) I plan on making this the final day of the trial period for this newsletter. Beginning tomorrow (if all goes well) I will be publishing this newsletter using Beehiiv to design & send my emails, so expect some changes (more in the PS at the end).***

If you read the quote above, you may be wondering, “what advantage could I possibly have over the large institutions?”

After all, they’ve got the big money and the big connections.

In short, they’re whales swimming in the ocean of the markets and we’re just a bunch of little fish. Whales get to eat a whole lot of krill (tiny little shrimp-creatures) and we’re often left with the scraps.

But despite their size and impressive appetite, market whales can’t move very fast.

And that’s the advantage of an individual trader:

Speed.

Last week, my dad made a trading mistake (the same kind of mistake I’ve made plenty of times, so don’t think of this as me pointing-and-laughing). He opened a trade on a ticker and immediately realized that the math was wrong.

That is, his risk management -- which he thought was fine before putting on the trade -- was actually way worse than it should have been.

So what did he do?

Immediately closed the trade for a tiny loss and the mere cost of commissions. Something like $20 (can’t remember exactly) lost for a mistake. 

No big deal.

And that’s the small trader advantage. We can get in and out of a trade FAST. 

If I make a mistake and need to immediately exit, I can. The big institutional market whales can’t do that -- it can take days or even weeks for them to exit a trade.

So, on this bullish opening to a Friday of a bull week, I encourage you to count your blessings, thank God for His goodness, and remember how lucky you are to have the freedom to zip through the market waters with ease.

From crypto coins to bibles, overseas deals to an upcoming line of cellphones, Trump businesses have raked in millions.
Associated Press Finance

Yahoo Finance

Bloomberg

Why it matters…

For whatever reason, the lead story on Yahoo news was an opinion piece on how President Trump is making deals to make millions for his family businesses. Of course this has little to do with the markets as a whole, but more than that, it seems kind of dumb to me. Trump and his businesses have been making millions for decades. Why is this news now? Strikes me as a somewhat desperate ploy for controversy on a relatively slow news day.

Speaking of slow news, here’s another headline about the upcoming Fed rate cut. Will they cut in July ... or August ... or September? It reminds me of the talking heads around sports radio, speculating on the rumor mill, but ultimately a bit of a waste of time. Could be entertaining, but I’ve got trades to make. Next.

The crypto news actually is interesting. Ultimately, it seems that the passage of the bill is legitimizing crypto in the mind of many investors. For me, as soon as ETFs came on the market I thought it was legitimate enough to trade (as long as I saw some good setups).

I guess we’ll see what happens as more and more money pours into the crypto market.

Comments: Well, it looks like my Bitcoin crystal ball did break. I don’t think we’re hitting 125K today (though, how crazy would it be if we did?).

Still, this looks to be a sideways-bullish day to wrap up a bullish week in the middle of a bullish month. The indexes continue to creep higher, even with this moderate pullback in the DOW. I don’t know how long the markets will sustain this bullish run. Personally, I’m getting more and more worried about a pullback in August.

What does that mean for my trades?

Not a whole lot except I will probably be more aggressive to close out of winning trades rather than waiting for expiration. Sometimes I can get out for couple pennies on a Wednesday or Thursday, and I often think that’s a better plan than waiting for Friday’s expiration. Especially if I can recycle that capital into another nice trade.

Here’s a trade idea on a stock that’s had a big bleed-off and is currently available for a bit of a discount. Plus the sample trade idea could more than cover this month’s Premium subscription...