The Week of April 7, 2025

This newsletter might be a little bit straightforward and perhaps lacking some of the "trading signals" that a lot of people want. That being said, I'm trying to share with you the one thing that has kept me alive over the last 20 years in the markets. It simply comes down to recognizing the game you are playing.

Unfortunately, we are going to continue to see a lot of volatility in the markets, and therefore the only thing you can control is what you do. First and foremost, by far the safest thing to do is to simply not participate for a while. As some of you may or may not know, my 19-year-old son has his own account that I trade for him. He has been out of the market for most of the last 2 weeks. While he is not making money right now, he is still outperforming pretty much everybody else in the markets. This is something that I think a lot of retail traders forget: sometimes the game isn't to be played.

So what do I do if I stay in the game?

I recognize that most of you will be focusing on putting money into the market, despite the fact that it is extraordinarily dangerous. Simply put, the most important thing you can do is cut your position size down right now. After all, when things get very dangerous, you have to understand that the market can move very rapidly, and your most likely outcome will be that you get frustrated when you take losses rapidly and then start to fight the market overall, perhaps even starting to "revenge trade."

Take a look at the NASDAQ 100 just below. I have the Average True Range plotted on the chart, and you can see that it has been elevating rather rapidly, and this means that you are more likely than not going to see more erratic trading. One of the things that is the easiest thing to do is to simply cut your position in half. After all, the ATR in the NASDAQ 100 is essentially double from where it was several weeks ago. This means that if you are to trade the NASDAQ 100, you will need to cut your position size in half because you are going to have much wider stop losses. Whatever it is you typically use, you need to at least double it. This essentially takes the volatility out of the market.

Ironically, Bitcoin is “ok.”

Ironically, the market that seems to be doing the best at the moment is Bitcoin. It's not even that strong; it's just that it isn't going off the rails at the moment, and therefore it is behaving in a much more stable market than a lot of the other ones. This is counterintuitive, because quite frankly, Bitcoin is normally a train wreck in these times. The ATR has actually been cut by about 35% over the last couple of weeks, which is interesting. I am beginning to suspect that the Bitcoin market is, for the most part, done selling off. I have been dollar cost averaging for some time now, and I think that is going to continue to be the case.

There are signs of hope.

One of the most important things you'll need to watch will be the announcements coming out of the White House. Donald Trump has released over the weekend a tweet/truth regarding Vietnam. Vietnam has reached out and stated that they are wanting to cut tariffs to the United States to zero. I suspect there are other countries out there about to do the same. This could be the beginning of the end of this “crisis.”

For those who have been reading my newsletter or paying attention to other outlets that I am involved in, understanding Donald Trump is very simple. He is America first, and unapologetically so. Keep an eye on announcements coming out, because with all of the massive selling that we have seen in the markets, especially the stock market in the United States, any good news could launch the market straight back up in the air. I suspect sometime this week, we will have a vicious bear market rally that will catch most people off guard. Remember, Trump likes to be the showman, so it'll be interesting to see how he goes about announcing any good news.

Trade well, and cut your position size!!!

Chris