Monday, 31 March 2025

Trading in Traffic: How to Survive and Thrive in a Volatile Market

Don Kaufman here.

The S&P 500 is doing its best impression of a yo-yo, the NASDAQ looks like it's been hit by a truck full of AI hype, and volatility? Oh, it's not just back—it's throwing a party. But let me tell you something: The key to surviving this chaos isn't about hitting the gas. It's about knowing when to pump the brakes.

Today, we're not going to dive into price action—you already know prices change faster than your favorite Netflix series gets canceled. Instead, we're talking about trading in traffic: how to navigate the madness when the market feels like Frogger on hard mode.

Why Volatility Is Your Best Frenemy

First things first: volatility is not out to get you—it's just misunderstood. Think of volatility like your over-caffeinated coworker at the office. Sure, it's loud, unpredictable, and sometimes makes you question your life choices, but it also brings opportunity.

Here's the thing: when volatility spikes, the market isn't trading on logic or fundamentals. It's trading on emotion. And when emotions run high, options premiums go through the roof. This is like finding a $20 bill on the sidewalk—if you know what to do with it.

But—and this is a big but—volatility can also rip your face off if you're not careful. You don't want to be the trader who chases every shiny object, only to get caught in the crossfire. That's why today's mantra is simple: trade small, trade smart, and for the love of all things holy, use spreads.

The Case for Spreads (aka Your Safety Net)

Listen, if you're out here buying naked calls or puts in this market, I've got news for you—you're playing with fire. And not the fun kind of fire, like a cozy campfire. I'm talking about the "burn your portfolio to the ground and cry in the shower" kind.

That's why spreads are your best friend in a volatile market. Take an in-out spread, for example.

It's like ordering a value meal at a fast-food joint: you know exactly what you're getting, and the risk is capped.

You buy a put, you sell a put—boom, you've got a defined risk and a shot at making a decent return.

Why does this work so well in a market like today?

Because spreads let you take advantage of overpriced options without exposing yourself to the full brunt of volatility.

Instead of betting the farm, you're betting the chicken coop—and trust me, that's a much better way to sleep at night.

In fact, today I scored a 55.1% winner in my GS put spread, a trade that I was in for just two weeks.

And I have had more than a handful of these trades this month in My 3 Trades Per Week Service, with gains of 30% in as little as one day.

If you're not a subscriber, click here to get started today.

Keep Your Hands Off the Mouse

Now, let's talk about the hardest part of trading in a volatile market: doing nothing. Yep, you heard me—nothing.

Here's the deal: when the market's moving 100 handles in 10 minutes, your instinct is to jump in and "do something." But let me tell you, that's a one-way ticket to making bad decisions.

The best traders know that sometimes the smartest move is to sit on your hands and let the market come to you.

Think of it like crossing a busy street.

You don't just sprint into traffic and hope for the best. You wait, you watch, and when the time is right, you make your move. The same goes for trading. Let the market settle.

Let the noise die down. Then, and only then, should you step in.

The Power of Patience

Patience isn't just a virtue—it's your secret weapon. In a market like this, opportunities don't just show up—they punch you in the face.

But here's the kicker: you need to be ready to take the punch without flinching.

That's why I always stress the importance of having a plan. Know your levels. Know your risk. And most importantly, know when to walk away. The market isn't going anywhere, but your capital will if you're not careful.

So, what's the takeaway here?

Simple: don't trade for the sake of trading. Trade when the odds are in your favor. And if the odds aren't there? Step back, grab a cup of coffee, and wait for your moment.

Embrace the Chaos

Look, I'm not saying this market is easy. It's not. It's messy, it's chaotic, and it's downright frustrating at times. But that's also what makes it exciting.

The key is to stay disciplined, stay patient, and remember that volatility is both a risk and an opportunity. Use spreads to manage your risk, keep your hands off the mouse when things get crazy, and above all, don't let the market bully you into making emotional decisions.

This game isn't about being the fastest or the smartest--it's about surviving long enough to take advantage of the opportunities when they come. And trust me, they will come.

So, keep your head on straight, your risk in check, and your eyes on the prize. This market may be wild, but with the right mindset and strategy, you can come out on top.