We’re in the midst of a down market…
So why is the market behaving like this?
Mainly due to questions regarding Trump’s tariff statements. Will or won’t he enact them in Canada and Mexico? And if he does, what follows?
All of those questions remain unanswered and investors aren’t happy about that.
Here’s a Wall Street Journal headline from yesterday.
Guess what…I’m not worried at all! It’s not a market crash by any stretch of the imagination.
And if you’re a day trader, so what?? Penny stocks don’t care what the broad market is doing. We still have tons of day trade setups waiting for us every day!
That being said, there are some things we can do to reduce our risk on fast-moving day trades when the market is moving against us.
Just as I suggest sizing down on fast-moving stocks in an up market, I have the same advice for trading them in a down market. In fact, I stress it even more in this situation.
You see, what makes these stocks so exciting also makes them dangerous.
If you’re not careful with your position size, you could go from riding the momentum to getting crushed by a brutal reversal in minutes.
After decades in the game, I’ve learned that trading isn’t about swinging for home runs—it’s about managing risk.
Why Should You Size Down?
Protect Your Capital—Always:
Rule number one: Your capital is your lifeline.
If you go in too big on a position and the stock reverses, you’re not just taking a small hit—you could wipe out weeks (or months) of gains in minutes.
Sizing down gives you a cushion. You’re still in the game, still able to take advantage of the opportunity—but without putting your entire account on the line.
A smaller position on a big mover can still bring solid returns—without the unnecessary risk.
Volatility Works Both Ways:
We love volatility when it works in our favor but don’t forget that it cuts both ways.
One minute, a stock is surging… the next, it’s tanking. And if you’re overexposed, that whiplash can be devastating.
When you size down, you’re respecting the volatility. You’re acknowledging that, while you can’t control the stock, you can control your exposure to it.
One Trade Won’t Make You, But It Can Break You:
Trading is not about one single trade.
If you’re betting big on just one aggressive stock, you’re putting way too much weight on a single outcome. And that’s not trading—that’s gambling.
Successful trading is about consistency. It’s about longevity.
Sizing down helps you stay focused on the bigger picture, and in a down market that’s what’s most important.
Survive to Trade Another Day:
I’ve said it over and over again…
At the end of the day, my goal as a mentor is simple: help traders stay in the game long enough to actually become successful.
Remember, not everyone, especially new traders, survives a continued market downturn, even if it’s not a market crash.
By sizing down, you’re making sure that no matter what happens with this one trade, you’ll be back tomorrow. And the next day. And the next. That’s how you grow an account.
My Final Thoughts…
Sizing down isn’t playing it safe—it’s playing it smart.
By managing your position size, you’re keeping yourself in control, protecting your capital, and setting yourself up for long-term success.
To keep an eye on the broad market as well as your own trades, you need to have a great trading platform.
I use StocksToTrade every single day. It’s got all the scanners, charts, and tools you need to stay ahead of the game.
PLUS, right now, you can get two weeks of both the STT platform and our Breaking News Chat service for $17.
Grab your 14-day StocksToTrade + Breaking News Chat trial today for only $17!
For more mentorship on trading smart in this market environment, join my StocksToTrade Advisory service.
You’ll get a monthly newsletter with a list of my top picks, three weekly videos with my watchlists, bonus reports, and more.
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Have a great weekend, everyone. See you back here on Monday.
Tim Bohen
Lead Trainer, StocksToTrade