{"id":21907,"date":"2024-06-19T07:30:09","date_gmt":"2024-06-19T11:30:09","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=21907"},"modified":"2024-06-19T07:30:09","modified_gmt":"2024-06-19T11:30:09","slug":"why-smart-traders-shouldnt-be-afraid-to-be-wrong","status":"publish","type":"post","link":"https:\/\/stage.jeffclarktrader.com\/market-minute\/why-smart-traders-shouldnt-be-afraid-to-be-wrong\/","title":{"rendered":"Why Smart Traders Shouldn’t Be Afraid to Be Wrong"},"content":{"rendered":"

Managing Editor’s Note:<\/strong> Today, our offices are closed in observation of Juneteenth. This means our customer service representatives will be unavailable until Thursday morning.<\/p>\n

Meantime, we’re handing the reins over to colleague Larry Benedict – a market wizard and legendary hedge fund manager.<\/p>\n

Today, he’ll share the attitude shift that led to a 20-year winning streak and being ranked top 1% of hedge fund managers by Barron’s<\/em>.<\/p>\n

Here’s Larry…<\/p>\n

\n

Ever argued with someone who refuses to admit they’re wrong?<\/p>\n

It can have you tearing your hair out.<\/p>\n

Faced with any number of facts, their instinct is to dig in even deeper.<\/p>\n

But the truth is… We’ve all been that person at one point or another.<\/p>\n

Especially if we trade in the markets…<\/p>\n

Most of us stubbornly hold on to a position that’s losing money. Or we trade based on what we think the market should<\/em> do – not what it’s doing.<\/p>\n

I did this all the time when I started out in the markets nearly four decades ago.<\/p>\n

And it cost me my trading account multiple times.<\/p>\n

Only when I changed my attitude did I turn things around.<\/p>\n

And that led to a 20-year winning streak that saw me ranked in the top 1% of hedge fund managers by Barron’s<\/em>. Plus, Jack Schwager featured me in his book Hedge Fund Market Wizards<\/em>.<\/p>\n

So today, I want to share what changed…<\/p>\n

Admit Defeat Early<\/h2>\n

One of the reasons I kept blowing up my account is I couldn’t admit I was wrong.<\/p>\n

For example, if I believed the S&P 500 was going up that day, I would take out a long position and hold it.<\/p>\n

Even if the position went against me, I would grit my teeth and wait for the market to turn.<\/p>\n

But I was making a simple mistake. And it’s common among many novice traders…<\/p>\n

I became wedded to my “view.”<\/p>\n

I’d look for anything that would support my position and disregard countering data.<\/p>\n

For example, if strong economic news came out, I’d see that as evidence of my long position being “right.”<\/p>\n

That only made it more difficult if the market sold off after the news.<\/p>\n

Thinking I was right and the market was wrong led to massive indecision.<\/p>\n

And that meant small losses could snowball into something much larger.<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Let the Market Decide<\/h2>\n

One way things turned around was when I began to set a predefined exit before<\/em> I placed a trade.<\/p>\n

A predefined exit just means I choose a percentage or price point where, if the trade hit it, I would exit my position – no matter what was happening in the market or economy.<\/p>\n

It took the emotion out of taking losses. I let the market decide for me.<\/p>\n

And I started going into every trade without any bias about what I thought the market should<\/em> do.<\/p>\n

If a strong long trade setup presented itself despite bearish news, I’d still take the long trade.<\/p>\n

Similarly, if there was a strong bearish setup despite positive news, I’d take the short trade.<\/p>\n

Doing this thousands of times taught me to ignore my own biases about the market.<\/p>\n

It let me quickly accept when I was wrong, take my losses, and move on to the next trade.<\/p>\n

So the next time you’re waiting for some big economic news to come out, set yourself a goal.<\/p>\n

Ignore what you think the market should<\/em> do with that news.<\/p>\n

Instead, just focus on the price action.<\/p>\n

That way, you’ll free up your mind to trade what’s in front of you.<\/p>\n

And if the trade goes against you, let your predetermined stop loss determine your exit point so that you don’t have to wrestle with your emotions.<\/p>\n

It’s not easy to admit when you’re wrong on anything – especially when money is involved.<\/p>\n

But mastering this skill helped me turn things around and finally make it as a trader.<\/p>\n

And if you apply these rules to your own trading, you can do the same.<\/p>\n

Regards,<\/p>\n

Larry Benedict
Editor, Trading With Larry Benedict<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Mastering this one skill helped Larry Benedict finally make it as a trader.<\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[58],"newsletter-type":[],"ticker":[],"class_list":["post-21907","post","type-post","status-publish","format-standard","hentry","category-uncategorized","publication-market-minute","person-larry-benedict"],"acf":[],"ai_tts_audio_outdated":false,"ai_tts_legacy_post":false,"_links":{"self":[{"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21907","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=21907"}],"version-history":[{"count":0,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21907\/revisions"}],"wp:attachment":[{"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=21907"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=21907"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=21907"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=21907"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=21907"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=21907"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=21907"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}