{"id":21940,"date":"2024-07-01T07:30:26","date_gmt":"2024-07-01T11:30:26","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=21940"},"modified":"2024-07-01T07:30:26","modified_gmt":"2024-07-01T11:30:26","slug":"the-lesson-all-traders-need","status":"publish","type":"post","link":"https:\/\/stage.jeffclarktrader.com\/market-minute\/the-lesson-all-traders-need\/","title":{"rendered":"The Lesson All Traders Need"},"content":{"rendered":"

Managing Editor’s Note:<\/strong> Today, we’re handing the reins to colleague Larry Benedict – a market wizard and legendary hedge fund manager.<\/p>\n

He’ll tell you about the heart of his mission – equipping readers with the skills and insight to make money and transform their lives… without so many bumps on the way.<\/p>\n

Here’s Larry…<\/p>\n

\n

Imagine I strapped you into the driver’s seat of a Formula 1 race car…<\/p>\n

The engine’s roaring, the crowd is cheering, and you’re in pole position on the starting line.<\/p>\n

Millions of dollars are at stake. You’re surrounded by the world’s best drivers….<\/p>\n

…but your only experience racing is from a go-kart track.<\/em><\/p>\n

It’s safe to say, you’d be a little nervous. You simply don’t have the experience you need to succeed at such a high level.<\/p>\n

The same goes for trading. You have to put in the work… and the training… before you can be a successful trader.<\/p>\n

But you don’t have to do it alone.<\/p>\n

Let’s revisit the same scenario from above. Same car, same crowd, same stakes.<\/p>\n

Except this time, you’re wearing a headset with Michael Schumacher on the other end – one of the greatest drivers to have ever raced Formula 1. He’s giving you turn-by-turn advice for each curve on the track.<\/p>\n

You’d feel a lot more comfortable with such an experienced mentor helping you out…<\/p>\n

Becoming a trader is like anything in life. If you want to be good at it, you have to start somewhere.<\/p>\n

And there’s no better place to start than by learning from someone who has already paved the way.<\/p>\n

It’s All About the Process<\/h2>\n

First and foremost, a good mentor provides a process to follow.<\/p>\n

Most traders struggle because they have no real process. They take positions willy-nilly, with no concern for position sizing (making sure each trade is the right size), or an exit strategy.<\/p>\n

It’s a make-money mentality… but with no firm plan.<\/p>\n

And to be a successful trader, you must have a plan. You need to know why you’re taking a trade… how much you’re willing to lose if it goes against you… and when to take profits if it’s a winner.<\/p>\n

Taking a loss is one of the hardest things in trading.<\/p>\n

Successful traders know that it’s part of the process. They keep their losers small and know that it’s all about making money over time.<\/p>\n

But rookie traders tend to hold on to losing trades in the hope that they’ll turn around. When you do that, small losses can quickly become big losses.<\/p>\n

It’s a crucial piece of discipline that’s extremely difficult to just figure out on your own.<\/p>\n

Having a mentor show you how to execute trades, explain when to get in and when to get out, and show you how to control your emotions along the way makes things a lot easier.<\/p>\n

I’ve had a few mentors throughout my career. But one sticks out… because he saved my career.<\/p>\n

How I Found My Mentor<\/h2>\n

I started out on the trading floor of the Chicago Board Options Exchange (CBOE) in 1984. It’s one of the world’s largest options exchanges.<\/p>\n

Back then, most floor traders didn’t go to college. They learned everything on the job.<\/p>\n

I went to college, which meant my colleagues had the advantage of four years of experience on the floor ahead of me. I was blind coming in. I had no idea what was going on.<\/p>\n

So I needed a mentor… badly.<\/p>\n

Naturally, I was drawn to the outlier traders – the one or two guys who were able to consistently grow their accounts without taking on big losses.<\/p>\n

One of those guys was Larry LoVecchio. I worked under him at Spear, Leeds & Kellogg. The company eventually got sold to Goldman Sachs, but it was one of the leading trading firms at the time.<\/p>\n

He was the best mentor I ever had. He taught me the discipline that I never had. I’d watch him in awe – not just his performance but also how calm, measured, and unemotional he was as a trader.<\/p>\n

Meanwhile, I was like a wild stallion that was out of control. I had the “it” factor – aggressiveness and the will to win – but I didn’t get how to make it all work together.<\/p>\n

LoVecchio was aggressive but also extremely disciplined. He knew when to take risks and how big of a risk to take. He didn’t overleverage his trades, and he never let his emotions get ahead of him.<\/p>\n

That’s why I say he saved my career. Before I met LoVecchio, I was just throwing all my money into one trade, swinging for the fences… and usually missing.<\/p>\n

It’s not easy to bounce back, time after time, after you’ve lost it all. And in my early days, I lost it all several times.<\/p>\n

I might have wound up quitting, had LoVecchio not pulled me under his wing.<\/p>\n

Start Small<\/h2>\n

The critical lesson he taught me was the importance of position sizing.<\/p>\n

Other traders would throw too much money into trades… hold on to losers too long… freak out at their massive losses… and get wiped out.<\/p>\n

But thanks to LoVecchio, I learned to cut my losses early. After booking some wins, I could size up to bigger and bigger levels comfortably.<\/p>\n

That’s why I recommend all new traders start out small…<\/p>\n

Start with just one trade a day. And keep your position sizes small. In other words, put only a tiny percentage of your overall capital into each trade.<\/p>\n

Then you can increase the number of trades you make… and their size. But only when you’ve learned the ropes.<\/p>\n

<\/p>\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<\/p><\/div>\n<\/div>\n

<\/p>\n

I eventually learned this lesson. But I had to watch someone else do it first. I had no other experience to draw from.<\/p>\n

Now, roughly four decades in, it’s my turn to be the mentor.<\/p>\n

It’s why I started my trading advisory business, The Opportunistic Trader<\/em>, as well as my free e-letter.<\/a><\/p>\n

It’s the culmination of my 40-year trading career.<\/p>\n

Using simple, easy-to-follow recommendations, I aim to help folks like you benefit from the strategies that made me one of the world’s most successful traders.<\/p>\n

I also do my best to pass on the insights, strategies, and lessons I learned along the way.<\/p>\n

It’s the best way I know of for regular folks to access hedge fund-level strategies and consistently make market-beating returns.<\/p>\n

Regards,<\/p>\n

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

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