{"id":21990,"date":"2024-07-17T07:30:00","date_gmt":"2024-07-17T11:30:00","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=21990"},"modified":"2024-07-17T07:30:00","modified_gmt":"2024-07-17T11:30:00","slug":"make-sure-youre-asking-the-right-question","status":"publish","type":"post","link":"https:\/\/stage.jeffclarktrader.com\/market-minute\/make-sure-youre-asking-the-right-question\/","title":{"rendered":"Make Sure You\u2019re Asking the Right Question"},"content":{"rendered":"

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

Larry shares some of the most valuable advice he can as a trader… that it’s better to manage your risk and think more about what’s the most you can lose…<\/p>\n

Here’s Larry with his insights…<\/p>\n

\n

When I talk to folks about trading, there’s one question I know I’m always going to get…<\/p>\n

After skirting around it with a few warm-up questions, they finally can’t wait any longer.<\/p>\n

They lean in… and often in a hushed voice ask me what’s the most I’ve ever made on a single trade.<\/p>\n

I get it. And I know they’re expecting a big-time story…<\/p>\n

Like when George Soros made over $1 billion in a day back in 1992 in a massive currency bet against the British pound.<\/p>\n

But the truth is, I simply can’t remember…<\/p>\n

Although I’ve made $1 million on a trade more than 500 times, there’s no single trade that stands out.<\/p>\n

What’s more, those folks are asking the wrong question.<\/p>\n

Today, I want to share with you the one question you really<\/em> should ask instead…<\/p>\n

The Trader’s Spiral<\/h2>\n

I started out on the trading floor of the Chicago Board Options Exchange almost 40 years ago. And back then, I focused on only one thing… crazy, outsized profits<\/em>.<\/p>\n

I’d bounce from one trade to the next as I tried to get onto the next hot thing.<\/p>\n

But instead of big profits, I was soon faced with eye-watering losses…<\/p>\n

My losses were so devastating that I ripped right through my trading accounts multiple times over.<\/p>\n

The harsh reality I learned was that going for home-run trades was a surefire way to go broke. The odds are simply stacked too far against you. It’s a basic question of math…<\/p>\n

Given that everyone has a limited amount of capital, you only need a few trades to go against you to clean out your trading account.<\/p>\n

Put simply, for every “George Soros” trade, there are countless others that don’t work out.<\/p>\n

And it’s the trying to get the lost money back that leads traders down the spiral of taking bigger, riskier bets.<\/p>\n

That leads them to blowing up their trading account…<\/p>\n

<\/p>\n

\n
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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

The Most You Can Lose<\/h2>\n

Only when I started asking the right<\/em> question did I turn my trading around…<\/p>\n

Instead of thinking about all the potential huge profits on offer, I learned to ask myself: “What’s the most I can lose on this trade?”<\/p>\n

After losing money over and over, I finally learned to tightly control risk management.<\/p>\n

By not getting caught up in the emotion of how much I could make, it ensured that I didn’t suffer a catastrophic loss.<\/p>\n

Once a trade started going against me, I quickly exited it.<\/p>\n

What’s more, if my losses grew to more than 2.5% of my account in any month, I’d quit all my positions and start fresh the following day.<\/p>\n

What I didn’t<\/em> do (and what so many traders mistakenly do) is sit around hoping for my losing position to turn around. That’s what turns a small loss into something much bigger…<\/p>\n

I’d then typically cut my position size in half until I started consistently making money again.<\/p>\n

I know that the allure of huge profits is what attracts so many folks to the markets. But the thrill of chasing big gains leads to poor risk management.<\/p>\n

Protecting your capital is sacrosanct as a trader. Once you lose it, you’re out of the game.<\/p>\n

I learned to put risk management first and accept losses. And once you learn that too, it will vastly improve your chances of making it as a trader.<\/p>\n

Happy trading,<\/p>\n

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

Traders should be sure to think more about the most they can lose instead of the most they can win\u2026<\/p>\n","protected":false},"author":55,"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-21990","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\/21990","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\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=21990"}],"version-history":[{"count":0,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21990\/revisions"}],"wp:attachment":[{"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=21990"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=21990"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=21990"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=21990"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=21990"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=21990"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/stage.jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=21990"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}