One Key to Success in Trading

Managing Editor’s Note: As a sentiment shift seems to be hitting the markets, we turn to our colleague – Market Wizard Larry Benedict – for today’s issue…

It’s about the number one lesson he learned from his mentor early in his trading career – the importance of maintaining discipline.

It’s this discipline that has made him so successful over his 40+ years as a trader, including over his two-decade run without a single losing year.

And now, he’s using that discipline – and a special 24-hour profit strategy – to take advantage of this shifting market.

Right now, according to Larry, the most predictable gains aren’t coming from chasing the big stocks making headlines… They’re coming from a specific ticker and a calendar of opportunities called “Trump’s 24-hour profit windows.”

Trading these opportunities can hand you impressive gains in as little as a single day.

That’s why he recently held an event where he dove into the strategy, as well as the single ticker you need to use it to your advantage.

For a short while longer, you can catch the replay right here to find everything you need to get started.

When I started out in the markets many years ago, I was fortunate to find a mentor.

The number one thing he taught me? Discipline.

Without discipline, you simply won’t survive, let alone prosper, as a trader. You’ll keep making the same mistakes that other traders make, bringing you undone…

Mistakes like refusing to use or stick to stop losses. Undisciplined traders will ride a position all the way down to the mat. They’ll also become so overexposed in a position that a sudden, sharp move can have a disastrous effect on their account.

We saw that last month when, upon Trump’s tariff announcement, a reported 1.6 million crypto traders liquidated out of their positions.

But as I’ll explain today, maintaining strict discipline applies to all types of trading. And that includes options trading too…

Don’t Average Down

One of the ways folks become overexposed is by averaging down on a losing trade. Averaging down is when someone keeps buying stock even as the price falls…

The aim is to lower their average entry price so that they profit – or at least break even – when the stock eventually bounces back.

But as I’ve seen countless times, the bounce never comes. And the trader gets stuck with way more shares than they ever intended in a stock that’s trending lower.

No prizes for guessing how that double-whammy scenario ends…

But if you’re not careful, you can make a similar mistake with options.

By adding more positions and/or blindly rolling existing positions – closing out a losing position and opening a new position with a later expiry – you can inadvertently build up a much bigger exposure than you should.

It also means that you’re burning through your capital on a trade that you should have already discarded as a loser.

If you keep adding or rolling option positions without the right trade setup just because you’re convinced that you’re right – much like a stock investor averaging down – you’re showing a clear lack of discipline… and needlessly risking your capital.

That’s why I’ve been so cautious and retained strict discipline throughout my career, and especially over these past months as the bull market has run unabated…

Keep Your Powder Dry

Up until recently, stocks had ground higher almost every day since the April low. And more recently, the market has made a succession of all-time highs.

Throughout this time, no one wanted to sell as buyers voraciously bid the market higher.

Although I remained convinced that stocks were headed for a fall, my mentor taught me to always respect the price action. You can’t trade against the market trend just because you think the market’s wrong.

Although I could have added new or rolled open positions for just a few hundred dollars each, I knew that I had to remain disciplined until the right setups started coming our way.

In doing so, I’ve been protecting my capital. And with those first cracks now appearing, I’m now well-placed to pounce on the inevitable opportunities that are going to come our way.

Over the many decades I’ve spent in the market, I’ve seen countless traders come and go. And the most common ingredient that brought them undone was their lack of discipline.

But if you keep discipline at the front of your mind, you’ll greatly enhance your chance of making it as a trader… and bank some serious gains along the way.

Regards,

Larry Benedict
Editor, Trading With Larry Benedict