{"id":21933,"date":"2024-06-27T07:30:37","date_gmt":"2024-06-27T11:30:37","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=21933"},"modified":"2024-06-27T07:30:37","modified_gmt":"2024-06-27T11:30:37","slug":"why-putting-a-p-on-the-page-is-the-most-valuable-trading-lesson","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/why-putting-a-p-on-the-page-is-the-most-valuable-trading-lesson\/","title":{"rendered":"Why Putting a \u201cP\u201d on the Page Is the Most Valuable Trading Lesson"},"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 explain his secret to successful trading is securing multiple “tiny” wins… rather than trying to catch huge moves.<\/p>\n

Here’s Larry…<\/p>\n

\n

Want to know the secret to successful trading?<\/p>\n

Unlike what you may think, it’s not about being a hot shot and taking high-risk bets.<\/p>\n

I’ve seen enough traders blow themselves up to know that’s a losing strategy.<\/p>\n

I’ve known traders with that mindset who ended up losing their homes… or even worse.<\/p>\n

They had a gambler’s mentality. And it caught up with them in the end.<\/p>\n

The secret to making money over time is to treat it not like an outing to a casino but as a business.<\/p>\n

Apply this insight to your trading, and you stand to really move the needle on your wealth. Fail to apply it, and you’ll likely end up losing money.<\/p>\n

In fact, I can’t stress enough how important it is to internalize. As you’ll see today, it’s what allowed me to thrive as a trader for the past four decades.<\/p>\n

If you’ve been reading along for some time, you may already know my story.<\/p>\n

But for newer readers, a quick introduction…<\/p>\n

All the “No-Nos” <\/h2>\n

My career as a trader began in 1984.<\/p>\n

I started out on the floor of the Chicago Board Options Exchange (CBOE) with $10,000 of my own money.<\/p>\n

That’s me on the right.<\/p>\n

<\/p>\n

\"Image\"<\/p>\n

Larry (right) on the floor of the CBOE<\/em><\/p>\n

But I really learned the ropes as a trader at a firm called Spear, Leeds & Kellogg.<\/p>\n

At the time, it was the largest specialist trading firm in the world – meaning it traded its own money. It traded almost every stock on the New York Stock Exchange.<\/p>\n

Then from 2000 until 2013, I ran my own hedge fund.<\/p>\n

It wasn’t all smooth sailing. Far from it…<\/p>\n

Early in my career, I bet too much on risky trades and got wiped out.<\/p>\n

I chewed through all my money two or three times by making silly mistakes.<\/p>\n

I was too impulsive. I was going for home runs. I was holding onto my losers for too long. All the “no-nos” of trading.<\/p>\n

Then something changed.<\/p>\n

I’d lost so much money, I thought my trading career was over. At the same time, I had a buddy, Andy, who was making money every day.<\/p>\n

I couldn’t figure out why…<\/p>\n

I remember I called my mom and complained to her that Andy was making so much money and I was losing all of mine. I was desperate for an answer.<\/p>\n

She said, “Just do what he’s doing.”<\/p>\n

It was a light-bulb moment.<\/p>\n

You see, what Andy was doing was simple.<\/p>\n

Instead of going all in on a risky trade idea like me, he was taking smaller wins on lower-risk trades.<\/p>\n

That way, he was slowly but surely building a strong base of capital.<\/p>\n

Putting a “P” on the Page<\/h2>\n

That’s what businesses do all the time.<\/p>\n

Coca-Cola, Nike, Hershey’s – these blue-chip companies haven’t been around for decades because they take wild bets all the time.<\/p>\n

They’re in business for decades because they’re booking smaller profits day in, day out.<\/p>\n

It took me a long time to grasp this concept. But when I did, it transformed my trading.<\/p>\n

From 1990 to 2010, I didn’t have a single losing year as a trader.<\/p>\n

This winning streak was so unusual, it got me featured in the 2012 book on the world’s greatest hedge fund managers, Hedge Fund Market Wizards<\/em>. (I was featured in the chapter after Ray Dalio, the manager of the world’s largest hedge fund.)<\/p>\n

It all came down to the insight I learned from Andy.<\/p>\n

I call it putting a “P” (for profit) on the page.<\/p>\n

You don’t take on much risk until you’ve had a string of smaller winners. You build a pile of capital you can speculate with.<\/p>\n

If you don’t have a big enough base of capital, you shouldn’t take on any high-risk trades. Target 5%… 10%… or 25% returns. Grab these smaller wins when you can.<\/p>\n

As the old-timers say, you never go broke taking a profit. Once you’ve built a strong foundation of capital, you’ve earned the ability to take on more risk.<\/p>\n

I’m not saying there’s no room for more speculative trades. But you have to earn them.<\/p>\n

<\/p>\n

\n
\n

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

Have you checked out Larry’s free trading resources on his website? It contains 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

You need to grow your capital pile with low-risk trades before you shoot for the moon. That way, you’re protected if the risky trade goes bust.<\/p>\n

That’s what keeps you in the green.<\/p>\n

Unfortunately, what tends to happen is the opposite. You go on a losing streak… get frustrated and emotional… and lose even more, even faster, because you’re shooting for big wins to recapture those losses.<\/p>\n

I’ve seen it happen dozens of times throughout my career. It’s one of the key factors that wipes out new traders.<\/p>\n

Instead, you want to think like a business.<\/p>\n

You earn the ability to take on more risk only after you’ve put a “P” on the page.<\/p>\n

That way, you can go the distance as a trader and build your wealth, slowly over time.<\/p>\n

Happy Trading!<\/p>\n

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

Want to know the secret to successful trading?<\/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-21933","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-larry-benedict"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21933","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=21933"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21933\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=21933"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=21933"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=21933"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=21933"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=21933"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=21933"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=21933"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}