Welcome to Trading With Larry Benedict

If this is your first time reading Trading With Larry Benedict, thanks for joining us. You can catch up on all previous issues right here.

If you have any questions for Larry, or feedback, shoot us a note anytime at [email protected].

Daina’s note: On Friday, we learned how fear and greed each play a part in trading. And how traders can learn how to use fear as a tool, by developing what Larry calls a “sixth sense.” 

Though fear can sometimes be used for good, today, Larry highlights how greed leads to the second pitfall new traders fall into: swinging for the fences on every trade. 

While going for the home run and making a fortune on one single trade sounds appealing, Larry argues it’s not the right path to becoming a successful trader… no matter how much money you have.

And, make sure you read all the way to the end of today’s interview. Larry will give his quick market outlook for today’s trading day…


Daina Schnese: Last time we spoke, we talked about fear and greed. You were saying a trader can use their fear to develop a “sixth sense” over time. Would you say they can use that intuition to avoid getting greedy and holding on to positions too long? 

Larry Benedict: That’s right. As you develop as a trader, your intuition becomes like a sixth sense. For example, a lot of times, I just know when I’m right about a trade. And I don’t always like to admit it to myself, nor could I explain just how I know it to someone else. 

What I’m trying to say is through over 30 years of trading experience, I have gained the ability to trust my instincts on a trade. That’s the intuition you can gain. But, you have to learn it. Just like a trader has to earn their risk through experience, they’ll also earn a trader’s intuition through experience. 

Daina: So, could someone entirely new to trading develop that intuition? Even if they didn’t have it from the start?

Larry: You can start from being a new, small trader and become an experienced trader. It just takes time. The misconception is that it doesn’t take much time. So, people get frustrated and quit early on because it didn’t happen overnight. You can develop an edge and an intuition. But you won’t necessarily get rich quick. 

Daina: You said the #2 pitfall new traders fall into is “get rich quick” thinking. And you said greed tends to play into that. Can you expand on that more?

Larry: Sure.What I mean is greed makes you overstay your welcome in a position because you don’t want to take a loss. You’re thinking, “I’m going to stay in this thing and make it work.” A lot of traders are looking for a grand slam every single trade. My methodology is more of a grind… Coming to work every day, slowly building something small into something much bigger.

That’s the sustainable way to be a trader. The people that swing for home runs every time are usually the ones that end up losing a bunch of money, getting frustrated, and quitting altogether. 

There’s no “get-rich-quick” answer when it comes to trading. And having time to learn how to trade properly is crucial. It takes time to slowly build that base of capital.

Daina: You said you can be fearful, but it doesn’t impact your trading. Do you ever get greedy?

Larry: Look, I’m still guilty of getting a little greedy sometimes. I’ll trade too big… meaning, I’ll put $250,000 towards a trade I should probably put $50,000 towards. But, I’ll only ever do that when I’ve got a stack of cash and built up P&L [profit and loss]. And when I’ve been on a hot streak and had five or six solid trading days. 

That’s because I’ve earned the risk. 

So, sometimes earning your risk puts you in a position where you could get a little too greedy, but the good thing about being a smart trader, is you’re willing to lose 100% on any given trade. That way, it’s not going to break you or even come close. 

Yeah, I’d be pissed that I lost $250,000, when I could have taken a smaller position and lost less… but not as pissed as I’d be if I were already down money and then lost that $250,000. 

Daina: Do you ever swing for the fences, then? Or are you mainly just building capital and taking on minor risk with larger positions?

Larry: There’s really no point in looking to swing for the fences. Swinging for the fences implies you have everything on the line. While it sounds exciting to go for the home run, you never want to put all of your money on the line. Especially when you’ve worked hard to build your base. 

You can’t just dive into risky trades or start going for the home run when you don’t have a foundation of capital under you. You’re going to get destroyed that way. And really, you don’t have to go for many home runs no matter how much money you have. 

Remember… you’ll never go broke putting profits on paper. In fact, you will slowly build your wealth to a place where you want it to be. And I’ve never considered my trades “home run” trades because I’m always putting on positions that I am comfortable with. 

That’s why when people ask me “what’s the biggest gain you’ve ever made on a trade?” I honestly can’t remember. Because I’m not looking for big gains every trade. I’m in grind mode. I am constantly churning out one profit after another. 

Like I said last week, it’s normal to worry that something might go wrong. Your money is at stake. But you should always feel comfortable enough with the size of your position that you’re willing to lose all of it on the trade. 

Daina: So, let’s tie this back to the “get rich quick” ideology. Why don’t most traders see this as a pitfall and avoid it?

Larry: Well, for one, I’d say about 90% of traders aren’t successful. And not being able to let go of a losing position has a lot to do with it. 

It doesn’t sound fun to lose. Especially when your hard-earned money is on the line. But losing is a part of trading, and the better you can get at losing… the better of a trader you will become. Yeah, you’re not going to get rich overnight… but you will slowly become unbeatable. 

Daina: Letting go of losers isn’t something you hear about a lot in trading. It’s usually just a lot of promises to make a lot of money. Let’s dive into the right way to take a loss on Friday. Thanks for your time today, Larry. 

Larry: That sounds good. No problem. 


Daina’s note: Like Larry said, losing isn’t something most traders want to hear about. But, learning how to take a loss is crucial to becoming a successful trader. Larry will dive into what he considers “the most important thing a new trader can learn” on Friday morning.

And if you have any questions you’d like Larry to answer, shoot us a note anytime at [email protected].

Larry’s Market Outlook

It was a weak trading day on Friday, mostly due to the negative announcement out of Boeing (BA). There were emails released about a pilot who knew there was an issue with a plane, but didn’t follow proper protocol.

Today, we’re looking at a weak debt market. This tends to be positive news for equities. 

It looks like the market will probably get to a new all-time high over the next few days. The S&P is only trading about 60 basis points from this all-time high.

We’ll look to maybe establish a short position into this new high, but we have to wait to see if that plays out. 

But, the key takeaway today is that the volatility of the market has contracted significantly over the last two weeks. This leads us to believe people are getting more and more complacent. Likely, they’re thinking a lot of the trade deal headwinds are already taken away from the market.

About Larry Benedict…

Larry is a former hedge fund manager with over 30 years of investing experience. He’s also known as one of the world’s best traders… and for good reason.

From 1990 to 2010 – when he was actively running hedge funds – Larry never had a single losing year.

Larry’s market commentary is frequently featured in Bloomberg, Barron’s, and The Wall Street Journal, among other major news outlets.

That’s why we’re publishing this limited-edition interview series over the next couple months. When we saw what Larry could offer to everyday investors, we knew we had to share everything we could with you.

If you have any comments, questions, or suggestions about this free e-letter, please drop us a line at [email protected].

And if this interview series isn’t for you, simply click this link to opt out now.


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