James’ note: One day it seems like the next market crash is starting… The next day it seems like the sky’s the limit… And most of the so-called experts don’t know what to make of it.

That’s why, before we get to today’s Cut, I (James) want to tell about a special event happening next Wednesday, December 11 at 8 p.m. ET…

Larry Benedict, the former manager of a $1 billion hedge fund, will walk viewers through the strategy he used to generate $95 million in profits during the worst part of the global financial crisis.

And if you don’t want to wait until next Wednesday, you’re in luck… Larry just released the first in a series of short, documentary-style videos… taking you behind the scenes of his day-to-day life as a top trader.

To watch the first video, secure your access here with one click.

But before you watch that, read on for Larry’s No. 1 piece of advice to all traders…

One of the problems with new traders is they end up letting one or two big winners define them. 

That’s an emotional approach. And that leads to a lot of early endings to promising careers.

I have always looked at trades very mathematically. I’m thinking less about how a trade reflects on me as an individual, and more on how it’s affecting my overall P&L (profit and loss). I want consistency above all, and that’s my way of achieving it.

Traders make mistakes when they make emotional decisions and divert from the mathematical plan. That’s the opposite of consistency.

For me, consistency has always come out of grinding out positive P&L. It’s from putting a P (profit) on the page, no matter how small.

That’s different from what I see most traders doing… They go for home runs.

I’m not a home-run guy. I’m looking for singles, doubles… And every so often, when everything lines up perfectly, I hit the grand slam. 

I don’t mean to pretend that I’m perfect. As I write this, I’m in a trade that was up a decent amount. I was probably up around $70,000. 

But, I got greedy. 

Instead of cashing out of the trade when I hit my profit target on the upside, I decided to keep pressing. And what was looking like a big gain is now a loser.

Here’s my point… When you’ve earned your risk – meaning you’ve had a string of good trades and built up a strong base of capital – you can afford to get greedy.

Before I made this trade, I’d been doing well. I had built up my P&L… so I took the risk.

I never would have pressed this trade if I were on a losing streak. I would have taken the profit right away when I saw $70,000. 

Every trader should be using this same discipline… but almost none of them do. 

What’s even worse is, this same emotional approach bleeds into their personal money management, outside of trading. And that can be just as damaging.

Here’s what I mean…

A lot of guys who trade for a living will have one great year… let’s say they make $750,000… and they go out and buy a boat. Or a mansion. They try to hit the “home run” of life.

The mistake is they think they will just make the same amount next year. That they’ll have the same income, year after year. And they just blow through all of their money.

That’s terrible money management. And if you are going to be successful at trading, or at anything you do in life, you have to have responsible money-management skills. 

That might sound strange, but it’s true. Being a successful trader for the long haul is just as much about what you do when you’re NOT trading…

Consistency is what made me unbeatable. I could risk a million on a trade and it didn’t matter. Because I earned it by building up a strong base of capital. 

And, just as importantly, I never lived outside my means. If you let your ego get to you and you go overboard, that’s just as dangerous.

You have to look at the long term as well as the short term.

Don’t change your lifestyle just because you had one great trade, one great month, or one great year. I always told the guys who traded for me at my hedge fund… If you have a good year, buy yourself one thing and save the rest of the money. Saving money and making sure you always have a solid pile of capital is the foundation of consistency.

The best traders are the guys that keep slowly building profits every year. And they keep getting bigger and bigger as they go. 

The worst ones are those who assume lightning will strike twice, and that they can depend on the same result over and over to fund higher levels of risk – and irresponsible spending.

If you’re consistent in not just your trading discipline, but how you manage your money after the market closes, you’ll come out ahead of almost everyone else.

Regards,

Larry Benedict
Editor, The Opportunistic Trader

James’ note: Larry has a knack for trading the markets for fast gains. It’s how he built a multimillion-dollar fortune over his 35-year trading career. And now, he’s showing everyday folks how to use the same techniques to build their own fortunes.

In a special event on December 11 at 8 p.m. ET, Larry aims to generate $70,000 or more in less than an hour – and donate the proceeds to a local South Florida charity. It’s your chance to see Larry’s strategy in action.

And as a special bonus… you’ll get a free copy of Larry’s “Foolproof 50” – an exclusive list of the stocks he trades – just for tuning in. Save your spot here.

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