This year the markets have been volatile… just like I predicted back in January.
I was even quoted in the media saying…
2022 will be a tough year for the broad market with Nasdaq underperforming all indexes. I believe all indexes will be negative for the year.
While many believed the exact opposite, I saw the storm clouds ahead. And I helped my subscribers profit even during the rockiest periods of 2022.
A big part of that came from the insights I developed during my decades on Wall Street.
And this week, I’ve been sharing seven of my top trading rules with readers in these pages…
To catch up, you can find Part One here and Part Two here.
Now, continue reading to learn the next two rules on my list…
Rule No. 5: Put a “P” (profit) on the page.
Regular readers know our No. 1 objective as traders is to always put a “P” (profit) on the page.
No matter how small or how few times per trading session, you should always look to have a positive profit-and-loss (P&L).
Not every trade needs to be a grand slam. If that were easy to do on every single trade, everyone would do it.
Trading is really about building up a strong base of capital, little by little, and then using that capital base to take on larger position sizes – while still keeping the same risk discipline.
Let’s say you make a 10% return on a $1,000 account. That’s $100. Your account size is now $1,100, and a 10% return is now bigger at $110.
That’s a very simple example.
But you can see how shooting for singles on numerous trades will grow your account size larger and exponentially increase your overall cash returns.
This is how every new trader should start out. It’s how my One Ticker Trader members built up an overall return of over 148% since we launched this past August.
Even smaller wins can add up impressively with a little time.
Aim to constantly put a “P” on the page, so you can build up a strong base of capital. Once you’ve done that, you can take on larger and riskier positions.
That takes us to the next rule…
Rule No. 6: Earn your risk.
This one takes a bit of explaining… but it’s the main concept that made me the trader I am today.
When you’re first starting out trading, you should only trade very small position sizes and take small gains as they come.
If you try to shoot for the home run on every single trade, you’ll quickly wipe out your account, wind up penniless, and swear off trading forever.
The only time you should swing for the fences is when you’ve built up a strong foundation of capital to work with.
Just as I described above, every profit you take grows your account.
You can keep your position size the same, and your return will increase exponentially.
That’s how smart traders get rich. They “earn” riskier trades by profiting on a large number of smaller ones. That’s sustainability.
And sustainability, along with strict discipline and money management, is what makes a good trader a great trader.
Tomorrow, we’ll wrap up with the final rule…
Regards,
Larry Benedict
Editor, Trading With Larry Benedict
P.S. In One Ticker Trader, we focus on just a single ticker each and every month, with roughly three to five trades per month. It’s a great way to gain experience with options if you’re new to them… and build up your capital base.
Like I mentioned above, we’ve eked out an overall return of 148% in under five months… and I’m looking forward to continuing to profit in 2023.
If you’d like to find out more about this service, I explain it all right here.