Maria’s Note: Maria Bonaventura here, senior managing editor of Rogue Economics. Today, we’re handing the reins to billion-dollar hedge fund manager, Larry Benedict.

Larry has been trading the markets for close to 40 years. His hedge fund made $95 million in 2008 – the same year most of the market was falling to pieces. He even went 20 years without a single losing year. So, when he talks, we listen.

And in today’s guest edition, Larry shows us why we don’t need to be emotionless robots to be successful traders. Below, he offers a few realistic tips to follow instead…

Keep your emotions in check.

You’ll find that advice in just about every trading book you read.

However, it’s much easier said than done. Emotions flow through us no matter what we’re doing, especially when it comes to the markets.

Compare the euphoric high of riding a winner… to the crushing low of a losing trade.

For some, the swings between the highs and lows are enough for them to swear off trading forever.

The truth is, it’s almost impossible to take emotions out of trading completely.

So instead of trying to turn yourself into a robot, you need to find a better way to manage your emotions.

And that all boils down to how you approach your trading in the first place…

Choose Your Risk Management

Emotions can get the best of you if you’re trading more than you can afford to lose.

For example, say you have $10,000 in your trading account and you decide you’ll go all in on one trade. You’re definitely going to be nervous!

There’s a big chance you’re going to blow up your entire account with just one trade.

Compare that to another trader with the same account size who risks no more than $200–$300 on any single trade.

It’s going to take an incredible string of losses for the second trader to lose a fraction of their account. That’s hardly enough for them to worry about.

That’s why establishing clear risk management rules before you place your first trade is going to take a lot of the emotion out of your trading strategy.

You need to know exactly how much capital you’re prepared to risk on any trade – and stick to it.

Set Realistic Goals

Another equally important factor is setting realistic goals. This goes hand in hand with risk management.

Too often, new traders come into the markets and set their goals too high. So they let their emotions (mostly greed) get the best of them and chase every move, hoping for a big winner.

Inevitably, each trade becomes a roller coaster ride.

Before they know it, they’ve gone through all their funds and are out of the game. And even if they want to start trading again later on, those big losses will leave emotional scars.

Instead, I’ve learned from decades in the market that you need to do the opposite.

Get into the habit of taking lots of little profits as often as you can. Not only does it build your account size (and confidence), but it also helps keep your emotions in check.

For example, if you aim to make a $200 profit per trade, then you’re not going to get as emotional as you would betting your whole $10,000 account on a single trade.

But soon, all those $200 profits start to add up and give your account size a real boost.

Then, when you aim to increase your profit target to $300 or $500 per trade, it’ll be less of a big deal. You’ve already trained yourself to take profits off the table regularly.

Now you can put your efforts into constantly refining and improving your trading strategy, rather than tying yourself up in knots with each trade.

Slow and Steady

As we’ve seen in recent years, the markets can rapidly shift between exuberance and fear.

That’s why I work hard to help traders cut through the noise.

I helped my subscribers avoid the worst of the pain during the March 2020 crash. We even managed a triple-digit profit!

Then, at the beginning of 2022, I warned that the major indexes would go negative. I knew inflation would be rearing its head and cause the markets to fall.

And it was the same story during the 2000 and 2008 downturns as well. My hedge fund benefited as I steered us through those crises.

That’s what I aim to do today.

This year, the market keeps running higher, largely off the back of the Magnificent 7 stocks.

But this setup feels precarious. Just look at Nvidia, the most headline-grabbing of the Mag 7 recently…

Nvidia’s current market cap is now almost double where it was at the start of this year (around $1.2 trillion vs. $2.3 trillion).

And we’re not even three full months into 2024!

It’s now almost three times the size of Warren Buffett’s Berkshire Hathaway, which is worth around $869 billion and the U.S.’s seventh-largest stock.

So right now, managing your emotions – and your trading – is more important than ever.


Larry Benedict
Editor, Trading With Larry Benedict