Stick With the Basics… and Don’t Forget to Breathe

By Larry Benedict, editor, Trading With Larry Benedict

The U.S. may retake the Panama Canal… or perhaps buy Greenland?

You may have heard of plans in Gaza… or the addition – or not – of tariffs with key trading partners. Then there’s the $500 billion “Stargate” project to drive AI infrastructure.

Whatever your political persuasion, no one can accuse President Trump of being idle…

He’s fired off so many executive orders and put countless other controversial topics on the table. So it’s easy to forget that Trump has only been in the White House for two-and-a-half weeks.

Throw in the DeepSeek scare and mixed company earnings, and no doubt many investors are exhausted…

And we’re barely into February!

Of course, you need to keep abreast of the news. You need to know what’s going on.

However, you don’t want the relentless news cycle to consume you.

If you get overwhelmed trying to follow every new development, you can end up stuck… and miss great opportunities as a trader.

So here’s your reminder to take a step back… and don’t get caught up in all the noise.

Because sticking to the basics is going to be critical to trading successfully in 2025…

No Rewards for Bad Decisions

When the markets rallied last year, investors could just “buy the dip” and hang on for the ride…

Even if your entry timing was all wrong, the market would soon recover. And that would help turn a losing position into a winner.

Put simply, bull markets can reward investors for making bad decisions…

Like hanging onto a loser in the hope it will turn around. Or putting way too much money into a trade…

This year, though, folks aren’t going to have the luxury of a runaway bull market to hide their mistakes.

Volatility isn’t going anywhere. And no doubt there are plenty more shocks to come.

In this environment, a losing trade will likely turn into an even bigger loser. And a badly timed entry will truly bite.

So we need to stick to rules that stand up in any market conditions…

Discipline Is Key

Right now, you should only enter a trade if key criteria are met.

That could be a combination of technical signals. For example, you could wait to see a reversal off a support level along with a clear change in momentum, as we discussed earlier this week. Doing so enabled us to pocket a 56.5% gain in two days.

And don’t base your trading decisions on the news cycle. No matter how negative the story, a stock could rally. And despite seemingly excellent news, a stock can fall.

Even more problematic, news cycles can change on a dime. If you build your trade on a short-term catalyst like this, it might not stick around long enough for your thesis to play out.

Of course, more than anything in 2025, risk management is going to be key.

That means having a clear exit strategy before you place your trade. Likewise, get into the habit of quickly banking your winners.

And more than ever, managing your capital is going to be crucial to prospering for the rest of this year.

Putting too much of your money into one trade is a surefire way to tear up your account if – or when – things go wrong.

And if you have a series of losses, reduce your position size for the next trade. You can return to your original position size once you’re back to regularly banking winners.

There are numerous opportunities in the markets every day. Even more so with the rise in volatility. But you can’t profit if you’re out of the game.

Make no mistake: 2025 is going to be a trader’s market.

By sticking to the basics, you’ll be able to ride out any rough patches.

Better still, you’ll be well-placed to profit from the opportunities coming your way.

Regards,

Larry Benedict
Editor, Trading With Larry Benedict