Managing Editor’s Note: The next breakthrough in artificial intelligence could be right around the corner…
According to our colleague Jeff Brown, we’re on the cusp of one of the biggest technological shifts in history… and a form of AI more powerful than any iteration we’ve seen so far.
That’s why Jeff’s put together an event about the economic “big bang” around the corner. When this type of breakthrough happened on a smaller scale, it helped send individual stocks soaring 1,000%-plus. Now he says we could be looking at something orders of magnitude bigger.
You can get all the details on Thursday, December 18, at 8 p.m. ET. Simply go here to automatically sign up to attend.
As we enter the last trading weeks of 2025, markets are just off all-time highs. Plenty of investors will be heading into the holidays in a jolly mood.
Even if you just caught some of this year’s rally, you’ll be sitting on some very tidy gains.
Those wins should be celebrated. As I constantly remind you, trading is all about putting a “P” (for Profit) on the page.
But after such big gains, investors can fall into the trap of expecting the good times and easy gains to continue forever. That will be dangerous if volatility picks up next year.
So today, let’s run through some helpful tips to keep your trading in tip-top shape… and prevent you from falling into the complacency trap.
A runaway rally can turn investors into spectators. As each new price level is taken out, they have another reason to cheer.
What’s not to like about markets breaking higher and making ever bigger profits?
But rather than staying objective, investors can get caught up in the hype. Discipline can quickly take a back seat.
Folks hang on for even bigger profits while ignoring warning signs like overbought indicators and valuation metrics. And they can set aside their stop losses and other risk management tactics.
So the key is to stay ahead of the market and be proactive. Focus on what’s coming next… not your latest gain.
This can mean staying on top of potential reversal signs – momentum indicators like the Relative Strength Index (RSI) and the Moving Average Convergence/Divergence (MACD).
If you’re not being proactive, you’ll get caught playing catch-up when markets eventually take a turn.
Now I don’t want to overplay it… As longtime readers know, I’ve been early in calling for a downturn.
But after such a massive rally off the April lows, you need to be prepared for a pullback. You don’t want to get caught flat-footed going into 2026.
Even if you don’t trade reversals like me, an overbought signal can give you some warning to start taking profits… or lighten your positions overall. This can help you avoid handing back a chunk of your profits down the line.
And that’s not the only tip to pay attention to. It’s also time to refocus on the basics…
When markets are rallying strongly and volatility is low, you can let your daily routine slip. It’s tempting to simply watch your stocks soar.
But a consistent daily routine is one of the best habits you can form.
You’ve got to look at your charts with fresh eyes each day to ensure that you’re not missing anything. That means consistently assessing your open trades. You should also keep a watch out for new trades on the horizon. That means you’ll have fresh setups ready to go if you’re suddenly forced to exit your open trades.
Running through charts and keeping an eye on key data is worth doing every day the market is open. Not just when you feel like it.
And beyond all this, consider doing a full evaluation of all the trades you’ve done this year. Were there any patterns to your wins or losses? Did you follow your risk management plan? This can help you fine-tune your entry and exit strategies, for example. Even a small adjustment can produce major results.
So enjoy the victory lap if you’ve taken part in the mega-rally. But whatever you do, don’t get complacent.
Use the year-end period as a time to assess your strategy and habits. Then rest and reenergize so you’re ready to get back into action in the new year.
Markets look set to get a lot more volatile in 2026. So we have a lot to look forward to in the months ahead.
Happy Trading,
Larry Benedict
Reading Trading With Larry Benedict will allow you to take a look into the mind of one of the market’s greatest traders. You’ll be able to recognize and take advantage of trends in the market in no time.
