The Question Every Trader Needs to Ask

When I talk to folks about trading, there’s one question I always hear… “What’s the most you’ve ever made on a single trade?”

And to be fair, I get it. People enjoy a big-time story – like when George Soros made over $1 billion in 1992 by betting against the British pound and “breaking” the Bank of England.

But the truth is, my big wins blend together. I made a million dollars on a trade more than 500 times. And I went 20 years in a row without a losing year.

So my big gains aren’t what I focus on. In fact, I think those folks are asking the wrong question.

Today, I want to share the one question you really should ask instead…

The Trader’s Spiral

When I started out on the trading floor of the Chicago Board Options Exchange (CBOE) more than 40 years ago, my mind was focused on only one thing… making money.

I’d bounce from one trade to the next, trying to get to the next hot opportunity. The aim was to snag crazy outsized gains.

But instead of big profits, I faced eye-watering losses. They became so big that I ripped through my account several times and had to keep starting over again.

The brutal reality I learned was that going for home runs was a surefire way to go broke. The odds are stacked too far against you.

Everyone has a limited amount of capital. So only a few trades can go against you before you clean out your trading account.

Put simply, for every “George Soros” trade, there are countless others that just don’t ever work out.

Trying to recoup that lost money leads traders down the spiral of taking bigger, low-probability bets. And that inevitably leads to them blowing up their account…

The Right Question

Only when I started asking the right question did I turn my trading around…

Instead of thinking about all the huge profits, I learned to ask: “What’s the most I can lose on this trade?”

After losing money repeatedly, the penny finally dropped that I had been doing things back to front…

By learning to tightly control risk management – and not getting caught up in the emotion of how much I could make – I made sure I didn’t suffer a catastrophic loss that could put me out of the game.

If a trade started going against me, I exited. What’s more, if my losses accumulated to more than 2.0%–2.5% in any month, I’d exit all my positions and start fresh the following day.

Then I’d typically cut my position size in half until I started consistently making money again.

The allure of making money attracts folks to the markets. But the thrill of chasing big gains quickly evaporates if you have poor risk management.

Protecting your capital is sacrosanct if you want to survive as a trader. Once you lose it, there’s no coming back.

When I finally learned to put risk management first and accept losses quickly, my trading career really started to take off. That later led to Jack Schwager featuring me in his book Hedge Fund Market Wizards.

So as we head into 2026, be sure to heed that same lesson. That’s the first step in your trading career taking off, too.

Happy Trading,

Larry Benedict
Editor, Trading With Larry Benedict