Note: In May of 2022, our colleague – tech investing legend Jeff Brown – wrote about Rigetti Computing as one of his favorite quantum computing stocks… It’s up 4,000% over the past year.

If you missed out on those gains, don’t worry… the quantum trend is far from over. In fact, by the end of this month, the government agency that invented the internet, DARPA, is set to make a critical quantum computing announcement…

And Jeff believes it will send his new top three quantum stocks skyrocketing higher. That’s why, next week, he’s hosting a strategy session called The Quantum Flashpoint.

Just go here to automatically sign up to join him on Tuesday, October 21, at 8 p.m. ET.

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Last Friday’s sharp selloff caught plenty of folks off guard. And for an overly complacent market, it was a stark reminder of just how quickly things can change.

Before the selloff, it had been just another typical week. The major indexes had been slowly grinding higher while volatility had been stuck in a sideways band just off its lows.

Yet the announcement by President Trump about an additional 100% tariff on Chinese imports saw those indexes tank and volatility burst higher…

The Nasdaq and S&P 500 fell 3.5% and 2.7% respectively, on the day. And the CBOE S&P500 Volatility Index (VIX) surged around 32% to its highest level since June.

A sudden move like this can spark plenty of emotions. Especially for folks who’d become accustomed to the market only heading one way.

But while we can’t eliminate emotions altogether, there are some basic concepts that can help keep them in check. And there are two I’d like to look at today…

Managing Size

One of the most common mistakes traders make is that they trade way too big a position for the size of their account. I did this myself when I started out, and it cost me my trading account several times over.

Of course, it all works well when the trade goes your way…

However, it only takes the slightest bit of bad news to tear a hole in your account. What’s more, with so much riding on each price tick, it becomes emotionally draining.

Learning to manage your trade size is crucial to your long-term success as a trader… and helping manage your emotions.

Consider a trader with a $10,000 account who strictly only risks 2-3% ($200-$300) per trade. For them, a selloff like Friday’s or a run of losing trades will only burn a small portion of their account.

They can quickly reset and go after their next trade…

However, compare that to someone who has their entire account riding on just one or two trades. The difference in pressure between the two scenarios is enormous.

Risking smaller and manageable amounts will vastly reduce the chance of your account taking a knockout blow. And that takes a lot of pressure off you emotionally.

However, while limiting your risk is key to reducing emotions, there’s something else equally important…

Tune in to Trading With Larry Live Each week, Market Wizard Larry Benedict goes live to share his thoughts on what’s impacting the markets. Whether you’re a novice or expert trader, you won’t want to miss Larry’s insights and analysis. Even better, it’s free to watch. Simply visit us on YouTube at 8:30 a.m. ET, Monday through Thursday, to catch the latest.

Unrealistic Expectations

With the runaway bull market, folks have become used to stocks only heading higher, believing that even if they get their entry wrong, the market’s next upswing will soon bail them out.

They’ve also become used to stocks posting double and triple-digit gains in quick time.

But any seasoned professional will tell you that the type of returns we’ve seen far exceeds longer-term averages. And even in strong bull markets, stocks don’t typically go up every day.

It’s just a matter of time before things revert to the mean. So if you’re expecting to keep hitting home runs, you’re going to be sorely disappointed.

And if this market rolls over, simply buying and holding on (as has worked in the rally) will see small losses quickly accelerate into something much larger.

And that will likely put you out of the game.

When I focused on chasing lots of little profits, rather than hoping for unrealistic gains, my trading really took off. Better still, I avoided taking any large hits.

The key is to manage your risk and profit expectations against the size of your trading account. Once you’ve grasped this and start applying it, it will dramatically help you keep your emotions in check.

Larry Benedict
Editor, Trading With Larry Benedict

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