3 Critical Mistakes That Hold Traders Back

By Timothy Sykes

Last updated on December 1, 2022
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Turning a small account into $1 million doesn’t happen overnight.

There’s no magic indicator you can drop in your charts that will suddenly start printing profits.

If you want to get there, you cut the lowest-hanging fruit…

The common mistakes that plague every trader.

I know that sounds cliche…

But with over 20 students from my Millionaire Challenge over that $1 million mark, the proof is in the pudding.

Clay Ruf hasn’t hit the mark yet, but he’s darn close at just over $800,000.

Like many of my success stories, he spent the first couple of years focused on study rather than profits.

He waited patiently for the moment to strike.

That came in late 2020 when the Fed juiced stocks and made for one of the best trading bonanzas in years.

But it wasn’t just the market conditions that helped him find his stride.

Clay worked meticulously at rooting out all the common mistakes from his trading.

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Speaking at our trading conference this year, he covered five critical mistakes traders make that hinder their progress.

Some of these may sound familiar to you, while others may be totally new.

But I promise you that eliminating these problems from your trading will help improve your results.

#1 – Not Setting a Max Loss

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Sometimes trades get away from us.

It might stem from revenge trading or a stock that simply moves hard and fast.

At some point, you just need to throw in the towel for the day.

Otherwise, you could wipe out a month’s worth of gains in a day or even a few hours.

I watched several great traders get pummeled trying to short Intelligent Living Application Group Inc. (NASDAQ: ILAG), some losing hundreds of thousands of dollars.

Some brokers allow you to set a max loss limit for the day or week. Once you hit that level, they’ll cut you off, which can be a good option for newer traders.

It’s also worth considering a max dollar loss on each trade.

To improve his consistency, Bryce Touhey limited himself to a $2 max loss per trade for nearly two months!

Now, he’s on his way toward that million-dollar mark.

The point of all of this is to keep things from spiraling out of control.

Large losses hinder most new traders.

It’s why my number one rule is to cut losses quickly.

#2 – No Sizing Guidelines

whats good till cancelled order
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Say you had two trades you planned to take.

One had an entry of $0.037 with a stop of $0.034, and the other had an entry of $1.25 with a stop of $1.10.

How many shares should you take of each?

Everyone needs a clear set of rules to determine their position size based on volatility.

Trades with more volatility require small share sizes.

Most traders don’t think about this and put the same dollar amount at risk on every trade.

You have to adjust your size when a stock makes wider moves.

Similarly, if you scale in or out of trades, you need to consider the market conditions.

I’d be more apt to take a profit and let a bigger portion run during the 2021 bubble than I am today.

So, if things are going gangbusters, I might only take off 50% of my position at my main profit target, whereas today, I’d probably exit the trade completely.

#3 – Itchy Trigger Finger

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It’s easy to get FOMO or worry about profits getting away from you.

Patience isn’t easy.

And as Clay pointed out, waiting for your entry is tough.

But, he said he’d rather miss a trade holding out for his specific number than chase the stock.

I recommend this for newer traders.

It teaches discipline and helps you focus on making good decisions.

The same holds true for your exits.

It’s fine to cut losses quickly. However, you also need to give your trades a chance to work.

This balance doesn’t come naturally.

The best way to find it is by logging trades in a journal.

From there, you’ll be able to look for patterns and identify where and when to take a profit versus cutting it loose.

Final Thoughts

how to find short float
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Remove as many ‘in the moment’ decisions as possible.

Develop a robust plan and strategy ahead of time that tells you what to do when the time is right.

It might seem like I’m asking a lot.

But, if you want to meet the Millionaire Challenge, this is what it takes.



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Comments (1)
Author imageTimothy Sykes
Hey Everyone,

As many of you already know I grew up in a middle class family and didn't have many luxuries. But through trading I was able to change my circumstances --not just for me -- but for my parents as well. I now want to help you and thousands of other people from all around the world achieve similar results!

Which is why I've launched my Trading Challenge. I’m extremely determined to create a millionaire trader out of one my students and hopefully it will be you.

So when you get a chance make sure you check it out.

PS: Don’t forget to check out my 30 Day Bootcamp, it will teach you everything you need to know about trading.

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