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3 Mistakes Sabotaging Your Trading Success

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Written by Timothy Sykes
Updated 3/28/2023 6 min read

I sent this tweet out yesterday:

I genuinely believe it.

But unfortunately, the majority of traders will never reach their full potential.

This market isn’t for the faint of heart.

It pains me to see traders repeating the same mistakes…over and over again.

There are three I see that can put an absolute stop to your progress.

I outline what they are and how to correct them.

#1 The Harsh Truth: Managing Expectations In This Market

timothy sykes in matera in 2022
© Millionaire Media, LLC

In 2020 I made $1.19 million, and $1.076 million in 2021.  The markets were hot and I did my best to exploit them. However, 2022 was difficult for most traders, with the markets having one of their worst years since the 2008 financial crisis.

I still managed to make $130K…but it was a far cry from what I did in 2020 and 2021.

But that didn’t upset me. I took what the market gave me.

Q1 2023 hasn’t been easy either.

That’s just the nature of the beast.

After +20 years of trading, I understand that trading has its peaks and valleys.

I tell my students that there’s a time for learning and a time for earning. Right now, it’s all about learning.

So many newbie traders got involved in the markets over the last few years, and think we will have that same excitement and opportunity…

But those are the WRONG expectations.

Now is not the time to be swinging for the fences. Instead of making profit goals for yourself…make process goals.

Pay attention to the following:

  • Trends
  • What’s working
  • Your trading plan
  • Execution
  • Risk Management

Professional athletes develop their skills and work on their games during the off-season.

This slow period in the market is like our off-season. But if you study hard and improve, you’ll be ready to take advantage of opportunities when the market heats up again.

I’ve been taking smaller traders, focusing on cutting losses quickly, and taking fast profits.

Why?

Because it keeps me sharp.

I’m getting my reps in.

I donate all my profits to charity…so I would love to make more…but I also want to be safe and not force action when there isn’t anything there.

Too many noobs are forcing the action and are losing money on stuff they shouldn’t be trading…or being that aggressive with.

#2 No One Knows What’s Going To Happen

© Millionaire Media, LLC

Will trading be dead like this for the rest of the year? 

Are there ever going to be big money-making opportunities again?

Should I even be trading if I can’t make money?

So many noobs are worried about things they can’t control. They focus way too much on making money than what’s really important…

Learning and Getting Better

The approach I’ve found to work best for me is to take it one trade at a time.

It hasn’t ended well every time I’ve tried to force a trade.

It seems like the more you try to make money, the less successful you are at trading. I know…that sounds counterintuitive…but that’s how this game is played.

That’s why I tell my students to focus on the setup and ensure the play is safe. 

 

#3 Trading Is Not A Team Sport

Midwest Traders
© Millionaire Media, LLC | Dominic rises for a shot over Jack while Tim & Michael look on

Short-sellers love team trading. For whatever reason, they find comfort in knowing that other traders are betting against a stock…maybe it helps their confidence or something.

Or maybe they know that misery loves company…

While I think short-selling can be profitable…it’s not a strategy for newbie traders or folks with a small trading account.

It only makes sense if you’ve got a huge bankroll and you’ve proven that you’re profitable. In the end, most short-sellers get their butts handed to them. And if you have a small account, it only takes one or two trades to wipe you out.

Before I got into teaching, I traded solo. I made millions doing it. And even though I have a chat room now, I tell my students never to follow me into my trades. 

I want them to be self-sufficient.

And I’m proud of my millionaire students who have developed their own trading style. That’s how it should be.

So many fake traders on social media post their phony wins (never losses), yet none of these clowns have any success stories.

You can’t copy and paste your way to success.

Learn to embrace that trading is a one-man/woman sport.

You must become an independent thinker.

Trading isn’t meant to be a social gathering. And yes, it can be lonely. But you need to accept it. You shouldn’t rely on others to give you ideas or hold your hand through trades.

I teach a process…I teach strategies…I teach a mindset.

It’s on you to take what I teach and make it yours.

Part of becoming an adult is taking responsibility for your actions.

Embrace the challenge you have in front of you.

It won’t be easy…but no one ever said it would be.

If you need help fine-tuning your process and developing the skills necessary to compete in these markets, click here for more information.


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Author card Timothy Sykes picture

Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (205) 851-0506 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”