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Trading Lessons

5 Figures In 1 Month: 6 Powerful Lessons Learned

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Written by Timothy Sykes
Updated 3/2/2023 8 min read

Making money in the stock market is the hardest way to make an easy buck.

Most people who get into trading hear about the success stories but fail to understand it takes A LONG time to develop the skills and mindset of a profitable trader.

There are no shortcuts…

To get results, you must put in the work.

Market dynamics change quickly. That’s why studying daily is so important.

I just wrapped up my February review and discovered six essential lessons for you to take into the month of March.

This game is all about adapting.

Here are my six big takeaways from last month…

Lesson #1: Not Every Play Is A Dip-Buy Opportunity

Tim Sykes checking his top penny stocks list in Italy
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Penny stock trading requires you to be patient.

A strategy that I’ve been leaning on a lot lately has been the “panic dip-buy”

It’s where I buy a stock that’s had a recent catalyst and selling off hard.

You see, most penny stock promotions are done for one main purpose. And that’s for the company to raise money. So they’ll pump the stock by issuing press releases. If the pump works, the stock will go up, and then they’ll raise money. After they raise money, the stock usually dumps, and then the cycle repeats again later on.

That’s why I don’t mind buying these stocks getting pumped off dips because my experience tells me that they fire off more press releases until they get their financing.

But once they’ve got their financing, I’m not interested in the “panic dip buy.”

I know, it’s a dirty game. And a lot of these companies are run by scum. But I don’t make the rules. I always tell my students to expect the worst from these companies.

I trade penny stocks because I believe they follow predictable patterns. And if you study their behavior over time, I think you can pick up on them too.

But just because a stock is selling-off hard…doesn’t mean it’s a buy.

Just take a look at yesterday’s price action in the ticker symbol SI:

Lesson #2 Be Conservative…But Stay Opportunistic

2023 thus far has been a slow year for trading. That doesn’t mean things can’t heat up, but it hasn’t happened yet.

I’ve done an excellent job at keeping my losses small. And I’ve tried my best to focus on the patterns and catalysts I’ve seen working.

Luckily my hectic travel schedule has taken me away from my computer screen.

It’s easier to stay focused when you’ve got a purpose.

Staying disciplined is difficult if you watch the markets on your computer all day.

I’m even vulnerable to overtrading if I have too much screen time.

In a slower market, you’ve got to fight off the temptation of chasing moves. I haven’t seen a lot of follow-throughs on one-day runners. That’s why it’s okay if you miss a move because you’ll likely get a chance to enter if you stay patient.

The lack of follow-throughs makes me want to take profits faster. Many newbie traders get greedy when they’ve got a winning trade on their hands. But I’ve seen a lot of large spikers fade.

This is not the market for greedy traders.

Lesson #3: Singles Add Up

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It was a pretty brutal month for stocks in February, but I still managed to make over $10,000.

I didn’t have any monster trades. But I kept my losses small, and my winners were larger than my losers.

Small wins can stack up if you manage risk properly.

Some traders have goals to make $500 to $1,000 a day.

But guess what?

The market doesn’t care about your goals.

That’s why it’s better to focus on developing your skills and refining your process. And when the market heats up again, you’ll be prepared to take advantage of it.

Don’t get hung up on monetary goals.

Lesson #4: Short-Selling Is A Dangerous Game

We see huge spikes like the one in the ticker symbol OCEA because short-sellers get aggressive and cause squeezes.

Now, you might be thinking: Tim, didn’t you tell me earlier to expect the worst from these companies? 

It’s true.

But you really need DEEP POCKETS if you want to be a successful short-seller. I agree that many large spikers will eventually come back down. But that doesn’t mean they can’t squeeze for several days before they come crashing down.

The old adage is true: The markets can stay irrational longer than you can stay solvent.

Don’t believe the hype you see on social media from short-sellers. They never post their losses. The name of the game is to live to fight another day. If you get caught on the wrong side of the short, it could be game over for you.

Lesson #5: Focus On Yourself

sykes in front of school with hands on waist
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Don’t believe the hype you see on social media, traders flashing their big wins, making it look easy.

Do these clowns ever post their losses?

Don’t get sucked into the idea all you have to do is follow an alert-service and you’ll instantly be profitable.

You’ve got to discover what works best for YOU.

Don’t get discouraged if you’re not profitable yet. My two most profitable students didn’t make money their first year. In fact, combined, they lost money in year one. And these are two guys who have both made 8 figures in their trading careers.

Focus on getting better every day. Focus on yourself.

Lesson #6: Learn From Your Trading & Adapt

high frequency trading
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At the end of the day, you want to discover what your strengths and weaknesses are. Once you can do that, work on doubling down on your strengths.

The only way you can do that is by studying and reviewing your trades daily. In addition, you want to study trades that you’ve missed, figure out why you missed them, and how you can prepare to take advantage of them next time.

Pay attention to the overall market. It will tell you when it’s time to get aggressive and when to be conservative.

Most importantly, focus on learning and developing your process.

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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

* 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 (888) 878-3621 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”