7 Questions You Should be Asking Before EVERY Trade
Table of Contents
Think you’re ready to make a trade?
Not so fast. All too often, we act without planning and thinking things out.
While you never want to drag your feet, acting without forethought can be even worse.
So as you’re on the precipice of your next trade (and every trade), pause to ask yourself these seven things and yes, watching this stock trading guide and using this free tool before EVERY trade will help your odds of success dramatically.
It might sound like a lot, but after a while, pre-trade planning will become an automatic part of your process. Over time, this practice can improve your performance and help make you a better penny stock trader.
1. Am I prepared?
Before any trade, ask yourself if you are truly prepared, on every level from potential risk to potential reward.
- First, consider your readiness on a very literal level.
- Have you gotten enough sleep?
- Did you wake up early enough to have some quiet time before you got to trading?
Really take a moment to evaluate if you are mentally prepared to trade right now, or if you have a million things going through your mind that might be distracting you from making the best decisions. You need a clear head to be a good trader.
Second, consider your preparedness on a deeper level:
- Are you prepared as a trader?
- Have you received the proper training and education?
- Do you understand the stock, sector and overall market enough to confidently make this trade, or are you just taking a stab in the dark?
While most penny stocks don’t trade on the major market exchanges, there are still some basics that you need to understand if you want to be successful.
The Timothy Sykes Millionaire Challenge was created to provide an educational resource for traders who want to succeed.
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2. Have I done my research?
One of the key things I teach my Trading Challenge students is that you have to do your research BEFORE YOU RISK YOUR HARD EARNED MONEY IN THE MARKETS.
Don’t go into a single trade without having some basis of knowledge and ideally the more the better.
After all, you probably wouldn’t even go to a restaurant without giving it a cursory look-up online to see reviews.
Why would you invest your money in a stock that you haven’t checked out?
Download a PDF version of this post.
It may be annoying to research a stock that is trading for pennies, but often just a little bit of digging can reveal information that can let you know if it’s worth it or not.
Cut through the BS; don’t believe just what a self serving stock promoter tells you. Think for yourself and do your own research before committing to an investment.
3. How much will it hurt if I lose it all?
Take a step back and ask yourself this question: how would it feel if this stock went south and you lost most or all of the money you invested?
No, this exercise isn’t meant to scare you off or to discourage you from making a trade. Rather, this can be a method of making sure you are properly mitigating risk.
If you haven’t even thought about the risk or are pushing it to the back of your mind, you may not be taking all of the proper precautions.
With the potential of loss looming, you might be inspired to do that extra bit of legwork to make sure that this trade is a good idea.
4. Am I forcing this trade?
In your desire to make a profit, are you putting on blinders to some serious red flags?
To really find success as a trader, you have to keep a level head and be able to think rationally and logically, think of yourself as a retired trader and ONLY come back into the market when a setup is so good you’d feel guilty missing it.
You don’t want to lose your patience as patience is what truly pays. You also don’t want to get cocky or else the market will humble you VERY quickly.
Approach every trade as a unique transaction. Sure, you can use the past to educate current and future decisions. But don’t think that if you force it this time it will end up like it did the last time you made a profit.

Millionaire Media, LLC5. Is there a pattern here?
The fact is, every trade is unique and should be traded that way.
But at the same time, history often repeats itself.
When it comes to penny stocks, there are certain patterns which, if you memorize them, can inform your trades and help earn you consistent profits.
In my free guide entitled Penny Stocking 101, I go over some common patterns and potential ways that you can react as a trader; I also cover this in more detail with students of the Tim Sykes Million Challenge.
Once you get the hang of it, seeking out patterns is a great way to really look at a potential investment and evaluate whether or not it’s a good fit for you at this time.

Millionaire Media, LLC6. What would my mentor do?
If you’re experiencing a moment of doubt or you don’t know what to do, try to channel your mentor.
What would he or she do in this situation?
The coolest thing about my trading chatroom is that there are SEVERAL Millionaire Traders there during market hours and it’s been great to watch newbies bounce ideas off more experienced traders.
More often than not, this can take you out of your head enough to get some distance from the situation and make the right choices in your trade.
7. What can I learn from this?
Most people think about what they learned after a trade is complete. But actually, there’s a lot of value in considering what you could learn from this experience before you actually buy.
For instance, if you’re trying a new method of investing, write down the questions and concerns that you’re having as you go through the process.
You can revisit these questions and concerns after the trade is complete, and you may realize that you’re better informed now.
It can be hard to think in the heat of the moment, so next time if you find yourself wondering the same things, you can think back to your previous experience and apply what you have learned.
Additionally, these questions can give you direction as you continue with your studies. You may realize that you need to learn more about selling short, for example.
Taking a few short moments to pause before making a trade can be a good thing. What you lose in your quick reaction time can save you from losing because of acting too rashly. Over time, these questions and considerations will become ingrained, and your overall performance can improve as your instincts become honed.
Have you ever asked yourself any of these questions before a trade and have you ever not asked these questions…then tell me which of these trades worked out better for you?
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.
Nice post Sir. Bullshit They Self Not 😀 Thanks to emercing myself in your reading list early, I feel really good about where I am at with this process. Increased account like 70 percent in last two trades. Surprised that you don’t hound that lounder. That is why you teach and I don’t. You are amazing at it. I on the other hand could never have the tolerance or patience to beg people to study. I would just wind up frustrated with there stupidity. BUT I can promote the SHIT out of in on your behalf. 😀
Hey man I’m late n this one.. but I appreciate every single fucking post,tweet, or whatever…. Thank u…
Prepare prepare prepare!
Another awesome post!
GREAT!
4 – Forcing Trades is my challenge!!
I have a hard time leaving money in cash!!
NICE!
Hi Tim,
I will add these to my 17 Lessons To Remember & Read Each Morning before I start my Million Dollar DVD’s. There is never to much to learn and you can never be a pain in the ass to me. Just a great teacher/instructor!
GOOD!
Thanks Tim. I love the SSS. It really makes it easier to cover all bases when planning. Can’t wait for the Shorting segment of the TCL.
Awesome
My biggest weakness is figuring out what I can learn from the trade about myself after the trade is complete. When you say you’re going to cut losses when the prices reaches X or your risk tolerance is Y but when you’re actually in the trade, many other factors evolve. Most recently I was in a trade where I set my risk tolerance, support, and exit strategy in place. When the pattern I dip bought in failed down to my initial risk tolerance and support I felt comfortable. However, another string of sellers came in pushing the stock down another 10-15 cents below support hitting the next level of support; all within a matter of minutes. It happened so fast but I thought going into the trade I would exit if the trade failed. However, the reason why it failed did not make me want to exit the trade asap, BUT if it fell through the next level of support I would’ve been exiting asap. I ended up escaping the trade with a $10 profit and could’ve been in the hundreds to thousands had I held and not went through that experience. I learned regardless of the situation I need to CUT LOSSES QUICKLY because what if it didn’t bounce back? Where would I have cut losses then? I don’t want to be another casualty and blowup because I didn’t react the way I was taught to. My experience is you never know what you will actually do unless you were in that same exact situation before with emotions and adrenaline rushing through you and the feelings you had if the trade didn’t go your way. This makes you more aware so you don’t make the same mistake again; however you can learn from mistakes, they just don’t have to be your own (I read that quote somewhere the other day and I liked it lol).
Cool
Such great questions to ask! I need to print this out and tape it to my laptop! I’m fairly new to the trading challenge and I know I still have a ton to learn- but the two I need to work on the most are #2, research, and #5, patterns. I am still learning how to do my research and still learning patterns.
I just wish there were more hours in the day to fit it all in! Thanks Tim for your constant education! I’ve learned so much and am so grateful!
Yesssss
I just joined the Challenge, haven’t done any trading yet, only studying so far. I have to learn from all of the 7 Q’s, but especially Nos. 2 and 5, I really have to work hard on those.
GOOD!
I have a problem with not letting winners play out when the level 2 fakes me out on NASDAQs. Been taking off half so I can be more diligent with the second half.
Cool, it gets easier over time
Great article Tim. Thank you. I have only been following you for a couple of weeks now but I already feel I’m learning so much. I am currently doing 7 all the time watching your videos and reading and learning.
Nice, thanks!
Tim, I think #4, forcing trades, is still my biggest problem, but I’ve cut down on that substantially in the past month as well. Only make the trade when the right setup for me is there, and all of the factors you talk about in the SSS line up.
NICE!
2 is my first offender, while I do research the stock I know I could do better. I need to watch the sec filings dvds to help with that.
4 forcing trades. Even though I see the right patterns I hesitate and miss the opportune moment to enter a position. Then I will chase it and have bad entry’s that completely mess up the risk/reward.
Good to recognize mistakes and get better
#2 I need to research more stocks so I go in feeling more confident.
Cool
Thanks for sharing, Tim. I’m just like a sponge right now. I am learning as much as I can and I do not trade as much as I want (avoiding impulse trading)–this is my way of “paying forward”. There are a lot of good trades but I am solidly building a habit of being mentally prepared for a setup. Focus on the fundamentals first. I personally need to go back to square one on all the basic stuff because lot of things made sense the second time I went through Pennystocking Part Deux, and Timfundamentals Part Deux. Recently, a friend shared with me Trading Tickers DVDs by Tim Grittani–awesome material. Although I haven’t gotten much sleep and very little play time with my kids lately because learning to trade is so addictive. The goal to all of this is not just to have money but a healthy and balanced life. It is my ultimate goal to join the Millionaire Challenge as soon as my finances permits. It must be an awesome feeling to have a mentor coach you side by side, LOL.
GOOD!
Sometimes have trouble with 4&5. As each week goes by I am trading more and more like a sniper. Just watching and waiting for the right kill. I am learning enough to trade less and trade smarter at the right times. May be watching great trades pass me by but using them as education trades. Jumped into STT today on some paper trading and made some awesome trades!
Nice!
Keep up with the great articles. Using your methods and principles I have become self sufficient in my trading. I have brought my account up from $18K to $30K since October. It is all because of your lessons and these great articles. Thanks again for your diligence in trying to teach us how to be safe and do this. The thing that won me over was the transparency of your trades and guidance for us to do the same. The accountability makes us all better traders.
Always!
Mahalo Tim,
Yup need to be fully prepared, plays must meet a good score on the SSS or don’t play at all.
Mahalo!
“#4, Am I forcing this trade” This is what I am working on.
When I look at my losses, I am working on not doing this. I am trying to make my trades more mechanical. I think I need equal work on the exit, if not more work on the exit.
How do you clear your mind from a recent loss and not have it affect your exit while in the next trade?
I think I can work on not entering a trade, or entering only good trades (avoid trading when things are not just right).
However, if a trade goes against me, the NEXT trade is harder to hold for the fear of another loss.
Any advice?
Cool, just think of yourself as a retired trader, you don’t have to trade every day
I struggle with #4 the most. Forcing trades due to past success and thinking I can make a trade happen is what gets me the most. I have been working on it and one thing that has helped me is to just close the computer down mid day and not worry about trading until power hour. Using the Sykes Sliding Scale has helped slow my trading down to make better decisions. Since I joined the challenge I have been trading less which has helped me learn more and wait for the best set ups. I have only been in the challenge for just over a month and have been mainly focused on learning new strategies and testing them by paper trading.
Good to know
For me it’s # 4,and #5 that I would like to ask myself more often. This is very helpful thank you Timothy
Cool!
Great perspective on things that actually matter. I need to do a better job at not forcing a trade and also asking myself “what would my mentor do?”. It really helps to go back to these basics questions and not get distracted. Great post!
Thx!
Awesome information I’ll try to apply as i make my first trades as a challenge student.
GOOD!
I am gonna print this one out.
Do it!
#4 is the one I deal with a lot. My account has suffered BECAUSE I’ve made trades for the sake of making a trade. The longer I’m a challenge student, the more things I realize and have to change to become successful. it’s a wakeup call. Thanks Tim.
NICE!
My issue is being afraid of missing out on a trade and also not holding my position long enough.