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Trading Psychology

Why It’s Crucial to Adapt in the Stock Market

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Written by Timothy Sykes
Updated 1/24/2023 9 min read

This is a very important follow-up to my recent post about SureTrader closing and why it’s crucial to adapt in the stock market.

I don’t know exactly what’s going on with SureTrader. And I haven’t used them since 2015, so I don’t know all the details. But from what I hear, SureTrader clients are getting their money back. So it’s not like a run on a bank.

But several people who remember when I actually used SureTrader almost five years ago have said…

“Oh, you’re such a hypocrite.”

But here’s the thing … I’ve been warning against using off-shore and upstart brokers for the past few years.

You’ve Had Repeated Warnings About Using Off-Shore Brokers

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I would agree with those people … I would say I’m in the wrong if I hadn’t warned for the past few years about off-shore brokers.

I’ve written blog posts warning against using the wrong brokers. On Profit.ly, I’ve talked about brokers in video lessons. I’ve warned students during webinars and at my annual Trader & Investor Summit. (Order your copy of the 2019 TISummit DVD here.)

The warnings have come over, and over, and over again. Like I said in this tweet back in 2016…

So, yeah, if I wrote that post the other day saying, “you shouldn’t use off-shore brokers” without any previous warning…

… that would be a problem.

Hindsight Is 20/20

It reminds me of a lot of traders and so-called gurus these days who say, “Look how much money I made!” Then they post a screenshot of a big win. It creates a false sense of what’s possible. People see those posts and think look how easy this is…

But the fake guru didn’t actually talk about the trade when they were in it. They’re just using hindsight. And hindsight is 20/20.

Back to brokers…

This is what happens to little brokers. Or prop firms. Or weird hedge funds. That’s why it’s so crucial to adapt in the stock market. And that includes brokers. For more on the brokers I recommend, read this post.

Also, too many people are missing out on the amazing information in “The Complete Penny Stock Course” written by my student, Jamil. (I wrote the forward.) There’s a whole section about brokers (see Chapter I.7, Brokers and Fees, pg. 77).

Focus On Safety

I’d rather have my money in bigger, safer brokers like E-Trade and Interactive Brokers. Again, I don’t get paid by Interactive Brokers or E-Trade. They just suck the least and are safe compared to little brokers. The last time I used SureTrader was roughly half a decade ago.

Look, every year I make a video about which brokers I’m using — and why. While this post is more about adapting than which broker to use, take the time to watch this six-minute video. As you’ll see when you watch it, I’ve been warning against off-shore brokers for some time.

I warned about this years … years … in advance. It’s nothing new. And it finally happened. I feel bad for people.

But for those of you calling me a hypocrite. Sorry, you’re wrong. Anybody who says that is an idiot. That’s like someone saying, “You were long in this penny stock before it went bankrupt.”

Are Brokers Like Penny Stocks?

I’m not interested in what happens to a penny stock eventually. I KNOW most of them go bankrupt. I warn people about it.

It’s fine to buy a penny stock you know is going to be bankrupt a year, two years … five years from now. As long as you get out before that happens. (Preferably long before that happens.)

There’s a whole group of people who say things like, “You should never buy a penny stock or any company that doesn’t have great fundamentals.” Why would they say that? That’s just ignorance.

Some of the best penny stock spikes we’ve seen over the past few months have been in some of the most fundamentally screwed companies.

I don’t care about fundamentals in penny stocks. Especially when they’re being squeezed. When these short squeezes happen they become, literally, the hottest stocks in the market.

Focus on What’s Working Now

So if you’re just narrow-minded and you only focused on fundamentals

… and you don’t adapt to a pattern that’s working…

… you’re gonna miss out on the hottest stocks in the market.

You have a choice: you can either adapt in the stock market or miss out.

Similarly, I’m not interested in what happens to brokers…

Adapt, Adapt, Adapt

A lot of the brokers I’ve used over the years — and I’ve used dozens — have gone under. Or they stopped being good.

I don’t regret using SureTrader or any of the other brokers when I did. As you know, I used to be primarily a short seller. SureTrader was good at finding shares to short.
That’s what trading is all about. Adapting. Narrow-minded people like to hate on adapting. They like to pretend adapting isn’t a thing. That’s why I’m writing this post. Because I have to call it out. It’s crucial you adapt in the stock market. Narrow-minded people leave the game broke and frustrated.

When brokers stop being good for what I do … I change. That doesn’t make me a hypocrite. If you adapt and evolve, it doesn’t make you a flip-flopper. It doesn’t mean anything negative whatsoever. That’s trading. Trading is all about adapting.

One thing to remember…

Nothing Is Risk Free

There’s nothing risk free. E-Trade and Interactive Brokers could surprise everyone and go belly up, too. But the odds of that happening are far less than some of these off-shore brokers.

I want to use the most predictable and safe brokers just like I want to be in the most predictable trades. (That’s not to say I never lose. I do — roughly 25% of the time.)

And the last thing I want to do is try to cut corners. Too many people try to cut corners. You try to get ahead and you usually end up last.

Don’t Fall for the ‘Easy’ Trap

SureTrader offered something like 6:1 leverage. I don’t think you should use 6:1 leverage. I don’t think you should use 4:1 … or 2:1 leverage. I don’t think you should use any leverage.

SureTrader also allowed you to escape the PDT rule. For me, I like the PDT rule. I used to hate it — until I watched too many newbies churn and burn their accounts.

Now I think it keeps you in check. It keeps you almost in a prison where you have to force your way out. You have to learn to grow your account to actually earn your way out of the PDT rule.

So I’ve adapted.

Using leverage and trying to overcome the PDT rule by using off-shore brokers…

… those are attempts to cut corners.

When It Comes to Knowledge and Tools, Take the Long Play

If you try to cut corners, you might win for a little bit. But I’m not in this for a little bit. And you shouldn’t be in this for a little bit.

I’m trying to teach you lessons and rules that will work over many years … and over many decades. Always adapt. Always adapt. Always adapt. Adapting is crucial to trading and the stock market as a whole.

And always focus on safety. Be in the game tomorrow. You can get better at the game. But if you get crushed trying to cut corners … that’s tough to overcome.

Trading Challenge and PennyStocking Silver

I’m entirely self-taught. Sometimes my education was painful. At the very least it slowed things down. My goal is to be the mentor to you that I never had. That’s what my Trading Challenge is all about.

To be successful, you’ll have to learn the patterns and rules. But, again, you also need to learn to adapt. That’s one of the most important benefits of my challenge. As markets change, brokers go bust, and penny stocks come and go…

… I’m constantly adapting. And I teach my students to do the same. You’ll see me adapt in real-time.

If you choose to subscribe to PennyStocking Silver, you’ll get access to my library of over 6,000 video lessons. When you study the video lessons it will be clear — you’ll see just how much I’ve adapted over the years. You’ll see why it’s crucial to adapt in the stock market.

What do you think of this post? Comment below, I love to hear from all my readers!

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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”