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Trading Lessons

Are You Trading Or Gambling?

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Written by Timothy Sykes
Updated 5/8/2023 6 min read

One of the biggest misconceptions of newbie traders is that they have to take on high levels of risk to make above-average returns.

There are even subreddits that glamorize reckless trading behavior.

I understand that misery loves company…

But if you really want to be my next millionaire student…

Then you’ve got to be serious about risk management and protecting your capital.

And don’t worry…

You don’t have to give up trading those insane Supernovas…

But you do have to be strategic.

Today, I’ll show you I got into one of Monday’s biggest stock movers, and how I traded it safely and profitably.

Everything changes when you start looking at trading this way.


3 Things That Can Improve Your Risk Management

risks with position trading
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#1 Position Sizing

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If I knew what the perfect entry and exit was I would have a lot more than $7.4 million in career trading profits.

The truth is, it’s impossible to pick tops and bottoms.

That’s why position sizing is so key. Personally, I will enter trades with relatively small size.

This allows me to focus on the price action…and not trade overly emotional…reacting to my PnL.

If my entry is off…I will cut losses quickly.

I have no problem re-entering if I see a better opportunity later on. And because I’m in the trade for small size, it gives me the option to average down and add if the trade looks promising.

#2 Price Matters

If I catch a breaking news headline early and I feel the catalyst is compelling I won’t hesitate to get involved.

But my travel schedule is so hectic that it doesn’t happen that often.

That’s why I’m generally looking for dip buy opportunities. I hate chasing the high of the day because the stock could dip, stop me out, and then retrace higher.

I like to find areas of support on the chart and buy around those levels. This gives me a clear out…which helps me get less emotional about my trading.

#3 Trade Scared But Have A Plan

Take on crazy risks and eventually the market will humble you. I know, because it’s happened to me countless times throughout my career.

I don’t know about you…but who likes feeling sick and empty after a big loss?

I know I don’t…although there might be short-sellers who get off on it.

I respect what the market can do, and that’s why I’m constantly thinking about my risk…to the point I’m scared.

Moreover, everyone of my trades has a plan. I know what price I’m entering and where I’m looking to take profits.

And if it looks like my plan isn’t going to work…I will bail quickly.

How I Nailed FUBO 

On most Friday afternoons I will look for a trade called The Weekend Trade.

You can learn about the strategy here. 

But in a nutshell, I’m looking for stocks with strong momentum, with the idea that it will carry over into Monday’s session.

Why I liked FUBO

If you look at the long-term chart you’ll see that it was once a Supernova.

But since then it has more or less been left for dead.

However, last Friday, the stock reported surprising earnings results.

It topped revenue estimates and raised its guidance.

And it even mentioned that AI would be a centerpiece to its global product vision.

But that’s not all…

It was a first green day mover…a pattern that I’ve seen work well recently.

I liked the price action…as well as the strength in the overall market.

I got my entry in at $1.48…I knew that $1.60 would serve as resistance…but if it could break above it…it could be off to the races.

On Monday morning I wasn’t sure what my WIFI situation would be because of my traveling…so I bailed in the pre-market at $1.57.

It turned out that the stock eventually broke above the $1.60 level, blasting off to $1.85 for a gain of more than 25%.

I played it cautiously, but we’ve seen so many breakdowns, that I would rather be safe right now.

If I see continued momentum on plays like this one then I’ll adjust and try to hold on for larger gains. But I’m just trading on what the market has been telling me lately.

Final Note

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I am consistently profitable year after year…not because I score big wins…but because I manage risk better than a lot of other traders.

You don’t have to swing for the fences to make great gains in the market. My trading the last three years is proof of that.

If you want to make it as a trader then stop treating the stock market like a casino.

And if you’re looking for some inspiration then you’ve got to listen to this story about this former NFL player’s journey into the world of trading…

Discover How:

How an Injured Pro Football Player Went from Struggling to Make Ends Meet…To Banking $18,750 A Month On Average. 

===>WATCH NOW <===

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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”