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Three Ways To Bounce Back After A Bad Trade 📉➡️📈

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Written by Timothy Sykes
Updated 9/13/2023 8 min read

Last Tuesday started out great…

I was up nearly $1K trading the ticker symbol WE.

However, I jumped into it a fourth time late in the afternoon and ended up losing a little over $1800. 

Ouch.

One bad trade wiped out all my gains for the day.

Mistakes like this might be rare for me, but they offer vital lessons.

The very next day, I nearly made all my losses back. 

That said, I know a thing or two about bouncing back from bad trades.

Here are my top three strategies.

 

One of The Worst Feelings As A Trader

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Very few things feel worse than trading well the whole day and then doing something dumb that ends up ruining your day.

That’s what happened to me on Tuesday. I was up almost $1K in WE, and then I traded it again, and the results were disastrous.

For some traders, a bad trade can lead to them going on tilt, revenge trading, and overtrading.

However, I’ve learned that only brings on bigger problems.

So, let’s talk about how I mentally overcome these bad trades.

Step #1: Own Your Mistakes

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So many “traders” on twitter post their massive wins and their big ideas.

If, for whatever reason, they don’t work, they just DELETE…DELETE…DELETE.

That’s why most of them are living a lie.

However, real traders like myself must live with their mistakes.

And while I’ve made $7.5 million in trading profits…I don’t shy away from talking about my losses.

If you don’t acknowledge your mistakes you’re bound to repeat them.

Step 2: Analyze What Went Wrong

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In the case of WE, I was playing a panic dip buy. However, it wasn’t at an optimal time.

I constantly review my trades; from that, I know the best time to trade the panic dip buy is at or near the open. And lately within the first 1-2 hours after the open.

However, I took WE late in the afternoon…which I know wasn’t the best time to take it.

But missing the big move earlier, I let FOMO get the best of me.

And because of that, I made a poor decision.

Source: StocksToTrade

In addition, I broke my number one rule: cut losses quickly.

Instead of bailing on the trade when I saw it not working, I added to my position.

Generally a desperate move…and that it was.

It put me in a deeper hole, and I eventually puked the whole thing for a loss of  -$1835.

What did I do wrong:

  • I traded the setup at a bad time
  • I tried to double down instead of cutting losses quickly
  • I overtraded the symbol
  • My position sizing was too big

Some newbie traders will call themselves unlucky…say the market is rigged…or make up a bunch of excuses.

I don’t.

I try to understand the outcome and take ownership.

Other traders will say stuff like I don’t trade that symbol well, I won’t trade it again. It’s the symbol and not your actions that caused the loss.

I knew I lost because of the actions I took.

I also knew that if I fixed my mistakes, I would make on the next trade, which I did.

Step 3: Review What You Do Best

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I want you to take ownership of your mistakes.

But I don’t want you to beat yourself up.

I hate it when traders beat themselves up, and say stuff like I’m stupid, I’ll never get it.…

There’s no place for negative self-talk in trading.

So while it’s important to review what you did wrong in the trade. It’s just as important to analyze your strengths so those are fresh in your mind.

For example, using the following guidelines, I’ve had great success with panic dip buys.

Besides looking for a panic near the open…here’s what else I’m paying attention to:

Don’t worry about whether the company is “good” or not. Lately, the worse the company, the better. I know that sounds crazy, but that’s what happens when shorts forget the principle of supply and demand.

Instead, focus on whether it has a pre-market catalyst or not.

  1. If it has a catalyst, watch the volume. Ideally, you want to be trading the heavier volume stocks.
  2. And, of course, it has to be a high-percentage mover. Why? Because shorts think this company doesn’t deserve to be up that much, the more they short, the greater the squeeze.
  3. Trade these stocks; don’t fall in love with them. For the most part, I’m looking at these stocks as plays. Some have run significantly, but I’m not here to chase. I’m here to make a quick move and be out.
  4. Follow the momentum. Pick your spots. You don’t have to be in them the whole day or try to HODL.

And you know what?

I got a chance to trade WE yesterday. I saw an opportunity to panic dip buy near the open and took advantage of it. 

Source: StocksToTrade

Are You Ready To Level Up?

Trading is not just about executing orders, it’s a whole realm of knowledge, strategy, and fine-tuned intuition.

And as the market evolves, there are always new tactics and perspectives to incorporate into your arsenal.

Remember my trade with the ticker WE yesterday?

Yes, the one that brought in a sweet profit. It’s moments like those, born from dedicated study and expertise, that can elevate your trading game.

However, the biggest pitfall isn’t missing out on a trend, but becoming stagnant in one’s approach. That’s why constant learning and adaptation are key.

It’s about understanding market dynamics, catching patterns before they become obvious, and having the confidence to act decisively.

But here’s the good news: you don’t have to navigate this journey alone.

I’m here to share my insights, experience, and the very strategies that have served me well over the years.

So, are you looking to refine your tactics?

To see the bigger picture and make smarter trades?

Our upcoming live training session is designed just for that. We’ll delve deep into modern strategies, explore recent trades, and most importantly, equip you with actionable insights to take your trading to the next level.

The catch?

There isn’t one. It’s premium knowledge delivered to you in real time without the hefty price tag.

So, are you ready to level up?

[CLICK HERE TO EMBARK ON THE JOURNEY WITH OUR LIVE TRAINING]

Every trading day is an opportunity. Make the most of it. Dive deep, learn more, and level up your game.

Act now, and stay ahead of the game. 


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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

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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”