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Trading Lessons

Define Your Trade – $JZXN

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Written by Timothy Sykes
Updated 4/26/2022 6 min read

Hey, trader. Tim here.

Losing small is my mantra.

However, many of you struggle to put it into practice.

Simply put, you don’t know how to define your trades.

I want to use Jiuzi Holdings Inc. (JZXN) to illustrate this point.

No, this stock didn’t turn out to be a winner.

But check this out…

My winners outweighed my losers!

There isn’t some secret formula that creates this kind of outcome. It’s basic math.

It all boils down to how three elements relate to one another.

Here’s what I mean.

Framing Your Setup

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Every single trade starts with a setup.

And every setup has three elements:

  1. Entry
  2. Profit target
  3. Stop loss

You should be able to tell me each of these BEFORE you enter a trade.

That sounds simple. I agree.

So, here’s the second step.

You need to define how these relate to each other.

Think of a coin flip.

You have a 50% chance of getting heads or tails.

If I bet you $1 to make or lose $1 for every flip, over time, I’d break even.

Sure, we could see a run of wins or losses. But flip the coin and make this bet enough, I’d break even.

Now, imagine I bought a stock at $1 per share. It has a 50% chance of hitting $1.10 and a 50% chance of hitting $0.90.

Same as the coin flip, if I reproduced this trade over and over, I’d break even.

But what would happen if instead of buying at $1.00 I entered the trade at $0.99?

Assuming I still had a 50/50 shot at the profit and loss level, over time, I would make money. It wouldn’t be much, but it would be a profitable venture.

You see, traders can make money one of two ways (and everywhere in between):

  1. A high win rate with small wins that outweigh the big losses
  2. A low win rate with huge wins that outweigh the small losses

Your ability to make money over time is based on a concept known as expected value.

Expected value (EV) is the amount you expect to make or lose over time given enough trades that occur under the same conditions.

It boils down to your risk and your win-rate.

Here’s the formula:

EV = (% Chance of Win x Potential Profit) – (% Chance of Loss x Potential Loss)

Let’s go back to the example where I bought a stock at $0.99 and had a 50/50 shot it would get to $0.90 or $1.10.

Here’s the expected value:

EV = (50% x $0.11) – (50% x $0.09) = $0.055 – $0.045 = $0.01

Now, here’s the cool part.

Assuming your probability of success doesn’t change, a lower entry creates a multiplier effect on your expected value.

Going back to our example, let’s now assume you can get $0.98 for your entry.

What’s a penny matter right?

In this case quite a bit.

EV = (50% x $0.12) – (50% x $0.08) = $0.06 – $0.04 = $0.02

You’ve doubled your expected value!


Because you gained more potential profits WHILE reducing your potential loss.

And this is the key when I talk about losing small.

I want setups with fantastic entries that give me tiny losses and massive potential profits. That way, I don’t need to win all that often. Just enough to make it rain.

Application – $JZXN

Let’s step into a chart of JXZN.

JZXN 1-Minute Chart

Thanks to our Breaking News Team, I picked up on this stock as it got a boost in the premarket.

From there, shares consolidated around $2.40 before dropping down to around $1.75.

I want you to notice the support right around $1.75.

We didn’t know that the stock was going to stop there.

But, we had some clues.

If you look to the left, that was the spot where price spent a brief, and I do mean brief, minute or so consolidating before taking the next leg higher.

Now, I’m not saying that’s where I want to buy.

However, once that shows me the support level, I have my stop loss area to trade against.

From there, I want to identify all the potential scenarios the stock could take.

As the market opened, shares briefly spiked that price before starting a run higher.

That to me signaled the support would hold and the stock could make a run for the recent highs around $2.35-$2.40.

I fully admit I didn’t get the greatest entries here at $2.04.

But, let’s look at the math.

If my stop was $1.75 (which in reality I cut at $1.99), and my target was $2.35, with an entry of $2.04, I can actually calculate the win-rate I would need to breakeven…which is 48.3%.

That’s not great. But like I said, I didn’t get the entry I should have.

Now, what would this trade have looked like had I gotten what I set out in my video review?

My ideal entry was closer to $1.90.

Guess what win-rate I would need to breakeven with that entry?


Do you think with some practice, you could win a trade like this more than 1 out of 4 times?

That’s what I want you to find out.

Do yourself a favor. Check out my SuperNova program and where you learn all you need to identify and trade these amazing setups.

Click here to learn more about SuperNova.

— Tim

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Author card Timothy Sykes picture

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 (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”