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Penny Stock Basics

My Ace Student, Dominic, Does These 6 Simple Things

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Written by Timothy Sykes
Updated 1/24/2023 15 min read

I love it!

Another Trading Challenge student is killing it! Congratulations, Dominic!

Here’s a guy — only 23 years old! — who had no clue what he wanted to do with his life after he graduated from high school.

So what did Dominic do? He did what many other young people do…

… he hedged.

That is, until he figured out how — according to him — to make $100,744.04 trading penny stocks.** His results aren’t typical. He worked his ass off and I’m super proud of him!

How did he hedge?

Since he didn’t know what he wanted to do, he went to college. The American dream

What Dominic Discovered While Skipping Classes

I have nothing against the American dream, by the way — it’s how they present it to us that pisses me off! Go to college, get a good job for life …

We all know for most people that’s no longer a reality.

Dominic knew he didn’t want a boring, 9-to-5, “normal” job. He knew he wanted to come up with some kind of big-idea, entrepreneurial-style way of making money.

This is hilarious: He went to college to ‘pass the time’ while he came up with his big idea. It’s a clever option, really.

Except if your parents are footing the bill and they want to know why you’ve been skipping class. It’s like getting caught with your hand in the cookie jar. But that’s why I love it.

Check this out …

After shadowing an actuary (his chosen field) during his sophomore year, Dominic realized he’d go effing crazy in the job.

So what did he do? He started skipping his actuarial science classes. Who wouldn’t? I mean, even if you’re good at math and you love probability and statistics …

… can you imagine spending your days trying to determine the probability of a 44-year-old suburban white male ending up in the hospital due to injuries sustained while playing in his softball league on the weekends?

No thanks, dude. I don’t mean to offend anyone who actually is an actuary. Just not for me. Or Dominic.

Back to Dominic … he most certainly did NOT want to do that kind of work.

He skipped a class with a guest speaker only to discover later that he had to write a paper on the guest speaker’s talk.

Oops. What to do?

College Lecture on YouTube Leads to Passion for Trading

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In this age of brilliant modern technology, Dominic was able to watch the lecture on YouTube.

And what do you think was off to the right — in the recommended videos — attempting to lure Dominic away from his dry, boring, actuarial science video?

That’s right: a video of yours truly being interviewed by Steve Harvey!

Do you think Dominic was able to concentrate on actuarial science once he watched that? No way! He started digging around to see if I was another ‘get-rich-quick’ scam artist or …

… a legit trading teacher who LOVES my students and wants the very best (even though I can’t hold your hand through the process) for each of you.

Dominic read my book, “An American Hedge Fund”, and researched some of my other students. Once he found his way to the Trading Challenge, he knew it was what he wanted to do.

Then he went to have a little talk with his dad.

I can relate to this talk. It’s probably like the talk I had with my parents back in the day.

Dominic begged his dad for the cash to join the Trading Challenge. He worked on his dad for a good month. Finally, his dad said “OK” and gave him the cash, but he wanted to be paid back — and he wanted it to happen fast.


You know this isn’t ‘get-rich-quick,’ right?

It takes time and tons of learning and testing and working. No parlor tricks. This is not smoke and mirrors!

So, Dominic’s dad says something like, “Dom, you start trading in January and start making my money back.” This was in the fall. So Dominic only had a few months before his dad wanted him to start trading.

Dominic’s reply was along the lines of, “But, Dad, I’m not quite ready. This is a massive amount information to digest. I’m learning it but it’s going to take some time.”

So, as happens so often in the annals of American history, Dominic took the ‘ready, fire, aim’ approach. He started trading a live account before he was ready.

He admits he screwed up a lot. He even said, “I did not take this half as serious as I should have when I first started.”

More than once he tried to follow Tim’s Trading Rule #1: Cut Losses Quickly. But he made the mistake of doubling down (and losing twice as much) because he didn’t even know how to use the trading software yet! Yikes! Can you imagine?!

Dominic managed to trade his starting $2,500 account down to an untradeable $500 in short order.

Luckily, Dominic is a bright guy. This could have been a very messy story — with a messy ending and family disappointment. (There’s too much of that these days.) Not for Dominic.

Thank you, Dominic, for taking a step back, for trusting me and what I teach, and for getting serious about your trading education.

Back to Dominic’s story, because things weren’t all rosy from there. He went through some health issues and had to leave college and work on his degree from home. But you know what he did?

He studied Trading Challenge material roughly 17 hours a day! He watched the market. He soaked it all up like a sponge. He borrowed another $5K from a relative to start trading again with his newly acquired knowledge.  And then …

… he did the same thing most people armed with a bunch of new knowledge do …

…. he tried to do everything he was learning. All at once!

In his own words: “I had no consistency, no bread and butter, and no identity.”

It took a while this time, but with his account slowly trending down, Dominic finally figured out how to turn things around.

This was not some super-epiphany-bop-you-in-the-head lightbulb moment. It was 10 months of consistently losing money! He was down $6K in his trading career. All on borrowed cash.

How Dominic Turned the Corner in His Trading Career (Or … Badass Information That Can Change Your Life!**)

Write this down in your notes. You have a notebook, right? If you don’t, get one now.

I asked Dominic to share what he did to turn things around. His answer was a lightbulb moment for me! Not that I didn’t already know it, but as so often happens with these things, the way he said it struck a chord.

Dominic said the most important thing he did when he was down $6K was …

… Start looking inward.

You might be sitting back asking, “What the actual f**k is Tim talking about?”

Dominic realized he had so much information and so many trading ideas running around in his mind — that he was getting in his own way.

Worse, before this realization, when he lost he figured the best thing to do was go watch another YouTube video or trading DVD. He thought the next setup he learned was the one that would make all the difference.

When he realized the answer wasn’t ‘out there,’ he started looking at himself.

How did he apply this to trading? Excellent question.

Dominic’s badass, super-actuary-mathematical-probability-busting brain decided to — and I quote — “Stop doing things that were consistently losing money.”

Friggin’ BOOM!

So simple, so practical, and so right on the money. Pun intended.

We’ve all heard the definition of insanity: do the same thing over and over again while expecting different results. Dominic came to the conclusion that his trading fit that description rather well.

He realized he needed to do two things. What are they? He tracked and categorized every trade.

Dominic used these categories to track his trades:

  • Specific setup
  • Time of day
  • OTC (over the counter) or listed stock
  • Profit and loss
  • Risk vs. reward ratio
  • And percentage gain

In other words, he started treating this like a business. He kept a trading journal. He knew he could get better at trading if he figured out what went right or wrong.

(By the way, you can learn all this if you get accepted to my Trading Challenge — and put in the work, like Dominic.)

I want to reiterate that last idea. Dominic figured out there were things he was doing really well, and if he could cut out the crappy trades …

… if he could repeat the things he was doing well and stop doing the things that were losing him money …

… he could be back in black in no time.**

Here’s another very smart thought Dominic had at the time: Most people who put in the time and effort to learn trading don’t know their numbers. In other words, they don’t know what they’re doing right or wrong because they haven’t taken the time to dissect each trade.

Like any business, if you don’t know your numbers you’re screwed.

And if you don’t take the time to identify the real problem, how can you expect to come up with a solution?

Awesome advice, Dominic! Way to go, man!

Dominic started to trade only a few setups. Does this sound familiar? Another student of mine, Mason Fecht, recently said almost exactly the same thing: Figure out a few setups that work for you and trade them. Master them. Build success one trade at a time doing things that work.

Dominic does not claim perfection. In fact, he says he screws up all the time. He still sometimes makes mistakes he’s already made.

How does he deal with losses?

“I’m self-aware enough to understand when I’m going down a bad path and correct it as quickly as possible by going back to the basics,” he says. “I keep learning and never get complacent.”

Dominic’s Six Trading Tips for Trading Success

Dominic’s Trading Tips #1: Know Your Numbers

“You need to have accurate data on each and every trade you make,” says Dom.

He decided to go over his numbers a minimum of once a month. Sometimes more often. By doing this he was able to figure out what was working and what lost money.

“Learn to completely cut anything that consistently loses money. Focus on the setups that are successful,” he says. “If you are not successful with anything, you need to find a new strategy.”

Doing this also helped Dominic create his own set of trading rules — which he constantly updates.

“Having the discipline to follow your own rules is paramount to sustained success as a trader,” Dominic says.

Dominic’s Trading Tips #2: Understand Risk Management

“Nobody will stop you from making foolish decisions except yourself.”

Dominic told me he learned very early on to ‘fear the market.’ He cuts losses quickly and intelligently. He uses key price levels as part of his risk management strategy.

As he puts it: “The question I always ask myself when choosing risk is ‘at what point on the chart do I think the pattern is dead?’”

If the stock reaches that price, Dominic is out. According to him, “Why on Earth would I want to keep holding shares under that price?”

Dominic’s Trading Tips #3: Add to Winners

“Your goal as a trader is to maximize winners and minimize losers so that in the long run you end up ahead.”

Check this out: According to Dominic’s Profit.ly account, he has 534 winning trades compared to 596 losing trades. Let that sink in …

More losers than winners and his profit — according to his Profit.ly account — is $100,744.04!

Dominic says this is because his risk vs. reward is in an optimal zone. In a winning trade he adds to his position to make more on his winners. And he always tries to keep his losers to $200 or less.

“This is something I struggled with for a long time,” he says. “My winners and losers would all be similar amounts and I slowly lost money as my winning percentage got the best of me.”

Once you get this you can find a strategy where one winner overcomes many losing trades. That’s when your success can start to pay off.

I keep wanting to use the word profit but my nitpicky lawyers tell me I can’t or I’ll get in trouble. So I’m not saying profit. How about “Your winners can outrun your losers …” Lawyers?

Dominic’s Trading Tips #4: Networking Overcomes the Loneliness of Trading

“The only thing worse than being a consistently losing trader is being a consistently losing trader with no one to talk to about your struggles.”

Are you taking notes? This is friggin’ awesome information! Dominic nailed it with this one.

When you are learning to trade it can be incredibly lonely. Dominic admits he didn’t reach out to anyone at first — not even his mentors in the Trading Challenge. Then he realized there were a lot of people out there just like him, working their tails off to figure it out.

He started connecting with other Trading Challenge students and reaching out to the mentors. It paid off.

“Reach out to people — build relationships,” Dominic states. “You might be amazed what it can do for your mental state and your trading.”

Dominic’s Trading Tips #5: Learn from Others’ Mistakes

“You don’t have to make every mistake in the book to learn the lessons.”

Dominic has heard my horror stories about big losses. He’s heard similar stories from my top student Tim Grittani. He uses these stories to make sure the same thing doesn’t happen to him.

“Most of the time, those ginormous losses happen at times when people break rules,” Dom says. “They lose discipline.”

This is a great lesson. Look, I’ve made every effing mistake in the book. I’m totally up front about it. I teach it to all Trading Challenge students and hope they never make the same mistakes.

Dominic might end up being a better trader than me because he gets this. Pay attention to what he’s giving you here. Learn from other people’s mistakes.

Dominic’s Trading Tips #6: Make a Time Investment

“Don’t go into this expecting to be the next millionaire trader in a year. It isn’t realistic. The learning curve is steep and it will take time.”

Thank you, Dominic, for this no-BS tip.

You have to invest time. Hours, days, weeks … months! Remember, Dominic had 10 months of consistent losses before he turned it around. My other recently successful student Mason had a long period of losses. Tim Grittani had something like nine months of losses before he figured it out.

Dominic nailed it when he said, “Everyone is different and will achieve different milestones at different times in their journey. 95% of what makes you a successful trader will probably never get noticed.”

Put in the time, develop self-discipline, analyze your trades at the end of every month …

… Is this starting to click?

My Takeaways from Dominic’s Badass Success

I hope you’re as inspired by Dominic’s story as I am.

Dominic, congratulations again on your success! You are a great example of why I love to teach!

Make sure you read this post again — bookmark it, even — because Dominic is turning into a helluva trader and he’s given you some clear and concise wisdom.

Each of Dominic’s trading tips is valuable for anyone willing to put in the time to learn. Commit them to memory.

Are you inspired by Dominic’s story? Congratulate him below and let me know where you are on your trading journey. I love hearing from you!

How much has this post helped you?

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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

* 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”