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How to Avoid Overtrading in This Hot Market

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Written by Timothy Sykes
Updated 3/3/2021 13 min read

Usually, I act like a retired trader. But lately, I’ve fallen off the wagon … So I want to talk about how to avoid overtrading.

The struggle is REAL. Overtrading is dangerous, but it’s so hard to avoid right now.

Overall, the market’s ugly. For the past couple of months, the Dow’s been like a rollercoaster … Large-cap stocks are tanking … General Electric (NYSE: GE) had its lowest lows in over 11 years, sparking all sorts of rumors about its demise…

But if you can adapt to this volatile market like my students and I have, there are SO many amazing opportunities. That’s why I’m up over $40K** so far this month (and donating all of my profits to charities like Direct Relief). It’s also why so many of my top students report killing it, too.

(*Please note: my results, as well as the students mentioned in this post, are not typical. We’ve spent years developing exceptional skills and knowledge. Always remember trading is risky. Never risk more than you can afford.)

I’ve gotta be transparent, so I’m telling the truth about how I’m overdoing it. I want you to be smarter and better than me. Consider this post my public service announcement about the dangers of overtrading…

What’s Overtrading?

Overtrading is exactly what sounds like: trading too much.

It’s like anything else in life: when you spread yourself too thin, it’s hard to stay focused. You start to lose track of the details … That’s when you start to make mistakes.

Think of a circus juggler with too many balls in the air … At a certain point, they’re all gonna drop.

So Many Amazing Plays Right Now

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Like I said — I haven’t been sticking to my mantra of “act like a retired trader.”

The combination of not being able to travel during lockdown plus so many amazing setups have made it SO hard to avoid overtrading.

I mean, just look at a play like Genius Brands International Inc. (NASDAQ: GNUS.) This was a stock with an actual catalyst — a shareholder letter. How’d I find that out?

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Once I knew there was an actual catalyst, I bought it in the $0.70s. I sold WAY too soon in the $0.80s before it went up to about $1.40 on the day I traded … All the same, I made nearly $2K.

I missed out on the highs, but the next day I got in on the red to green action with a $3K+ win.

Here’s the chart action:

how to avoid overtrading GNUS stock chart
GNUS 2-day chart — courtesy of StocksToTrade.com

My Trading Challenge students killed it on GNUS, too.

Profit.ly user Focusdaddy reports a confirmed $855 profit on GNUS …

Profit.ly user TroyMan reports a confirmed $525 profit, noting:

“Made a plan, had patience and waited for the dip, and executed it near perfectly! I had just listened to Tim say in his live Webinar yesterday say, ‘You want fading before a morning panic ideally.’ Those words I had written in my trading journal notes guided me to be patient and wait for the stock to come to me! Beautiful!”

Overtrading: It Happens to the Best Traders

If you think overtrading is just a problem for degenerate gamblers or newbies, you’re wrong.

Yeah, I’ve found it hard to resist crazy plays like Waitr Holdings Inc. (NASDAQ: $WTRH), SPO Global Inc. (OTCMKTS: $SPOM), and more …

I’ve had some wins … But also some losses. The potential to make mistakes increases exponentially the more you trade. NEVER forget that.

No trader is immune…

Tim Grittani’s Experience With CytoDyn Inc. (OTCMKTS: CYDY)

how to avoid overtrading
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Yep, even my top student Tim Grittani, who’s up nearly $11 million** in profits, overtrades sometimes. And he knows overtrading is dangerous. Check it out…

Trading Challenge students have the opportunity to learn from incredible traders like Tim in my vast library of webinars and video lessons … You can learn a LOT from successful traders like him.

In his webinar on April 28 on Profit.ly, he addressed his overtrading problems head-on:

“It’s been a craptastic week for me. I have struggled so far. Not so much any one big loss or anything, just overtrading and lots of sloppy losses. Right now I’m trying to trade about $10K risk, and I think I’ve had about 6 or 7 losses this week that are $7K or $8K losses.”

He continued,

“I owe a lot of it to my BFF $CYDY … That’s what happens when you get over-attached to a ticker and get attached to a name too much.” 

What happened? In short…

  • He thought “sell the news” and took a loss on a short…
  • Then he dip bought and thought it was stupid and sold at a loss…
  • Then he bought again and it went red on him…

Grittani just couldn’t quit this ticker. He ended up getting angry, emotional, and had some losses. Check out his trades here.

The point is, overtrading is dangerous … the risk is very real. Grittani sums it up well, “There’s no avoiding it, no matter how far along in your journey you are.”

How to Avoid Overtrading in This Hot Market

How can you avoid overtrading during this hot penny stock market — especially if you have extra time on your hands? Here are some key tips…

Wait for the Right Setups

I can’t stress this enough. You MUST wait for the right setups — the ones that fit your criteria.

Even if there are a zillion traders posting insane profits from short sellingif it doesn’t fit your strategy, don’t do it.

For instance, I’m super rusty on Check out my verified trade here. I sold 1,000 shares at .10 and covered at .53. People asked me why I covered so quickly. Frankly, I’m scared of short selling … I’ve dabbled a little. But lately, I’ve mainly been focusing on first green days and morning panics. I know those setups work best for me.

Sure, be open to adapting — every trader’s style evolves over time. For example, one of my top students, Jack Kellogg, has slowly shifted from OTCs to coronavirus plays and Nasdaq stocks. And now he’s on fire … He made over $70K** last month!

But you’ve gotta know the difference between adapting and trying to force yourself into trades.


The market is still crazy volatile. It can be tempting to go crazy and start trading everything. Big mistake. Things can go really wrong really fast if you’re not prepared.

Have a trading plan. Study the market. Have a strong watchlist. Be like a sniper waiting to attack when the moment is just right.

Don’t be an idiot! Get smart about how to prepare for these market conditions. If you haven’t checked out “The Volatility Survival Guide,” it’s a MUST-watch resource.

It’s up to you. Check out this NO-COST guide to learn how to stay safe in this crazy market … Or be one of the morons and keep losing…

Don’t Believe the Hype

Rumors. Hype. Pumps. This is the stuff that can move penny stocks.

Idiot newbies take hype at face value. They buy penny stocks thinking that they just bought a winning lottery ticket … Then they’re surprised when they blow up their accounts.

Most of these companies will screw up in one way or another. Eventually, most penny stocks will fail.

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It’s all about outsmarting the idiots who pump these stocks up and then riding the volatility.

I don’t want them to stop … I just want to trade off of the predictable patterns they create.

Remember: There WILL Be Other Opportunities

Before you start jumping into trade after trade, remember that overtrading is dangerous. Missed the latest hot play in the hottest sector in years? Don’t worry. Spikes can run again. Former runners can come back.

Think about that drunken uncle who always seems to come back to every wedding and family event. Stocks can be like that … They keep coming back, and they never really change that much.

When you keep track of former runners and get to know the personalities of individual tickers, you can be better prepared to take advantage of them when they run again.

Trading Challenge

Who am I? Just a rich guy teaching what I’ve learned over the past 20+ years in the stock market.

What I want to teach you is how to be a smart, discerning trader who knows how to pursue a trade rather than blindly chase. You can learn how to avoid overtrading, find the best setups, and so much more…

I created my Trading Challenge to give traders the educational resources I didn’t have — because they didn’t EXIST — when I was just getting started. I had to do it the hard way and make a ton of mistakes along the way. You can benefit from what I did right … and avoid what I did wrong.

You’ll have access to a TON of resources — video lessons, webinars, and my personal favorite, the chat room. I’ve gotten SO many trade ideas from that chat room, it’s ridiculous.

Ready to get serious and study hard to become a self-sufficient trader? Consider applying.

Have you been overtrading? Be honest. Tell me if you struggle with overtrading and what’s happened as a result!

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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”