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Trading Lessons

This Market Crash & How To Survive

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Written by Timothy Sykes
Updated 8/5/2024 5 min read
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I didn’t have any weekend plays because I could see the bearish activity in the market on Friday …

The July jobs report showed less-than-expected job growth in July and showed an unemployment spike. It raised concerns that the U.S. was heading toward a recession amid sticky inflation and high interest rates.

The U.S. market drop on Friday was drastic … But the real panic started on Monday when the Japanese market opened and had its first chance to react to weak U.S. job data.

When Japan’s market opened on Monday morning, it was still Sunday night for the U.S. stock market …

Below is one of Japan’s more popular indices, the Nikkei, every candle represents one trading day:

Nikkei chart multi-month, 1-day candles (Source)

And when the U.S. stock market opened on Monday, the bearish price action continued again.

Here’s a chart of the S&P 500 ETF Trust (NYSE: SPY), every candle represents one trading day:

SPY chart multi-month, 1-day candles Source: StocksToTrade

See my post on X below:

Over the +20 years that I’ve traded stocks, I’ve experienced multiple market “crashes”.

The most recent and the biggest before this was the COVID crash. My millionaire students and I profited substantially in 2020 …

And we will continue to trade in this market environment.

There are opportunities for you too. But you have to know what to look for.

Especially when the market is crashing!

How I Plan To Profit Right Now

First of all, understand: I’m still trading the exact same setups.

During hot markets and cold markets alike, the patterns are the same.

These volatile stocks like to follow a specific framework. We see these patterns in the market because people are predictable during times of high stress. Like right now, when the market is crashing due to recession fears.

This is the framework that we use to trade!

Attention: New traders and anyone nervous about recognizing this price action …

I trained an AI bot to follow my specific trading framework on the hottest stocks. It took a few months to train, but it was worth it! Now my students have a tool to help them identify plays even during a down market.

>> Use the XGPT AI trading bot to make smart trades right now <<

The patterns are always the same.

But … That doesn’t mean we’re immune to market crashes.

Make This One Change

Sit on your hands.

Get comfortable sitting on your hands.

Only make a trade when you see a setup that’s so perfect that you would feel guilty missing out on it.

When the market is trading lower like this, we find fewer trade setups.

Now … When the market rallies, that’s when it’s time to swing for the fences.

But right now: Trade scared.

See my post on X below:

There’s a whole community of traders weathering this storm right now.

We’re all hanging out in the Challenge chatroom. See a screenshot below:

Apply to join our trading community!

The journey to self-sufficient profits can be lonely. But you don’t have to do it alone! In this community we grow and learn together.

And let’s get something straight … This is completely different than the community of degenerate HODLers that follow promoter and pumper Zach Morris, LOL.

Grow up! Open your eyes! These Zach pumps WILL fail eventually. Especially now that the market is diving lower.

We can definitely make money on the volatility. But you’ve got to know when to get out!

See my post on X below:

Cheers.

 

*Past performance does not indicate future results

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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”