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Why I Love Red Days

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs
Updated 11/19/2025 5 min read
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The market’s been bleeding a lot of red recently…

But it doesn’t affect me one bit. 

Why?

Because while “buy-and-hold” investors are watching their portfolios sink, refreshing their brokerage apps every five minutes, desperately praying for a massive bounce…

My students and I? We’re sitting in cash.

Calm. Prepared. Ready.

Red days expose the truth about this market:

Holding and hoping isn’t a strategy. 

When the indexes drop 2%, 3%, even 5%, the “long-term investor” crowd starts sweating bullets.

They tell themselves “It’s just a dip.” They convince themselves to ride it out.

But their accounts are bleeding. And they’re powerless to stop it.

Meanwhile, traders can take advantage of the intraday moves.

Red Days Teach What Green Days Hide

Every time the market corrects, I see the same pattern play out:

  • Traders who refused to cut losses are now stuck in positions down 20%, 30%, even 50%.
  • Traders who “averaged down” on falling stocks are now bag-holding even bigger positions.
  • Traders who thought they could time the bottom are now underwater (with no exit plan).

Warren Buffett once said, “Only when the tide goes out do you discover who’s been swimming naked.”

Red days don’t lie. They reveal who has discipline (and who’s just winging it).

The only traders who survive these conditions are the ones who cut losses quickly. 

Not at -10%. Not at -15%. At their predetermined stop loss, usually -5% to -7%.

One bad trade can’t hurt you if you cut it fast. But one bad trade you refuse to exit? That can wipe out weeks of gains.

Cash Is A Position

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You know what’s better than being down 3% on a red day?

Being down 0%.

Cash is a position. And it’s the most underrated one in trading.

When you’re sitting in cash, you’re not stressed about market direction. You’re not checking the indexes every hour. You’re not hoping the Fed saves your portfolio.

You’re waiting.

Waiting for the right setup. The right catalyst. The right entry.

And when that setup appears, you strike. Fast. Precise. Then you’re back to cash.

This is exactly why I push paper trading so hard. It trains you to sit on your hands until the opportunity is undeniable.

No FOMO. No revenge trading. No desperation plays.

More Breaking News

Just patience and preparation.

Why Red Days Don’t Ruin Me

My portfolio isn’t correlated to the S&P 500. Or the Nasdaq. Or any index.

When the market drops, I’m not automatically down.

When it rallies, I’m not automatically up.

Because I’m trading individual setups, not the overall market direction.

A small-cap stock can spike 300% on a red market day. I’ve seen it dozens of times:

Low-float runners don’t care if the SPY is bleeding. They only care about their own catalysts, their own squeeze potential, their own momentum.

That’s the advantage of being nimble, of trading outside the major indexes.

Big accounts, mutual funds, hedge funds … They can’t move fast. They’re stuck holding positions through the bloodbath.

But traders with small accounts who follow a disciplined process can be in and out in minutes.

Red days don’t scare us.

They remind us why we trade this way in the first place.

What To Do On The Next Red Day

Don’t panic. Don’t average down. Don’t hold. Don’t hope.

Instead:

  • Review your open positions. Are any of them hitting your stop loss? Cut them.
  • Sit in cash if there’s no clear setup. Patience beats forcing trades.
  • Paper trade if you need the reps. Build your pattern recognition without risking capital.
  • Watch for opportunities. Red days often create the volatility needed for explosive small-cap moves.

This market will have plenty more red days. That’s guaranteed.

The question is: Will you be ready? Or will you be another “hold and hope” casualty?

Cheers,

Tim

 

 

*Past performance does not indicate future results

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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.
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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”