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How Jack Schwarze Went From Yearly Losses to Millionaire Trader

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Written by Timothy Sykes
Updated 11/22/2022 5 min read

Imagine hitting a hot streak after months of studying, feeling like you finally hit your stride…

Only to watch your trades turn ice-cold, vaporizing all your profits and then some.

It’s a painful, frustrating experience most of us know all too well.

For Jack Schwarze, my Millionaire Challenge trading student, it lasted for years!

So, how can he stand in front of traders today with $2.5 Million in trading profits?

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For Jack, it’s all about trading what he knows, which includes:

He doesn’t often win, only about 53% of the time.

But he keeps his losses small and takes them fast while leaning into his profitable trades.

However, the real key to his success, which turned everything around, was this simple philosophy…

How fast can I fix the flaws in myself and my system?

This feels like something out of a Silicon Valley startup…

But when you apply it to your trading, it becomes incredibly powerful.

I want to take you through some practical examples to help you overcome your obstacles.

Here’s how it works…

Everyone is Different

jack Schwarze trading
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Before we dive in, I need to acknowledge the elephant in the room.

Many of us face similar problems: overtrading, forgetting a stop loss, too much risk, etc.

How we deal with our problems is unique.

True, you might find a lot of similarities with another trader.

But what works for one person doesn’t necessarily work for another.

That’s a big reason why I load my Millionaire Challenge with so much content.

I can explain a simple concept like Cutting losses quickly. And someone might understand it clear as day the first time I mention it.

However, it could take another person months to study the same concept before it clicks.

The point is not to compare or get down on yourself.

Take each challenge as it comes. Turn it into an opportunity. Work through it the best way for YOU.

Know Your Enemy

Trading mentor Tim Sykes realizes he made a trading mistake
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To this day, Jack battles emotions.

He feels that tug and pull every time a stock makes a sharp move.

FOMO causes him, like so many others, to jump into trades at bad entries that can turn good setups into lousy ones.

Very few people can will emotions out of their trading.

Instead, you have two options: practice and automation.

Yes, you can practice how and when to take losses. In fact, it’s a good thing, so long as you do it cheaply or even with a simulated account.

That way, muscle memory kicks in when you’re trading for real money, and you don’t succumb to emotions.

However, it’s also important to be comfortable with your trades.

Jack strongly believes in trading what he knows with the size he’s comfortable with.

When you take an oversized position, worries start to creep in. If the trade doesn’t work immediately, you question your judgment, and the setup and eventually get into analysis paralysis.

Any changes you make to your trading, from size to strategy, should be done gradually.

And the more emotional you are, the slower you should go.

Be patient. There’s plenty of trading left before the world ends.

Quality Not Quantity

Tim Sykes Italian Alps with a laptop top penny stocks list mindset master
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This doesn’t just apply to trading.

It applies to how you study and learn.

You can study 18 hours a day. But if it’s not productive, you won’t get very far.

Instead, limit your focus to one idea at a time.

Review your trades, and especially the decisions you made.

Ask yourself whether they adhered to your strategy and plan.

At first, you’ll spend a lot of time constantly beating back small mistakes.

However, as they decline, you’ll be left with the big ones that cause serious drawdowns.

Deal with those the same way.

Take them apart piece by piece and work on one component at a time.

For Jack, he would oversize his trades on tickers thinking he wanted the extra risk, but mentally, he didn’t.

He pushed himself before his mind was ready, resulting in early stops with extra losses…despite getting the trade setup right!

Trading is an evolution and a regurgitation process.

You move forward while always shoring up the basics.

Take it one step at a time and enjoy the journey.

—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 (205) 851-0506 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”