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Trading Lessons

Learn From Your Mistakes

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Written by Timothy Sykes
Updated 7/29/2022 5 min read

I started trading back when I was 13 years old.

Almost 30 years and millions of dollars in profits later, people seem to think I’m immune to mistakes.

Nothing could be further from the truth.

While I make fewer mistakes than when I first started, or even 10 years ago, I still make them.

Ask any of my millionaire students, and they’ll tell you the same thing.

Anyone can have a winning streak here or there, especially when the market is hot.

Studying the patterns I teach and tactics I recommend, like cutting losses quickly, is hugely important.

However, I get a lot of newer traders who struggle to identify their errors, let alone fix them.

That’s when I offer them the same plan I’m about to share with you.

These ideas can help you quickly understand what happened and how to correct them.

It All Starts With A Plan

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The only way to know when you make a mistake is to have a point of comparison.

That’s why one of the first things I teach my students is how to recognize chart patterns, be it my Supernova pattern, or otherwise.

Once you have an outline, then you create a trading plan.

In that trading plan, you need:

  • A set strategy
  • Criteria to trigger an entry
  • Defined parameters for a profit target and stop loss

Here’s an example from a trade I took the other day in Q BioMed Inc. (OTC: QBIO).

QBIO delivered positive news in premarket regarding preclinical trials.

This stock was also a former runner from April.

That was enough to put the stock on my radar for a potential trade.

However, stocks like these can sometimes open without seeing any volume.

So, I waited for the news to digest and for shares to show signs of life.

About an hour into the trading session, I finally got what I was looking for.

Using my setup patterns, I entered the trade on a small pullback.

While shares held up for a few minutes, as did volume, there was no follow-through spike, much to my surprise.

So, I cut the position quickly for a small loss.

Write Everything Down

Trade journals will help you improve faster than any other tool out there.

None of us can remember all the trades we take, let alone the specifics.

A good trade journal helps you retain an accurate, unbiased look at your performance.

Mine is open for everyone to see online right here.

Let me give you an example.

The QBIO trade messed with my head a little bit. It got me out of sorts and I made a mistake in the trade I took in Brookmount Explorations Inc. (OTC: BMXI).

I’d already been in this name and managed to lock in a tiny profit.

However, the QBIO sat at the back of my mind.

I ended up in an overnight trade and then a day trade in the name, both of which failed.

When I sat down to review the trades, I realized I made two mistakes.

First, I let QBIO influence my habits and create a bit of FOMO.

Second, I took a trade on the third day of a runner, one of the least likely days for a stock to see additional follow-through.

These mistakes became apparent when I looked at all the trades I had taken over the last few days.

I created a video for my challenge students because I wanted them to avoid the same pitfalls.

Without actively journaling my trades every day, I don’t know that I would’ve realized my mistake as quickly, if at all.

The Bottom Line

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This isn’t a hard process.

Tedious? Yes.

Hard? No.

It’s like a business creating their budget.

You draw out the plan, execute, and then compare your results to the plan.

Even if things turn out favorably, it’s important to verify that you stuck to the patterns, signals, and execution.

The last thing anyone wants is to get lulled into bad trading habits only to have the rug pulled out from under them.


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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”