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Should You Forget About Your Losing Trades?

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Written by Timothy Sykes
Updated 3/8/2023 6 min read

“Never let the fear of striking out keep you from the game.” –  Babe Ruth.

In trading, they tell us to have no emotion… If you take a bad loss, you must erase it from your memory and move on.

What a load of nonsense.

Emotions are what make us human, and as much as we would like to remove them from trading, it’s impossible.

I say embrace it.

Forgetting your losses is another piece of bad advice I hear.

If you don’t learn from your mistakes, you’re bound to repeat them.

It’s okay to be frustrated when things aren’t working out.

However, it’s not okay to not do anything about it.

Over the last three years, I’ve followed a mentality that’s helped me make over $2M in trading profits.

And it’s exactly how I teach my students to be. 

In fact, if you trade a small account, I think it’s the best mindset to have.


Taking A Few Positives Away From Every Trade

timothy sykes in matera in 2022
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I haven’t been exactly lighting it up lately.

Of course, it’s frustrating.

But one thing I’m not doing is ignoring my bad trades and sweeping them under the rug.

In fact, I review all my trades for my challenge students. 

It not only helps me, but it helps them. Better to learn from my mistakes than lose money on yours.

I do the following when I review my trades:

  • Go over my thesis. What motivated me to get into this trade?
  • Review the charts. I typically like to look at the history of a stock and see what type of moves it had in the past, whether it was a former spiker, and how it reacts to catalysts.
  • Review my execution. Did I rush into the trade? Manage the trade correctly? Did I size up too much or too little? Did I take profits too quickly?
  • Rate my overall performance. Did I have the right idea but poor execution? Was my idea wrong?

While reviewing trades in which you lost money is not fun, it will make you a better trader in the long run.

I’m +20 years into trading, and I’ve made over $7.4 million in profits. And from time to time, I will make dumb mistakes.

That’s why it blows my mind when I hear from traders they don’t have time to review their trades. Or they don’t think it’s worth it.

If you look at professional sports teams, they spend a good chunk of their practice time studying film and preparing.

Here’s a quick look at some recent mistakes I’ve made, and hopefully, you can learn something from them.

Discount Print USA (DPIU)

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This was a sub-penny spiker that I believed was a decent catalyst.

However, it didn’t have a strong history of reacting well to press releases, and the overall price action was weak.

This was a trade I probably should have avoided entirely.

On the other hand, I was able to follow my number #1 rule, and that’s cutting losses quickly.

American Battery Technology Company (ABML)

This stock has been strong over the last couple of months. Typically I look to buy stocks in an uptrend on dips. It had a significant dip from its highs.

However, it wasn’t moving when much when I was in it. And instead of hanging around, I decided to exit for a small loss.

After reviewing it, I saw that my thesis was correct, and the stock did bounce. I could have been more patient. So for this trade, I had the right idea but poor execution.

Nonetheless, I stay true to my number #1 rule, cutting losses quickly.

I’ve lost over 1,700 trades in my career.

But I manage to win on more than 3 out of 4 trades I take.

So let me share with you what I learned from a winning trade I recently had.

Cecors Inc. (CEOS)

This was a stock that had a strong uptrend on the daily chart. And one, I was thinking about getting in on a dip. I stayed extremely patient and waited for an extreme panic, which actually happened, allowing me to grab shares near the absolute lows.

I was able to flip this one for 14.5% profit. (I risked $4,080 in capital).

The Mindset That Serves Me Best

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I don’t need to trade anymore.

In fact, all of the profits I make get donated to charity.

And that’s the mindset I try to have to go into each trading session.

Trade like you’re retired…and only come back unless you see an opportunity so amazing…you’ll want to kick yourself for missing it.

In other words, be extremely patient and stay disciplined. And only take the absolute best setups.

Of course, I sometimes mess up. But overall, my track record speaks for itself. 

It’s something I teach to all my millionaire students. 

And one I invite you to try.

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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. 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”