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Trading Lessons

Follow This Market Survival Guide

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Written by Timothy Sykes
Updated 5/2/2022 5 min read

Hey there, it’s Tim.

Right now, my trading account is up over $65K year-to-date. Several of my students including Roland Wolf and Jack Kellogg are up significantly more. Meanwhile, the Nasdaq is down roughly 20%!

Now, I’m not writing this to brag. But to show you that money can be made in a down market.

If you want to succeed, you’ll have to focus on trade selection and risk management.

It sounds simple. But this is a lesson I had to learn the hard way.

In fact, I lost more than $500,000 at one point because I didn’t know any better.

I can teach you how to survive this market with a few simple rules.

I knew markets were in trouble all the way back in November of last year.

Despite bulls everywhere, I stood up with my hard hat and safety vest to tell a room full of people a market crash was coming.

And I let the market have it!

Since then, I continue to pound the table to take heed of that warning and make the following adjustments.

Read The Big Picture

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With few exceptions, markets don’t typically veer off a cliff without some warning signs.

This time isn’t any different.

FAANG stocks are a great example.

Until its recent pop, Meta Platforms Inc. (NASDAQ: FB) was trading near $180 or so, about 13x earnings and 11x cash.

Coca-Cola Co. (NYSE: KO) trades at 27x earnings at 23x cash.

Now, I’m not a big fundamentals guy (or really at all).

But when Coke’s valuation is twice that of Facebook’s it makes you really wonder.

Because let’s be real here, Facebook had a crap quarter last go around. Yet it still managed 27% revenue growth YoY and is expected to hit close to 20% in the next year.

People are scared, plain and simple.

Take a look at Netflix Inc. (NASDAQ: NFLX). That stock fell like it was shot out of the sky, not just because the earnings were bad, but because it was so fully valued.

Or how about Alphabet Inc. (NASDAQ: GOOGL)? You think if they’re struggling it’s going to be any easier for smaller companies?

There are countless red flags across the market that tell us stocks need a breather.

Does that mean we drop by 50%? It’s unlikely without a major catalyst such as a full-blown WWIII or credit crisis.

But could we faceplant by +30%? Absolutely.

Admit When You’re Wrong

Cathie Wood might be brilliant. But she’s arrogant.

I may be loud and get in people’s faces. But I’ll admit when I’m wrong.

What’s the number one thing I tell my students? Lose small and fast.

Cathie held onto companies and continued to buy them as they headed towards oblivion.

She refused to accept what price action, the ultimate arbiter, said.

Just look at this chart of Teladoc Health Inc. (NYSE: TDOC) and tell me why you want to buy this stock.

Shares are in an absolute freefall.

Alright, so how do you hold yourself accountable?

Put your trades out in the open.

You can check out all of my trades and those of my students on Profit.ly.

We don’t just post our winning trades. If you see someone doing that, call them out and ask for their losers.

You want to keep yourself honest? Post your trades and be open to explaining why you chose them.

Be Choosy & Patient

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This is not a market to get aggressive.

This is a market to be meticulous and choosy.

We want the premium setups — ones that offer low risk and high reward.

That doesn’t mean going short on Fridays, even if the company is garbage.

Because while markets may drop hard and fast, the bounces are just as violent.

And let me tell you something — short selling data is wrong and often outdated.

You can’t use it to tell you whether shorts are piling into a stock. That’s why we use price action.

As volatility increases, your position size should decrease, and you want only the best entries.

Final Thoughts

You do not HAVE to be in the market.

If you want to generate real wealth you need to survive.

Yes, the market is about taking the appropriate risks for the right rewards.

That doesn’t mean, however, you should do anything you aren’t comfortable with.

If a trade that goes against you makes you sick to your stomach, lower your position size.

If that doesn’t help, then go to a simulated account.

No one said you had to blow up your account to learn how to trade.

I plan to do my darndest to make sure that doesn’t happen.

Learn from the mistakes I made and let me teach you how to become better TODAY!



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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”