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Trading Tips-Tim Sykes Penny Stock

The One Quality You Must Have Right Now

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Written by Timothy Sykes
Updated 2/17/2023 5 min read

This is the perfect market for losing a lot of money….

Uncertainty surrounding the economy, inflation, and the Fed’s next move has the stock market scared after a massive runup in January.

I picked up on this a few weeks ago before it became clear to most folks. And it’s why I’ve become more selective with my trades and decided to take quick profits when I see them.

However, several traders are still banging away on their keyboards like nothing’s changed.

Look at some of the last few big OTC spikers, Auto Dataflow Inc. (OTCMKTS: EPAZ) and SMC Entertainment Inc. (OTCMKTS: SMCE). They were one-and-done moves, lacking the same follow-through we saw in January.

There’s a time to be active and a time to lay off.

Unfortunately, most traders don’t recognize this until it’s too late and they’ve either gotten into a deep trading hole or blown out their trading account.

You’ll have to develop your AWARENESS levels if you want to avoid falling victim to this trap.

This shift in thinking could be the difference between making little money in the market or becoming my next millionaire student.

By answering these series of questions … you’ll be primed for optimal performance.

Prepare Yourself Mentally

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I’m usually never in the same location for more than a few days. Most of the time, I’m tired from jet lag and working on my charitable foundation, Karmagawa.

On top of that, I often trade in locations where the WiFi is spotty.

However, I don’t use these as excuses to trade poorly.

In fact, being aware of my current mental state allows me to stay disciplined.

Building your awareness levels takes practice. But if you consistently ask yourself the right questions, you’ll develop awareness.

  • Are you prepared for the day? Have you studied your charts, read through the catalysts, and prepared a stock watchlist? If you haven’t, you’re coming into the trading day unprepared. Knowing what’s been happening in the market can help you recognize trends faster and make you more efficient.
  • How are you feeling around the opening bell? Are you distracted, thinking about something else? Or are you calm and relaxed, waiting for the right setup to come your way?
  • What is the sentiment of the overall market? 3 out of 4 stocks will follow the market. If you are going to be bullish on a down day, is the catalyst you’re trading strong enough to overcome a weak tape? (Once you have a better feel for the market, you’ll know when you should be hesitant or decisive.)
  • How are you talking to yourself?  I don’t know what it is about traders, but they love beating themselves up when they miss an opportunity or lose money on a trade. While it’s okay to be upset, it’s never good to have negative self-talk. The only way you’ll be able to trust your gut is by staying positive.
  • What is catching your eye the most?  Many of my millionaire students have developed their own style of trading. However, the trait that makes them so successful is their discipline. They wait for their plays to develop. On the other hand, newbies are more obsessed with staring at their PnL.
  • How do you rank your decision-making? Are you placing trades because your PnL is bothering you? Are you not trusting your gut instincts because you’re on a cold streak? Is your style drifting because you’ve lost confidence? If you catch yourself making poor decisions, shut it down and live to fight another day.

Analyze Your Trading

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  • How are you trading? Are you chasing moves? Or are you patiently waiting for your setups before you trade?
  • Are you playing for the right moves? Are you fighting the market, trying to buy a stock when its price action is choppy? Are you trying to jump into 20 trades and scalp a few pennies here and there? Or are you playing clean setups and playing for big moves like I teach my students how to do?
  • Does your trading match the markets? A few weeks ago, I recognized that the market became much choppier to trade. That’s why I became more selective and decided to take profits and cut losses faster. I adjusted my trading to fit the current market conditions.
  • Are you sticking to your trading plan? Do you get out of a stock if it hits your stop limit or ignore it because you’re stubborn and don’t want to take a loss? Are you not taking profits because you’re overcome by greed, only to have those profits vanish on you when the stock reverses?

These are just a few questions you can ask yourself to raise your trader awareness. But that doesn’t mean you can’t add your own.

Raising your awareness level takes practice and experience. Once fully developed, it can help you avoid bad trades and take advantage of the best opportunities.

I’m not the world’s best trader, but I have been consistently profitable, racking up more than $7.4 million in profits during my career. And after coaching more than 30 students into millionaires, I can tell you that awareness is a trait you must acquire if you want to take your trading to the next level.

 


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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

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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”