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3 Steps I Took To Get Out Of A Trading Slump

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Written by Timothy Sykes
Updated 3/27/2023 7 min read

Never compare your chapter 1 to someone else’s chapter 15.

Some students who join my program hear about the success stories and how I’ve helped mentor +30 students on their journey to becoming millionaires…and think it will happen to them immediately.

However, they fail to realize that the results didn’t come right away.

In fact, my two top students, Tim Grittani and Jack Kellogg, have collectively made over $25 million in trading profits—but they didn’t make any money in year one.

Trading can be absolutely brutal…

You invest your time and energy…with no guarantees.

And when those results aren’t there, you start doubting things. You start thinking about how that time could have been spent elsewhere.

I found myself in a slump this month.

But after doing these three things, I got out of it.

 

Step One: Focus On The Process, Not The Money

tim sykes on laptop computer by Lake Como
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There’s nothing wrong with wanting to make money. After all, that’s one of the most amazing things about trading一your potential is limited only by your imagination.

But trading isn’t the Powerball…

You’re not going to get rich overnight.

Becoming a consistently profitable trader requires several skills.

It’s not just about learning patterns and catalysts. You must also develop discipline and patience. And focus on risk management and capital preservation.

It takes time to acquire these skills. And you can’t skip steps.

That’s why focusing on profits early in your journey is a BIG mistake.

If Jack, Tim, or any of my other millionaire students focused on money in year one…it’s unlikely they would have achieved the success they did.

They understood there was a process they had to develop. And instead of rating their development based on their PnL…they rated it on their learning.

This month I found myself getting into trades, thinking I could make quick profits. However, several of them were not ideal setups. Instead of focusing on the process of waiting for good setups…I was thinking about the money first.

And that’s why my results suffered.

If you’re early on in your journey, don’t focus on the money. Trade small and try to learn each day. Don’t let people discourage you because the profits and losses look tiny.

Once you have the skills…then you can scale up.

Step Two: Review All Your Trades

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Some traders will forget about their losses and only study their winning trades.

However, learning NOT what to do is just as important as learning what to do.

I review all my trades and share what I learned from them with my students.

When I do this, I’m looking at a number of factors.

I’m analyzing:

  • My thesis: Was my idea right or wrong?
  • My entries: Did I get in at a price level that gave me a good risk vs. reward?
  • The Chart: Did I read the chart pattern, or did I miss something?
  • My exit: Did I take profits when my target was reached or cut losses quickly?
  • My overall execution: Did I follow my plan, or did I get emotional or lose discipline?
  • What kind of trade was this? Was I buying off a news play? Was I trying to dip buy? Some plays work better than others. I want to know what’s working in the current market environment.

When I was reviewing my trades, I noticed I was overtrading.  Moreover, I was not taking optimal setups. After realizing it, I started to tighten my belt. I was taking fewer trades, being more patient, and waiting for better setups.

When you’re not making money, it can hurt your confidence. I made the decision to trade a smaller size. This allowed me to work through my issues without the PnL driving my emotions. It allowed me to focus on the process.

That’s why I always tell my students…this is a great market for learning.

It’s important to put your reps in now when things are slow. Develop your skills— you’ll be ready when the markets heat up again.

Professional athletes spend the majority of their time preparing and practicing. They make it look easy when it’s time for them to compete. But very few know the sacrifices and preparation they took to achieve their results.

Trading is the same.

Studying your trades and dissecting what you did right and wrong isn’t glamorous. But it’s important if you want to make it in this game.

Step 3: Give Yourself A Grade

Tim Sykes giving top tested trading tip from Venice, Italy 2021
© Millionaire Media, LLC

Some traders will base their success on how much money they make or lose during the day.

But if you’ve read up to this point, you know that’s not the correct way to look at things.

After I review my trades, I like to give myself an overall grade.

You can give yourself a letter grade as they do in school…I use a scale of 1-10. A 1 is a horrible trade, and a 10 is a great trade.

Be brutally honest with yourself…unlike school…you don’t have to show these grades to anyone. It’s for your benefit.

Source: Profit.ly

I gave myself an 8 on the trade in RGLG yesterday. It was the setup I wanted to see. The play worked out perfectly. I would have given myself a higher grade if I had put on more size.

Source: Profit.ly

I gave myself a grade of 5 on this trade on NOTE.  The pattern was good. However, I misread the chart and sized it incorrectly on this trade. However, I do like how I handled my emotions. I quickly cut losses and didn’t turn it into a horrible trade.

Source: Profit.ly

The same day here but earlier trade in NOTE. This one was played much better, an early morning dip buy and quick exit for profits. I gave myself a grade of 7 on this trade.

It’s important to note, I give detailed video reviews of the trades and give them to my students. 

I’m just giving you a very brief overview here. I’m a lot more meticulous than what you see here.

At the end of the week, I like to give myself an overall grade too.

Right now is a great time to be learning and working on developing your skills. Invest the time to get better and when trading conditions improve you’ll be happy you put in this work.

If you’d like to learn more about my program, click here for the details.  


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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”