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5 Steps To Overcoming Overtrading

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Written by Timothy Sykes
Updated 8/23/2023 7 min read

It’s exciting whenever you see stocks like the ticker symbol VFS go from $12 to $46 in just a few days…

It’s a constant reminder of how much opportunity there is in the market, even during the end of summer, which is typically viewed as a slow period.

However, getting caught up in all the hype is far too easy.

Before you know it, you’re jumping from one position to the next, chasing the elusive perfect trade.

Overtrading can be a vicious cycle… if you’re trapped in it… you know how it can drain your trading account quickly.

But if you want any chance at success in trading…you must overcome it.

Today I’m going to show you five steps on how I overcome overtrading and stay consistently profitable.

Before We Get Started: Full Disclosure

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I’m not one of those traders who naturally get up early in the morning, works out, eat, sleeps, and breathes trading.

I’m up late at night, often getting little to no sleep, traveling from one place to the next, balancing coaching, trading, and my charitable work.

Now, I’m not saying that to knock others who are 100% committed to trading…I’m just bringing it up so you know I’m not some super-disciplined guy.

I too, struggle with overtrading.

However, I have figured out a way to manage it and thrive.

And that’s what I’m going to share with you today.


Step One: Know Your Strengths

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When you don’t know your best setups, you’re vulnerable to jumping from one trade to the next.

FOMO can beat you easily.

However, once you know what you’re good at and what makes you money, then it’s a lot easier to stay disciplined.

If you read this blog, then you know what my favorite setups are.

You won’t see me jumping into trading options one day or crypto the next.

I stay true to my strengths.

Lately, that’s been panic dip-buying heavily shorted stocks and multi-day runners.

If you know what makes you money, doesn’t looking for those opportunities exclusively make sense?

Of course, it does.

So, how do you do that?

You have to journal all your trades.

You then have to review your trades.

Find out where you are making and losing money.

Discover what setups are working in the current market and why.

If you are a complete newbie, Step 2 will apply more.

Look, I’ve been trading for 20+ years…

I still journal to this day. In fact, you can see all my trades right here. 

Step Two: Study…Study…Study

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If you’re a newbie just getting started, then it will take you some time to discover what your best setups are.

After all, you need to test out different strategies and setups.

One thing that can help you is by studying successful traders.

That’s one awesome thing my Trading Challenge students have an advantage with.

They learn from me and my other millionaire students like Mark Croock, Tim Lento, and Jack Kellogg.

Why is that so awesome?

Because you get exposure to so many winning strategies.

Jack Kellogg didn’t his first year didn’t make any money.

But he was encouraged because he saw others make money.

He felt that if he could tighten up a few aspects of his trading, he would earn soon enough.

When you don’t have much experience, learn from other profitable traders.

Step Three: Restrict Yourself To A Trading Limit

If you follow steps one and two, you should improve your trading discipline substantially.

However, if you still need help, you may consider putting a hard number on the trades you take each day.

For example, if you find yourself trading 5 symbols a day, and most of those trades suck…then limit yourself to 2 or 3 trades.

By setting a limit, you are focusing even more on taking quality setups.

I’m a big believer in less is more in trading.

Step Four: Schedule Breaks

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If I’m in front of my computer all day, I’ll probably get sucked into overtrading.

I know this, and because of that, I will take breaks from the screen.

Once you discover your best setups, you’ll then also discover what your best times to trade are.

For most traders, that’s the first hour and the last hour of trading.

It’s okay to step away and do something else.

Trading isn’t a 9-to-5 job where you punch in and out.

If you make your money in the first 25 minutes of the day and you know you have a problem with overtrading…then what is the point of staying till the closing bell?

At the end of the day, we trade to make money.

If the opportunities aren’t there…then you step away from the screen.

Step Five: Set Trading Rules and Stick To Them

Overtrading comes from a lack of discipline– If you struggle with discipline after taking the first four steps, you should establish some trading rules.

For example, have your entry and exit points laid out before entering a trade.

You probably want to set risk management rules as well. How much capital are you willing to risk on a single trade?

All this does is force you to think and answer tough questions.

Why is that important?

Because overtrading is impulsive.

Being more strategic and intentional makes you less likely to make impulsive decisions.

Are You Ready To Level Up?

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What if you could learn directly from me and my top students? Would you be up for it?

Every day my team and I put together training workshops aimed at helping people like you improve their trading.

All you have to do is sign up right here. 

Just think, you could be just one click away from changing your story.


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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”