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Mentor Updates

Millionaire Mentor Update: Preparation Is Key

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Written by Timothy Sykes
Updated 9/13/2022 12 min read

Preparation is key. I say it all the time, but too many people aren’t getting it.

There’s a common statistic thrown around that says 90% of traders lose. Why do so many lose? Because they’re unprepared and they don’t follow rules. (I trade using these rules.)

Here’s a little wake-up call to anyone learning to trade penny stocks: You haven’t studied enough. You still haven’t figured out that preparation is key.

New to penny stocks? Start here with my FREE penny stock guide.

I constantly remind Trading Challenge students that preparation is key. Why? Because 90% of them aren’t studying enough.

The stock market is a battlefield. You don’t have the luxury of going into battle without being prepared. Study or get crushed. Read on for more about why preparation is key to success.

First, I want to share something I’m very proud of…

I’m happy to say I’m donating all $506,000 in profits as part of this…

Karmagawa Announces $1.6 Million Donation for Yemen, Lebanon, Mauritius, and Indonesia

We’re trying our best with several crises that all popped up at the same time. It’s our honor to donate badly needed funds and to spread awareness about the world’s most pressing issues. Karmagawa is donating to 15 charities with local teams on the ground.

The charities are:

Partners Relief, Bali Children’s Project, Unicef, Save The Children, Doctors Without Borders, Direct Relief, Mona Relief, World Food Program, IFAW, Four Paws International, Animals Lebanon, World Central Kitchen, Baitulmaal, Eco Sud, and Mauritian Wildlife Foundation.

Roughly $1 million is going to Yemen. We’re donating $100,000 to Bali for more schools, libraries, and food programs. Lebanon will get around $375,000. And Mauritius is getting around $125,000 to help clean up the oil spill.

Our fundraiser for Yemen has now ended. But you can still donate to our Mauritius and Lebanon fundraisers. Every donation adds up!

Donate to help clean up the oil spill in Mauritius here.

Donate to help the victims in Beirut, Lebanon here.

Why I Donate 100% of My Trading Profits to Charity

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Remember, this isn’t about one person or one charity. It’s about teamwork. Mat Abad and I want to thank the community for all your support. Keep sharing and keep donating!

Now it’s time for…

Trading Mentor: Questions From Students

Each week I answer one or two questions from students. It’s my honor and duty to teach. My goal is to cut through all the BS and be the trading mentor to you that I never had.

Our focus this week is on preparation. Preparation is key because the market will keep giving opportunities. You just have to be ready.

The first question this week is about recognizing and adapting to shifting patterns…

“In a video lesson, you said, ‘the 11 a.m. bounce is a thing lately.’ What does that mean?”

First, you need to understand the morning panic pattern. Read my post “Try This Every Morning to Improve Your Mindset for Trading.” Even though that post is over a decade old, the same pattern is still happening.

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Read “How to Dip Buy Morning Panics” for recent examples of the same pattern. It’s a pattern you should look for every day.

Back to the question…

Normally I like dip buying right near the market open. Often we get the bounce in the first five or 10 minutes. But lately, we’ve been seeing bounces later. That’s just something you have to adapt to.

I’ve mentioned the trend in several recent video lessons and webinars. I tried it on August 17. Check it out…

Conversion Labs Inc (OTCQB: CVLB)

Conversion Labs has benefitted from the shift to virtual medical treatment. The company has a nationwide physician network and ships medications directly to patients.

Look at the CVLB three month chart below:

CVLB 3 month stock chart
CVLB chart: 3-month, daily candle, multi-day runner — courtesy of StocksToTrade.com

As you can see, CVLB was a multi-day runner leading into the morning panic on August 17.  I thought it was a gimme given its recent strength.

Here’s the August 17 CVLB intraday chart with my trades:

CVLB stock chart
CVLB chart: August 17 intraday, morning panic, 11 a.m. bounce — courtesy of StocksToTrade.com

My first trade was on the classic morning panic, but the bounce wasn’t as big as I expected. There were some big sellers on the ask, all in the $1.40s. I played it safe for a 5% win and $1,540 in profit.*

Testing the 11 a.m. Bounce

The second trade is an example of how a lot of dip buys have bounced later recently. I took a smaller position size due to the stock being scary. But it was a good patience trade based on the 11 a.m. bounce. It was a 6.34% win for another $540 in profit.*

(*Please note: My results, along with the results of my top students, are far from typical. Individual results will vary. Most traders lose money. My top students and I have the benefit of many years of hard work and dedication. Trading is inherently risky. Do your due diligence and never risk more than you can afford to lose.) 

I probably should’ve held it longer, but it can be tough to be patient when you learn a pattern. Which is why I don’t teach people to just memorize patterns. You have to start understanding why it’s happening.

Why is the 11 a.m. bounce happening? Because so many people are looking for the dip buy right away and it’s becoming crowded. (Like how short selling became crowded but not nearly as risky.)

The thing to remember is that the pattern hasn’t disappeared. It’s just mutated a little.

Next question…

“You often say preparation is key. What’s your number-one preparation tip for both new and experienced traders?”

why you must be vigilant
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It’s all about learning a little bit every day. For example, learn to recognize pattern adaptations. 

So you start by learning the initial patterns. Go through the 30-Day Bootcamp. All the basics are finally organized thanks to Matthew Monaco. Also, read “The Complete Penny Stock Course.” (Hint: it’s included in your 30-Day Bootcamp purchase.) Then watch the DVDs, webinars, and video lessons.

When you go through all the content my team and I put together, you’ll start to see the nuances and minor variations. Then you have to try to learn to adapt to changes as they happen.

So for those of you who like dip buys, you can start looking for the 11 a.m. bounce. Or even consider holding until 11 or 11:30 a.m. But don’t get too attached to it because it’ll likely shift again. You have to constantly test and tweak.

If you’re impatient, like me, you might like quicker bounces. Other people like shorting first red days.

Preparation Is Key: Find What Works Best for You

Preparation is all about you finding what works best for you. That’s why preparation is key.

The market goes through hot periods and slower periods. Different sectors get hot. But it will always give opportunities — sometimes more and sometimes less. The question is … are you prepared?

You have to picture yourself almost like a batter in baseball. The market is the pitcher, and it will keep throwing pitches at you.

You have to figure out what you’re best at. Are you better at fastballs? Are you better at curveballs? Should you not swing sometimes?

Keep in mind … the market doesn’t care. The market will just keep throwing stuff out at you.

It’s your job to be prepared for as many pitches as possible.

Preparation Is Key When Trading Different Setups

A great example is Jack Kellogg. Jack took a big loss shorting Turtle Beach Corp (NASDAQ: HEAR) in May 2018. After that, he decided to stay away from he started tracking everything. He figured out what was working for him. As it turns out, it was only two patterns. He’d tried short selling for a while.

He focused on OTC long setups until he felt comfortable and could adapt. Then he slowly started working on shorting again.

Fast forward to today, and Jack’s a perfect example of how preparation meets opportunity. He can trade long or short. Sometimes he goes short and long on the same stock. It’s like he can swing and hit different pitches. (Do you think it helps that Jack wears his chain on the outside?)

Now it’s time for the…

Trading Lesson of the Week

This is a simple lesson, but too many people find it difficult…

Don’t Be Afraid NOT to Trade

Especially in August. Some of my top students made between $50,000 and $300,000 in June. It was capped off by that amazing CytoDyn Inc (OTCQB: CYDY) morning panic on June 30. Tim Grittani also gave an amazing webinar packed with lessons after his $272,000 win that day.*

Then July was a bit slower. Now August is slower again. I’ve still made $65,000 three-quarters of the way through the month.* So it’s not a terrible month. Actually, it’s stronger than most Augusts.

But at the same time … if you compare August to July it’s much slower. Compare August to June and it’s WAY slower. So you have to adapt.

Tim Grittani is on vacation right now. I don’t even know if he’s looking at a laptop. He’s already made $3.6 million this year.* So this is not a normal 9-to-5 job. You either adapt or perish.

How do you adapt? Preparation is key. I can’t emphasize that enough. You have to learn the basics and then gain enough experience trading small to adapt. That includes knowing when to step away. Sometimes the best trade is no trade.

Millionaire Mentor Market Wrap

That’s another one in the books. Use this last week of August to study — especially if it’s a slow week. Remember, preparation is key, so learn a little bit more every day. Study the past. Spend time building your knowledge account.

Also, start testing and tweaking different setups. Even if it means paper trading a new setup on StocksToTrade for a while. It gives you more options as the market shifts. Again, think of it like being able to hit different pitches.

Leave a comment below saying, “preparation is key, so I will study.” Also, tell me what you think of this post. I love to hear from all my readers!

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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 (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”