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3 Strategies I’m Using To Recover From My Biggest Loss

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Written by Timothy Sykes
Updated 9/8/2022 5 min read

Everyone on social media loves flashing their big wins and projecting themselves as bulletproof to trading losses.

But the truth is, losses are part of the game.

And while I consider myself an extremely disciplined trader, I occasionally will take a loss bigger than I’d like, which is what happened last week when I lost $6,000 in HPCO—my biggest trading loss of 2022.

Beating yourself up after a loss, revenge trading, or blindly following others won’t help you get those losses back.

They can ruin your trading psychology and put you in an even bigger hole.

That’s why I want to share with you my three best strategies for bouncing back after a big trading loss.

I’ve nearly recouped my losses from last week in just a few short days by applying them.

Tighten Your Belt

Hedge Funds, Algorithmic Traders, and all of Wall Street are trying to eat your lunch.

Whenever you experience a large loss—you have to be extremely careful and not let it spiral out of control.

And while I preach taking small losses, even I, after decades in this game, can slip up and take a bigger loss than I’d like. This is what happened last week when I took a $6,000 loss in the ticker symbol HPCO.

Most newbie traders will come out guns blazing…thinking they need to make up their loss immediately. Of course, this usually leads to further account destruction.

Instead of seeking revenge, you’ve got to slow things down and tighten your belt.

You see, as much as you’d like to get those losses back…

You don’t control the markets. There might not be any worthwhile opportunities to take at the time…

So instead of forcing the issue…you’ve got to be even more patient. Because the last thing you want to do is add to losses and ruin your psychology.

That’s why it’s not a bad idea to just watch the day after a bad trading day.

Or limit yourself to one trade.

When things aren’t going your way…slow down.

Review Your Strengths

top penny stocks list Tim Sykes on a cliff in Italy with a laptop
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Domino’s Pizza is a $13 billion business. What they did to separate themselves from the competition wasn’t making a better pizza…

Instead, they focused on their strength. They promised customers free pizza if it wasn’t delivered in 30 minutes or less.

Their edge was speed.

When you suffer a trading loss, it’s not uncommon for your confidence to be shot. That’s why I recommend reviewing your past winners and identifying your strengths.

My best trades have been off of breaking news plays, buying dips on panic sell-offs in OTC stocks, and my weekend strategy.

So that means no more fooling around trading IPOs, high-dollar stocks, and non-OTC stocks.

If you’re in a trading hole, the best way to get out is by focusing solely on your best setups. Reviewing your strengths gives you a better idea of what you should be trading.

Trade Smaller

I’m a big believer in chipping away at big losses. That’s why I typically trade smaller after a sizable loss. This allows me to build my confidence back up slowly and gain momentum along the way.

In addition, it gives me a chance to see if I’m reading the market correctly. I want to know if my process and strategies are working. I don’t want to be worried about “what if I lose again or take another hit.”

Trading smaller lets you get your head back in the game and work out your issues.

And that’s exactly how I’ve been playing it since my HPCO loss.

Bottom Line

I am coming off my worst trading loss day of 2022. But by focusing on my strengths, playing small ball, and staying patient, I’ve cut my losses in half in just a few short days.

Taking a big loss sucks, and it can ruin your mental game and trading account if you don’t take the right steps.

While I might not be the world’s best trader…

I’ve been able to consistently make money year after year.

Furthermore, I’ve helped over 20 of my students become millionaire traders.

I don’t know anyone else who can say that.

And here’s the thing…

You don’t have to take on crazy risks and swing for the fences to make generational wealth in the stock market.

In fact, you just need to master a couple of strategies and have a solid risk management plan.

Nowadays, everyone on social media seems to brag about their big wins…but you never hear about the losses. Risk management has always been the key to my success.

And the reason why I’m still around…while so many others have faded.

If you’d like to discover more about my process, how I’ve made over $7.4 million in trading profits, and how I’ve helped so many people achieve financial freedom, then Click here to learn more about my coaching program.  

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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”