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Trading Psychology

R.I.P. Copycat Traders

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Written by Timothy Sykes
Updated 9/22/2022 5 min read

Despite what you may have heard on social media, there are no shortcuts in trading.

Now, don’t misunderstand what I’m saying. A solid education, mentorship, and community will significantly shorten the learning curve.

But you won’t get anywhere trying to copy someone else’s trades.

People join my Millionaire Challenge, believing they can make a fortune using my trades.

They assume that because I, and more than 20+ of my students, made millions in the market, all they have to do is take our signals and make the same moves.

In reality, it never works out this way.

I know it seems counterintuitive.

But before you ignore this advice and thrash your account, let me explain why copycat trading fails.

Then, I’ll show you how I use other traders’ examples to improve myself.

There Are Always Differences

sykes and kyle williams on laptop
© Millionaire Media, LLC

When I execute a trade, there are only three pieces to the transaction:

  • Size
  • Time
  • Price

While it seems simple enough, I want to walk through possible reasons copycat traders cannot consistently match my trades or anyone else’s.

For starters, I size my trades for my account, not someone else’s.

Most of my trades make or lose a few hundred dollars. But I make mistakes, just like everyone else. Sometimes, those can cost me several thousand dollars.

That isn’t going to hurt my account. However, losing a few thousand dollars would clobber an account with only $5,000 or even $15,000.

Plus, I may get filled while another person gets nothing at all.

This also speaks to the time difference between my order and someone else’s.

I trade based on price action in real-time. It’s how my strategy works and why I can achieve such a high win rate and profitability.

Emails, chat rooms, and any other signal method always has some delay. Then, a trader has to enter the order. This might only be a second or two, but it can be the difference between a good fill and missing the trade entirely.

This is where price becomes a problem.

Traders feel left out and try to chase the stock, entering at a worse price, totally changing the risk/reward relationship, and putting themselves in a losing situation.

Let me give you an example.

I buy a stock at $1.00 with a target price of $1.10 and a stop of $0.95. My reward to risk is 2:1. With this setup, I only need to win the trade 33.33% of the time to break even.

A copycat trader chases the stock up to $1.03, not far away. However, that changes the reward-to-risk ratio to 7:8. Which means they must win the trade more than 50% of the time to break even.

That’s a huge difference.

Individually, none of these seem like a big deal. When added together over many trades, it leads to losses more often than not.

Use Trade Examples Correctly

basic vs diluted shares
© Millionaire Media, LLC

So what do I tell my students to do with my trade examples instead?

First, use them to learn something specific.

Each profitable trade is built from small ideas and concepts that combine to form a profitable strategy.

Rather than trying to tackle all of them at once, I encourage my students to focus on one at a time, work it until they are good, and move on to the next one but still come back to review it from time to time.

Some trades highlight concepts better than others. That’s why I create so many videos and cover these over and over. I give my students different approaches to tackle the skill.

Then, use them to study price action.

I’m a big proponent of, and skilled at, cutting losses quickly.

My students follow my trade signals and chat so they can read and understand what a trade looks like when it works or fails in real-time.

The more they ingrain the concepts into their heads, the more it becomes second nature.

Lastly, I want them to simply watch and feel how trades work.

Emotions are the biggest obstacle in any trader’s path to profitability. The more you see trades and know what to expect, the less likely you are to have knee-jerk reactions.

This doesn’t have to be a journey you travel alone.

My students are a community dedicated to making themselves and others better traders.

Join them by taking my Millionaire Challenge.


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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

* 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”