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Trading Tips-Tim Sykes Penny Stock

Bulletproof Your Trades with These 4 Risk-Proofing Strategies

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Written by Timothy Sykes
Updated 9/9/2023 7 min read

Ever notice how two people can hit the gym, do the same exercises, but end up with completely different results?

The secret’s in their diet – the nutrition that turns routine into transformation.

The same applies to trading.

We’re all eyeing similar tickers, but what separates the pros from the novices is risk management—the nutrition of trading.

Today, I’ll share four game-changing risk-proofing strategies: targeting important price levels, nailing position sizing, balancing risk vs reward, and mastering the art of cutting losses quickly.

This is your personalized trading nutrition plan, designed to beef up your portfolio. Get ready to trade like a pro.

#1 Price Levels

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Think of price levels as your dietary guidelines—knowing what’s good and bad for you.

You wouldn’t load up on junk food if you’re aiming for a six-pack, right?

Similarly, knowing when to enter and exit a trade is crucial. Whether it’s support, resistance, or Fibonacci levels, always have a plan.

Newer traders see my ~75% win rate and automatically assume I have some secret formula to find the perfect spot to buy morning panic dips.

The truth is I use the same techniques most of you know.

Want a quick way to find a price level?

Look for areas where the market found support or resistance in the past.

Take a look at the chart for Verb Technology Co. (NASDAQ: VERB):

All I did here was extend lines where the stock halted up or down.

Each line that it touched acted as support or resistance on the first hit all three times.

Is that guaranteed?


The point is you don’t need some magic equation. Just identify prices that should be important as your first step.

Then you look for a setup and price action at or near that level to initiate the trade.

#2 Position Sizing

Tim Sykes in a boat in Italy checking the stocks on his top penny stocks list
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Ever overeat and regret it later?

That’s what overleveraging feels like in trading.

Position sizing is like portion control; it’s all about how much of a particular stock you’re willing to “consume” relative to your overall portfolio.

Too much of even a good thing can lead to indigestion—or, in trading terms, massive losses.

When I’m dealing with penny stocks, volatility is a given.

I don’t play these stocks expecting a 1%-2% move.

I’m looking for 5%-10% on a ticker that’s up or down tens if not hundreds of percentage points in a day.

The greater the volatility, the smaller my position size. It’s that simple.

Making 5% on one stock with your normal position size gets you the same profit as 10% gains with half your position size.

So, how do you determine your position size?

That’s where the last two strategies come into play.

#3 Risk vs Reward

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I love to eat.

You’ll often find me on a run just so I can sit down for a large dinner without feeling immense guilt.

But you know what I wouldn’t do?

Run a marathon to eat a single slice of pizza. It’s just not worth it.

Trading is all about weighing the risk against the reward.

For example, if a trade offers a 2% gain but comes with a 10% downside, it’s like sweating out an hour for a tiny treat. Not worth it!

My goal is to get multiples of what I risk out of each trade.

That’s why if you look at any given trade I’ve taken and compare it to my average win or loss, they aren’t that far apart.

I consistently seek to keep my losses to a fraction of my wins.

This leads me to the 4th and most important strategy of all…

#4 Cut Losses Quickly

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No bodybuilder is going to keep doing the same exercise if they don’t see results.

I’m the same way with my trades.

I go into each one with a clear idea of what I expect based on my patterns and experience.

The way I trade, most of my setups should bounce within minutes.

If a stock refuses to budge and just trades sideways, I cut it loose.

You might think this would lead to a lot of losses. But again, I have a pretty consistent win rate close to 75%.

Now, I’m not suggesting that someone will achieve that right out of the gate.

This is how I trade and what I expect based on the style I chose.

My millionaire student Jack Kellogg wins between 50%-60% of his trades.

However, he keeps his losses small while maximizing his gains.

He focuses on getting the best entry he can and being impatient with the results.

You’ll hear a lot of ‘gurus’ tell you to give a trade time.

I disagree.

You have an expectation of what should happen. And that should happen when you expect it to happen.

If it doesn’t, then either the trade isn’t working out, which happens, or you didn’t come in with the right expectations.

In either case, it warrants an exit and moving on.

Ready to Power Up Your Trading?

sykes giving you two thumbs up
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Your trading routine is only as effective as the “nutrition” it runs on.

Just like gym-goers can’t out-exercise a bad diet, traders can’t outperform poor risk management.

You now have a personalized trading nutrition plan in hand, with four strategies designed to fuel your portfolio gains.

If you’re all in for mastering the fine art of risk management in trading, it’s time to kick things up a notch.

Don’t just trade, transform. Join our FREE live training session and elevate your game to pro levels. Click Here to Secure Your Spot!

This is your chance to go beyond the article, to trade not just profitably but phenomenally. Are you in?

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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”