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Trading Lessons

The Non-Negotiable Rule For Trading

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Written by Timothy Sykes
Updated 4/26/2023 8 min read

In a hot market it doesn’t matter…

You’re likely to get paid…

In 2020 I saw some of the most reckless and degenerate traders make money.

But when things go south each one of those flaws gets exposed.

And that’s exactly what happened to them in 2022 when stocks plummeted.

Consistency is key if you want long term success. 

But there’s one thing that’s non-negotiable.

Without it, your chances of beating the odds and being a profitable trader nearly vanish.

I’m going to show you where traders mess this up…and how to fix it.

If you have any aspirations of being my next millionaire student

Then you’ll want to listen to this carefully.

Top Traders All Possess This Behavior

students kyle mari and jack
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I was in college in 2000, making money hand over fist. 

I thought I was a stock trading prodigy.

After all, I was receiving loads of media attention after making $1M by the age of 21.

Looking back now, it’s easy to see that a large portion of my success was due to catching a hot market.

I quickly realized that if I wanted to achieve long term success that I couldn’t rely on a favorable market to make money.

Plus, we never can control how the markets will react.

In order to continue to thrive, I had to improve my discipline.

Without discipline your chances of making it in this game are slim to none.

I’ve mentored over 30 of my students on their journey to seven figures, two have gone on to make eight figures.

And after 15 years of coaching I’ve found five roadblocks that ruin traders’ discipline.

Here they are…

#1 Lack Of A Trading Plan

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Each morning I send out a watchlist to my Challenge students.

I explain to them the stocks I have my eyes on, the potential setup, and why I like them.

Now, that doesn’t mean I will trade these stocks. But I have them on my radar.

I’m also looking at hot sectors and keeping my eyes peeled for any news catalysts with stocks in those sectors.

Bottom line…you can’t go into the trading day without some sort of plan.

Without a focus list you’re likely to trade random stocks and get random results.

Narrowing your focus is the first step in planning.

You also want to plan your trades.

Many of my top students won’t go into a trade without having a specific entry and exit in mind. 

They all know my number #1 rule: Cut Losses Quickly.

Without this, you’re likely to make impulsive decisions based on emotions rather than making calculated decisions.

#2 Overconfidence

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After stringing together several six-figure months in 2000, I started doing some math in my head. If I can make $150K a month for the next few years I’ll have millions stacked on millions.

Again, this was really foolish thinking on my part. Of course, the markets weren’t going to remain that hot forever.

However, my cockiness led to some big trading losses after.

But it was a great lesson for me.

That’s why when the markets crashed in 2008 and in 2021…I already had perspective.

In fact, I warned traders about the latest crash. Not because I am a genius…but more so that I’ve seen how bubbles played out in the past.

Being confident is a good thing in trading. Having overconfidence can be destructive.

You can’t control how stocks will react. But you can control how much you want to risk.

Stay humble…swing for singles…focus on being disciplined and consistent.

#3 Overly Emotional

Trading mentor Tim Sykes realizes he made a trading mistake
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Imagine if real estate traded like stocks.

It would never happen right?

Today the price of this property is worth $1M and tomorrow it’s worth $700K…

You never see it because it’s not logical.

But that’s not how stocks work.

For example, shares of UPS are down about 10% this week. Has that much changed with the United Parcel Services?


But the stock market is driven daily by the emotions of traders. Fear and greed dominate.

How else can you explain triple-digit moves in a single day?

Don’t get me wrong…I love Supernovas…but these stocks aren’t moving off fundamentals.

Fear and greed can cloud your judgment. Fear can lead to hesitation and missed opportunities…while greed can lead to taking excessive risks and ignoring risk-management rules.

Sticking to your trading plan and respecting your risk rules is one way to keep your emotions in check. But honestly, I like to trade scared. For me, it keeps me focused.

#4  Lack Of Patience

position trading the bottom line
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You’re in front of your screen…and the ticker symbols are flashing red and green. The money is out there for someone to take it…right?

Again, if you’re taking random setups and jumping in and out of trades without a plan…you’re likely going to get subpar results.

It’s hard to sit on your hands.

But you have to stop treating the stock market like a casino.

It’s not about the thrills or the action. That’s why it’s important you realize what setups work best for you.

After 20 years…I have developed several that I like to go back to. They include the weekend trade and Supernovas

By knowing what your best setups are…you are likely to stay more disciplined.

Also, you want to figure out what your best times are. You don’t want to become one of those traders who stares at their screen all day and is missing out on life.

There’s more to life than just trading. That’s why you want to be efficient with your time.

#5 Poor Risk Management

how to get into stocks
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In a hot market taking huge losses isn’t a big deal because you know you’ll get a chance to get it back in another play.

But now, with things slow…A big loss could take days, weeks, or even months to recover from.

That’s why you must understand the market we’re in and adjust your risk accordingly.

Also, you want to make sure winners are larger than your losers.

You can’t be making $0.20 on a trade but then be willing to lose $0.35 on a trade. You’d need nearly 2 winners for every one loser just to break-even if you manage risk like that.

Know your numbers…many of my top students like Kyle Williams keep detailed records of their trading stats.

It gives them insight on when they should be trading bigger or smaller…taking on more risk or less.

I like using Profit.ly…it’s an easy way to keep track of my numbers.

Final Note

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A lot of traders got exposed in 2022 and 2023. The markets changed and without discipline their big gains in 2020 started getting wiped out.

While it’s a difficult market for traders…it’s a great one for those just starting their journey. You want to gain experience in a market like this because when things pick up again you’ll be primed to take advantage of it.

Discipline…you hear it a lot. But you need it if you want any chance to take your trading to the next level.

If you’d like to learn more about my program then here’s the link. 

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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”