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Mentor Updates

Millionaire Mentor Update: Rules To Live By

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Written by Timothy Sykes
Updated 3/4/2021 13 min read

We all have rules to live by. Do you follow yours to a T?

Even though we know rules are good for us … we like to break them. That can be fun, right? But in trading, it only leads to pain. Rules are what separates the consistent traders from the gunslingers.

Keep reading for more rules to live and trade by. First this from my travels…

A Super Meetup

My recent trip to Arizona was amazing. It turned into a super meetup of some very talented and hard-working traders.

I met with Paul Scolardi (dubbed the Superman of Stocks). Paul’s sharing some big news soon — and he’s SUPER excited about it. (Sorry, couldn’t resist.) I’ll keep you posted.

I also met with Jack Kellogg and Kyle Williams. We have exciting news about these awesome young traders coming soon. (Stay tuned … Jack might even get a new chain to wear outside his shirt.)

Roland Wolf was also there. Roland recently launched a new newsletter, “$1K Paydays.”

Finally, Matt Monaco was there, too. As you probably know, Matt helped me with the “30-Day Bootcamp.” We released it to rave reviews over the summer.

Matt also recently launched the Small Cap Rockets chat room with John Papa (papajohn on Profit.ly and @SublimeTrades on Twitter) and StocksToTrade lead trainer Tim Bohen.

After so many months cooped up due to the pandemic, it was great to get out. And it reminded me of one of the most important…

Rules to Live By: Live Life to Its Fullest

tim sykes in sedona arizona with laptop of stock chart
© Millionaire Media, LLC

One of the most important rules to live by is to get out and live your life.

To be 100% clear … We all have a responsibility to do the right thing during the pandemic. So I’m NOT suggesting you break any rules about travel or the use of face masks.

This is a long-term life lesson…

Too many traders sit behind their screens all day, every day, for months on end. It blows my mind because the whole point of getting into trading is to free yourself from a 9-to-5. So build your knowledge base, gain experience, and work to become self-sufficient. Then go live your life.

Hiking in Arizona reminded me of how important it is to get out and experience this amazing planet.

I have a few more rules to live by in this post. Let’s start by reviewing a trade…

Trading Mentor: Trading Rules to Live By

Last week I had one of my biggest losses in a while. It was actually funny. My haters jumped on saying, “Sykes just blew up!” Please. I had a lousy 2,000 shares … So no, I didn’t even come close to blowing up. By the end of the day, they were embarrassed because I had an $11K swing to finish up $6,949 on the day.*

(*These trading results are not typical. Individual results will vary. Most traders lose money. My top students have the benefit of many years of hard work and dedication. Never risk more than you can afford to lose. Trading is inherently risky. Always do your due diligence. )

Here’s a rule to live by: losses happen, so learn to take them mechanically. After the loss, I got this question from a student…

“Tim, that loss would make me feel bad. You followed your rules and cut losses quickly. What’s the difference between a good loss and a bad loss?”

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Rule #1 is to cut losses quickly. Breaking that rule would have benefitted me on this one trade. But breaking rules leads traders down a very slippery slope. Which is why I’m SO happy I followed my rules. It helped me turn my day around.

Let’s check out the trade…

Ambow Education Holding Ltd. ADS (AMEX: AMBO)

China-based Ambow Education Holdings is an educational service provider. It has an Amazon Web Services training deal with Amazon (NASDAQ: AMZN).

On September 28, AMBO spiked in premarket trading. The catalyst was news that the company is expanding its partnership with Amazon. It was already up a lot, and I don’t like to chase. So I took a very small position on the premarket dip. My goal was to sell in the $5s.

Take a look at the AMBO chart from September 28:

AMBO penny stock chart
AMBO chart: September 28 intraday, rule #1 cut losses quickly — courtesy of StocksToTrade.com

As you can see, the stock tanked right out of the gate. The thing is…

You have to accept that losses are part of the game. This is why I trade so cautiously. I was buying a stock already up roughly 150% on the day. So I knew it was a risky trade. That’s why the position size was so small. I still don’t know why it dropped. Crazy stuff — there was no news.

When it was dropping, my thought was “I don’t know what’s happening. Let me get out.” 

Then it got halted. After the halt, it actually reopened above $5 and it went to a high of $6.43. So, barring the halt, it probably would’ve been a profitable trade. (I sometimes get asked about trading halt rules. Learn about trading halts here. And see current trading halts here.)

That day — and that trade — was a good example of…

Bouncing Back in the Stock Market

Good Rules and Discipline

I don’t look at my own trades and say, “Oh, personal trade, bad idea.” I got a little unlucky, but I stuck to my rules. I’m happy I cut losses quickly and mechanically.

This is a great example of why I share my rules. It’s why I show all my trades — including position sizes — transparently. Good rules and good discipline win the marathon.

Check out these…

6 SIMPLE Rules I Wish I’d Known When I First Started Trading

Here’s another question from a Trading Challenge student…

“2020 is now your most profitable year ever. Is it challenging to remove emotion and focus on one trade at a time? Are you thinking about passing $1 million this year?”

Is it challenging to remove emotion? Not at all. Again, this goes back to rules. I wasn’t even aware it was my most profitable year until one of my team members pointed it out.

Obviously, I know the million-dollar mark is within sight. After all, I’m human. But whether I end the year with $840K, $900K, or $600K … I’m grateful for everything.*

That’s the next rule to live by…

Be Grateful Every Day

Find a sense of gratitude every day. Even if you’re struggling right now, find something to be grateful for. If you can read this, you have access to the internet. I think the internet is the great leveler. You can learn almost anything on the internet — including skills that can change your life.

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Remember, I’m also trading for charity these days. I’m more interested in showing the process. And in showing what works. I get more amped when a student makes $10K in a day. Especially the first time because it helps them to understand the potential.

That brings up another rule to live by…

Open Your Mind to Potential

When I was a freshman in college, my mind opened to the true potential of trading. One trade — that’s all it took. It was my first six-figure trade, and it completely blew me away.

You can read about it in my best-selling book “An American Hedge Fund.” Click the link to get it for free. Chapter 6: Once In a Lifetime (page 85) is fully dedicated to that trade. It changed my life. Again, not by how much I made but because it opened me up to potential.

Trading Mindset Lesson of the Week

timothy sykes in arizona 2020
© Millionaire Media, LLC

I hope you’ve gathered some rules to live by. This week’s trading mindset lesson is another…

Take It One Trade at a Time

Take it one trade at a time and learn to take singles. I say this all the time. Also, don’t look to trade every day. It’s never my goal to take a trade. Whether I have a live trading webinar or not, my goal is to make good trades.

I know that’s not fun — it’s not an exciting mindset. But it’s what helped me take my tiny account at the start of 2020 and turn it into nearly $850,000.*

Here’s another of my rules to live by…

It’s a Marathon, Not a Sprint

Too many people want quick and fast. The problem with that is that most people who make a lot of money fast also lose it fast. Like lottery winners who lose everything and end up declaring bankruptcy.

The strategies I teach won’t help you get rich quick. The irony is that time is relative. How soon could you potentially get rich working that 9-to-5?

One final rule to live by…

Treat the Market Like a Business

Once you get free, you’ll be able to have fun with the money you make in the markets. But the fun is outside the markets. So treat trading and the market like a business. If you treat your business well enough and you’re disciplined, THEN you can have a lot more fun.

But if you want trading to be fun, you’re falling for one of the greatest traps in trading…

Gunslingers Have Fun (But Lose BIG)

Being a gunslinger is exciting. Swing for the fences, right? What happens if you’re wrong? What if I’d gone big on that AMBO trade? Instead of losing $4,240, it could have been 10 times that amount. Or more.

So, yeah, being a gunslinger is fun until you get crushed. If you want to do that, eventually you’re gonna lose big. You’ll probably blow up. You choose.

Millionaire Mentor Market Wrap

tim sykes at the Grand Canyon
© Millionaire Media, LLC

That’s it for this week. Be safe — the market is volatile right now. There’s still uncertainty with the pandemic. Also, you have to consider the upcoming election. And now President Trump and FLOTUS have tested positive for coronavirus.

Who knows what will happen in the stock market this week? I don’t like to guess — only react.

As you continue to study and trade, follow the rules. (I trade using these rules.) Once you start breaking rules, it’s difficult to regain discipline. Stick to the rules and work on the process.

Now go study…

Trading Challenge

What should you study? If you’re serious and dedicated, apply for the Trading Challenge today. It’s not easy. But I share everything I’ve learned in 20 years of trading and over a decade of teaching. Do you have what it takes? Apply today.

What do you think of the rules to live by in this post? Comment below, 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

* 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”