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Safety First! Why I’m Trading More Conservatively Right Now

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Written by Timothy Sykes
Updated 4/18/2022 10 min read

Safety first! That might seem like a ridiculous sentiment in the penny stock niche.

On the one hand, it is ridiculous. After all, most of these low-priced stocks are doomed to fail in the long run … I talk about it all the time. That’s why I trade penny stocks instead of investing in them.

Penny stocks are an especially volatile slice of the stock market. For me, that’s part of the appeal. They can experience huge price spikes in brief periods of time.

But it’s also part of my motivation to stay conservative — especially right now.

We’ve seen some big shifts in the stock market lately. And while I believe that there are always opportunities no matter the market conditions … Adapting to the changing market is key.

Trading always carries some level of risk. There’s no changing that. But there are protective measures traders can take in a shaky market.

Here’s what traders need to know about adapting to the current market…

Why I’m Being Extra Safe Right Now

I’ve been getting a LOT of DMs and questions from Trading Challenge students about why I’m being so conservative right now.

There are a few reasons…

For one, just look at what’s happening in the market right now.

The stock markets had a rough few weeks. Major indexes took some major hits. Last week, the S&P 500 briefly lost all of its 2021 gains…

Tech stocks tumbled, too.

Back in early February, Apple Inc. (NASDAQ: AAPL) was trading close to $140. This week shares traded under $120.

Then there’s Tesla Inc. (NASDAQ: TSLA). It was trading in the $800s in early February. Shares dropped to the $660s this week.

Yes, those are large-cap stocks. So maybe as a penny stock trader, you think they don’t matter.


Maybe you’re not trading TSLA, but you should definitely be watching it if you’re interested in lower-priced electric vehicle (EV) stocks. After all, they always seem to follow the sector leader.

Right now, people are spooked by what’s happening in the stock market.

So you at least must be aware of what’s going on in the market at large. It helps you make a game plan for future trades.

Trading ‘Conservatively’ — It’s All Relative

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Before I get too deep into my ‘safety first’ campaign, I’ve gotta clarify…

Conservative trading is a relative term.

It’s not like I suddenly shifted to investing in blue-chip stocks or anything. I’m still trading volatile, big-percent gainers. I’m just approaching them a little differently in the current market.

Let’s look at an example of one of my trades from Monday, March 8…

Standard Vape Corp. (OTCPK: SVAP)

This OTC stock ran up 200% following news it was merging with a fintech play. I have StocksToTrade’s Breaking News Chat to thank for the lead. (Full disclosure: I’m a proud investor and developer of StocksToTrade.)

I saw a dip off of the highs, so I took my entry despite the fact that the stock was illiquid. The news had just hit — the interest and liquidity hadn’t ramped up yet.

This is what I mean when I say it’s all relative.

To someone with a long-term investing mindset, this trade probably seems like the scariest, riskiest thing in the world.

But this is my niche. I wasn’t scared to enter the trade, but I was more cautious than usual in my approach.

For example, typically when I dip buy, I want to see the stock test the day’s high. If it does, that means it might break the daily high.

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And if I think it will do that, I might stay in the trade longer. Or I might take partial profits but keep a partial position to wait and see.

In the case of SVAP, it didn’t even test the day’s high. So rather than wait around, I got out fast. I still made a $1,269 profit.* But I wasn’t going to sit around hoping for more.

Even a month ago, I might have approached this trade differently. Adapting is crucial — it’s important to adjust your strategy based on how the market is right now.

(*Please note that my trading results are not typical. Most traders lose money. Individual results will vary. Trading is inherently risky. Before making any trades, remember to do your due diligence and never risk more than you can afford to lose.)

Safety First: Tips for Traders in a Shaky Market

What’s going on in the stock market?

Is it a correction? Are we about to see a big crash? Or is it the beginning of a bear market?

Whatever ends up happening, it doesn’t really matter to me. I know there will always be opportunities. It’s a matter of figuring out what’s in play in the current market and tweaking your strategies.

In the meantime, here are some important tips on how to stay steady in a shaky market…

Don’t Believe the Hype

Promoters lure in newbies, claiming the stocks they’re pumping are the next big thing. Don’t believe the hype.

I learned years ago to not fall for the hype. But I do try to take advantage of the short-lived price spikes that hype creates.

Sometimes I only hold a position for a few minutes … It’s all about trying to capture the meat of the move.

This is the essence of my penny stock trading strategy … It’s what has helped me make over $6.8 million in profits over the years.* And it’s the strategy I teach my Trading Challenge students.

It can be tempting to believe that a stock’s going “to the moon” … But I prefer a slow, steady approach. I aim to take singles and let small gains add up over time.

It’s Fine to Underestimate

Right now, I’m in ‘protect, protect, protect’ mode. I’ll gladly underestimate a stock if it means staying safe.

Traders have gotten spoiled recently … It’s been insane, especially in the OTC market.

Several of my top students have been recording record profits.*

I’ve had multiple students pass the million-dollar profit mark in 2021 — the two most recent are Jack S., aka “Jack #2” and Mariana.*

(*Please note that Jack and Mariana’s trading results are not typical. Most traders lose money. Individual results will vary. Trading is inherently risky. Before making any trades, remember to do your due diligence and never risk more than you can afford to lose.)

But right now, we’re just not seeing the same huge percent gains.

For example, on Monday, March 8, 2021, I dip bought Ozop Energy Solutions Inc (OTCPK: OZSC).

It wasn’t an ideal setup. The dip was a little weak. But there was a recent contract announcement, so I still saw value in the trade.

Because of my reservations, I took a small position — and I was prepared to cut losses quickly.

I didn’t lose — in fact, I made a $1,011 profit.* Sure, I could have made more if I’d taken a bigger position or stayed in the trade longer … But I’m not upset about it.

I’d rather underestimate a trade and have a small win than get overly aggressive and lose big.

Keep It in Perspective

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Remember … It’s still possible to lose on a ‘good’ trade.

Sometimes, I dip buy a stock and it doesn’t bounce. If that happens, I cut my losses (rule #1!) and move on.

Trading is not about being right all the time. Nobody’s right all the time — as you can see from my Profit.ly stats, I have an approximately 75% win rate. That means I’m wrong about a quarter of the time.

It’s a bummer when you lose, but remember the big picture. Learn from the loss, try to figure out how to do better, and move on.

Remember — it’s a marathon, not a sprint. The market might be scary right now, but things can change fast. Who knows … Things could be completely different a month from now.

Better Safe Than Sorry…

I know, ‘safety first!’ is probably the last thing most traders want to hear.

Most traders just want hot stock picks and to get rich quick. But most traders fail. 

So you can see why this is important stuff.

When the market changes, traders may need to change up their strategies. Adapting is vital for survival in the stock market.

Are you ready to study the past so you can be better prepared to adapt and grow? Consider applying for my Trading Challenge.

Do you understand my ‘safety first’ mindset? Leave a comment … I want to know what steps traders are taking to stay safe in the current market!

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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”