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Is The Fastest Way To Scale Up?

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Written by Timothy Sykes
Updated 8/17/2023 7 min read

I focus on helping new and unprofitable traders develop trading skills to be self-sufficient someday.

More than two dozen of my students have taken what I’ve taught them and used it on their way to becoming seven-figure traders…two of them are now eight-figure traders.

So while I’m focused on helping newer traders…it doesn’t mean I don’t know a thing or two about trading for higher stakes.

After all, I did take $12K and turn it into $7.4 million. 

And that’s what I want to do with you today, talk about scaling up.

Specifically when you should do it and when to know it’s the right time.

I see so many traders doing this wrong, and it wipes out weeks and months of progress.

I’m hoping after you read this, that won’t be you.

The Age of Entitlement

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We live in a world where we demand things right away. And if we don’t get it, we moan and complain.

I had no mentors in trading. There was no playbook for me to follow. I had to figure this out through trial and error.

Today’s generation is all about instant gratification.

But you know what?

It’s a good thing.

Why?

Because I want my competition to be slow and lazy.

I want them not to do their homework. I want them to trade with emotion and without a trading plan.

I want the person on the other side of my trade to be naive.

But for whatever reason, these newbie traders want to start making four and five figures daily.

Little did they know my very best students struggled in years one and two of their journey.

You see, making big money doesn’t start in those first few years…it happens much later.

Here’s the fastest and easiest way I know how to scale.

It’s All About Conviction

Jack Kellogg is one of my students and an eight-figure trader. He shares his weekly watchlist and hosts a webinar for Challenge Students. 

It’s not uncommon for Jack to make or lose five or six figures in a month.

But that’s not how he started…not at all.

In his first year, he didn’t make any money.

So how does one make this quantum leap?

You need conviction.

Sounds simple enough, right?

It is, actually.

But it requires work.

Here’s how to do it…

The Best Traders Become Masters At Pattern Recognition

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The other day I had a slick trade in the ticker symbol EVLV.

How did I find the stock out of thousands?

Well, it was a multi-day runner, a pattern I’ve seen work a lot lately. It was an AI play and a strong earnings winner, which were other winning patterns.

And the price action reminded me a lot of AAOI, one of the hottest-performing stocks this year.

I recognized the pattern and took a shot because I felt the risk vs. reward was favorable.

And that’s how the game was played.

Your job is to identify winning patterns…rinse and repeat.

This could be things like:

  • Earnings winners
  • Sector-related catalysts (most recently, AI has been the hottest)
  • Government and policy-related (for example: the push towards EVs)
  • Riding the hot hand (ideas from hedge funds, bloggers, and chat rooms that have been hot lately)
  • A specific chart pattern (breakouts and mean reversion)

Of course, there’s more, but that’s a good start.

Now, here’s the thing…

The market is dynamic, so some patterns that worked in the past might not work now. And new patterns emerge.

That’s why you must journal your trades. As well as identify the trades that work best in this market.

When Jack wasn’t making money in his first year, he didn’t get discouraged.

Why?

Because he saw other traders making money utilizing specific patterns.

He knew that if he could button up some of his mistakes that he would have a chance to profit in the future.

Once you’ve identified which patterns are working and built your account up, you can slowly start to scale up.

Don’t Make This Mistake

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One thing I see is traders trying to scale up too quickly.

For example, if you’re used to risking $100 on a trade, and now you want to risk $200…well, guess what?

You’ve doubled the amount you were used to risking.

Does that make sense?

Not at all.

It takes time to adjust to your new risk levels.

Instead of risking $200, risk $120. That’s a 20% bump.

Eventually, you get to a level of feeling uncomfortable.

Once you get to the point where you are more concerned about the PnL and not the actual trade, you know you’ve scaled too much.

You should feel slightly uncomfortable, but not to the point where you can’t make good decisions because you’re worried about the PnL.

Scaling should happen naturally. You should have so much confidence in the setups you’re taking that you should want to increase your size.

In addition, you want to be scaling when trading better and have profits. Trying to scale from behind can be challenging and could mess up your psychology.

You must prove yourself with consistent results before deciding it’s time to scale up.

Are You Ready To Step It Up?

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Imagine getting insights and training from millionaire traders…do you think that would help you along your journey?

Watching and listening to traders who have climbed the mountain you want to climb can be inspiring but also make things REAL.

You see, a lot of people talk about wanting to make it as a trader. But very few have an actual plan of attack.

Every day my team and I are putting together live training classes aimed at helping new traders achieve their goals.

We bring these live training classes to you at zero cost.  

All you have to do is show up.

CLICK HERE IF YOU’RE READY TO TAKE THE NEXT STEP

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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

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* 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 (205) 851-0506 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”