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Trading Tips-Tim Sykes Penny Stock

The Top 3 Rules for Turning a Small Account into a Trading Powerhouse

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Written by Timothy Sykes
Updated 7/27/2023 5 min read

One of the dumbest things I hear from people is that you need a lot of money to get started in the stock market.

If you’re a newbie, then a small account is an advantage.

Why?

Because trading is hard…

If you start with a high five-figure or six-figure account and you have no skills, knowledge, or experience…

Guess what’s going to happen?

You’re going to lose A LOT of money.

You’re still likely to lose money if you start with a small account, but at least it will be something you can bounce back from.

The question then remains, can you turn a small account into something substantial?

Absolutely.

I turned mine into millions of dollars…and dozens of my students started small and built their accounts into seven figures…two into eight figures.

Here are three things I showed them that helped take them to the next level.

#1: Set The Right Expectations

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No one walks onto a basketball court the first time and thinks they’re ready for the NBA.

But when it comes to trading…social media has distorted everyone’s reality.

All these phony accounts posting big wins and making it look easy…has newbies believing they’ll make millions right out of the gate.

My two top students who have made more than 8-figures…didn’t make money in their first year.

If you really want to be my next millionaire student

Then you need to think longer term.

Instead of looking for results in months two or three…start forecasting what years two and three will look like.

This is important because it emphasizes learning.

There are so many skills needed to become a successful trader.

Your goals early on should be focused on learning setups, mindset, strategies, catalysts, market psychology, and risk management rules.

Forget about your PnL.

That’s why starting small is such an advantage.

Because your only concern should be on acquiring knowledge and getting better.

If you want to know more about that process, CLICK HERE.  

#2: Know Your Constraints

how to get into stocks
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Everyone is different, right?

Some people have to study at night or on the weekends.

Others can only allocate a fixed amount of time to trading.

And if you have a small trading account, you’re limited to the number of trades you can take each week.

Whatever your deal is…you must determine what strategies will work best for your constraints.

The cool thing is, the farther you get in your journey and the more success you achieve, the fewer constraints you have.

For example, I can travel the world year-round…and to some of the most beautiful places on the planet.

#3: Develop The Right Rules

bonus tip 2 to the best trading risk management
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Ever heard the phrase it’s hard to teach an old dog new tricks?

Your first few years in trading is where your foundation will be built.

That’s why you must develop the right rules.

For example, my number one rule is to cut losses quickly.

Yes, my number one rule is focused on risk management.

Too many newbies are focused on the wrong things.

Risk management is critical to your long-term success.

But that’s not all.

You also need discipline.

How do you stay disciplined?

One way to do that is by outlining what your favorite setups are.

Once you’ve learned how a setup works and you’ve proven that you can consistently make money trading it…then you focus on that setup.

So many newbies are trying to catch the next FOMO trade they find in a chat room or on social media…they never learn any setups.

They just know how to chase bad plays.

Of course, most of them lose.

It’s a slow process…but take it from me. It’s worth it. You want to become a rules-based trader in the beginning.

Need More Help?

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There are a few ways I can help.

  1. Start receiving ideas from my team and me. They are 100% free of charge
  2. Talk to a team member and see if you fit my coaching program. You can book a call here. 

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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 (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”