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3 Trading Barriers That Can Be Setting You Back

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Written by Timothy Sykes
Updated 10/24/2023 5 min read

I’m going to get right to it…

What’s your ultimate goal as a trader?

If your answer is ‘to get rich’, you’re not alone.  All of my challenge students share that same ambition – they all want to be my next millionaire success story…

But before they reach that pinnacle, three common hurdles stand in their way.

Today, I’ll be breaking down these three barriers and equipping you with the tools to conquer them…

Plus I’ll be sharing with you the top three stocks I’m keeping a close eye on this Wednesday morning.

Are you ready? If so, let’s dive in!

Managing Your Risk

Trading isn’t a shortcut to wealth…

Nevertheless, an increasing number of traders seem to believe they can transform into my next millionaire student within a year or less.

If you want to find success in this market, you need to know how to trade safely and not like a degenerate gambler.

I emphasize this topic daily with my challenge students, continually reminding them of the potentially devastating consequences if they overextend themselves…

Or enter a trade without a well-thought-out plan.

Many of you may remember when I had one of the biggest losses of my career earlier this year…

Source: Profit.ly

I tried to rush this trade, and instead of cutting my losses quickly, I added to my position size trying to dig myself out of the hole I was in.

Time and time again I remind you to cut losses quickly and not to hold and hope if a trade doesn’t go as planned.

As you start your trading journey, the best thing you can do is to understand how this market works…

And my recommendation is to do so by testing your trading ideas with a small position size. 

I don’t like to risk a lot when it comes to trading, because every time I do, the market humbles me…

Instead, I’m focusing on the process to help me better understand what’s working in the market.

In the days ahead, I want you to manage your risk by determining an amount you can afford to lose without jeopardizing your entire trading account…

And if the trade doesn’t go as planned, remember to cut your losses quickly as there will be plenty of other opportunities for you to capitalize on down the road.

Finding The Right Opportunities

Understanding this is a crucial initial step…

Because without a starting point, how can you expect to find success in any market?

Far too many traders want to follow someone else’s ideas, but the thing is that minutes and seconds can often make all the difference…

That’s why when you see a breaking news play, the stock could’ve already soared 300%, 500%, or even 1,000%…

And if you try to chase those stocks higher without having a breaking news alert, you may have already missed the bulk of the move and you’re buying it at the worst possible time.

Every morning I scan the market for some of the biggest runners.

At the time I was writing this, I told all of my students to keep an eye on these three plays…

  • LianBio (NASDAQ: LIAN) was up over 131%
  • Terran Orbital Corporation (NASDAQ: LLAP) was up over 12%
  • InMed Pharmaceuticals Inc. (NASDAQ: INM) was up over 140%…

And I want all of you to keep an eye on them and make sure you are prepared for what your next move should be.

Right now, I’m not looking to chase them higher, and what I recommend all of you to do is to focus on the price-action…

And look for potential dip-buy opportunities.

Remember, it’s all part of my 7-Step Penny Stocking Framework and I’m just looking for that 5-10% bounce!

More Breaking News

The majority of my trades start by focusing on big percent gainers in the morning and then I look to dip-buy them off their highs.

Getting Too Fancy

I see way too many traders trying to get fancy with their trades…

They don’t like to follow the basic rules and principles I share with them…

Instead, they go all-in on the “next big stock” that they hear about in hopes of making millions.

I’m all about trading scared…

Because if you trade scared, trading isn’t so scary.

I don’t want to risk a lot of my hard-earned money on one trade…

And I know if I lock in quick profits and limit my losses along the way, those small wins will continue to add up.

The best way to start your journey is to keep things simple and focus on one strategy at a time.

That’s why I recommend all of you learn my morning panic dip-buy strategy while focusing on StocksToTrade Breaking News Plays.

I want all of you to be successful…

And every week we break down some of the best opportunities in the market and discuss what strategies work best…

So if you want to learn how to trade like a pro, don’t miss this FREE trading session. 

Stay safe and I’ll see you in chat.

-Tim

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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.
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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”