timothy sykes logo

Trading Psychology

Why Tilt is Killing Your Trading Performance – And How to Fix It

Timothy SykesAvatar
Written by Timothy Sykes
Updated 2/9/2023 8 min read

The number one rule in trading for beginners and unprofitable traders is: Live to fight another day. 

Tilt can cause you to throw risk management out the window, suffering losses that are hard to come back from. Not only can it damage your account by sucking money out of it, but it can also cause psychological damage if the losses are significant enough.

Regardless, if you’ve been trading for ten days or ten years, we’re all vulnerable to getting on tilt. The top traders can recognize and stop it before it gets out of control.

Here’s what you should be on the lookout for:

© Millionaire Media, LLC
  • Focusing too much on your outcome. 

Early on in our trading career, we seek validation. Newbies want that validation to come in the form of PnL. They think success means making money and that they’re on the right path. But often, making money too fast can lead to later problems in the future. For example, thinking you’ve got trading figured out, you decide to trade bigger and then get wiped out.

Believe it or not, many of my millionaire students, like Bryce Tuohey, Tim Grittani, and Tim Lento, took months, even years, before they became consistently profitable. If they were fixated on PnL, they would have quit before they achieved success. Instead, they focused on learning patterns, setups, and catalysts, developing a trading plan, and a risk management strategy.

If you’re not skilled at trading yet, and your only gauge for success is PnL, then you’re likely to get angry with your results, triggering you to go on tilt.

  • Putting Pressure on yourself.

Most of my millionaire students started off trading a small account. However, they gave themselves enough time, knowing that success wouldn’t happen overnight. So many newbie traders give themselves a short leash. They set unrealistic goals like I am going to give this three months. If I’m not making money, then I will give up. Or they rely too heavily on their trading profits to pay the bills. I need to make money this month, or I won’t be able to pay my bills. Putting unwarranted pressure on yourself to perform when you don’t have all the skills for success can create anxiety and force you into bad decision-making.

  • Letting Mistakes Eat You Up

There’s not a week that goes by that I don’t tell myself— if I had stayed in the trade longer, I would have made bigger profits. As traders, it’s hard not to play the woulda…coulda…shoulda game. But one thing I notice a lot in newbie traders is that they tend to obsess about their losses. They take losses personally and eat at them for days, weeks, or even months. Eventually, this obsession can spill over to a state of anger, leading them to go on tilt.

Becoming Aware: What Can Trigger Tilt

© Millionaire Media, LLC

A build-up of anger and rage causes tilt. Several things can happen to traders for this to happen.

They include:

  • Getting Into a Trade That Immediately Moves Against You. For example, you try to dip buy a stock, and it instantly starts tanking lower. It pisses you off that you decide to add to your position to get a better price. This complete disregard for risk puts you in danger of losing substantially more than you initially had planned.
  • Making A Mistake You Know You Shouldn’t Have. For example, you mean to buy 500 shares of a stock, but you accidentally buy 5000 shares. The trade moves against you. Instead of punching out, you trade it because you don’t want to take the loss.
  • Losing Streaks. Trade long enough, and you’ll eventually deal with a losing streak. It’s tough for anyone but especially hard for newbie traders. Their self-talk can become negative and toxic. They’ll put themselves down, call themselves stupid or even go full-blown conspiracy theory believing the market is out to get them. A series of losses is bad for your psychology, which can drive some traders into a rage and get on tilt.
  • Watching other traders in chatrooms make money while you’re not. You should never compare your chapter 1 to someone else’s chapter 11, but it’s sometimes hard to swallow seeing people around you “get it” and make money while you’re still struggling to find your way. Instead of upsetting you and forcing you to rage…use it as motivation. When I started, I didn’t have success stories to look up to. All the top people in finance were hedge fund managers. Day trading penny stocks were viewed as a dirty way to make money. Today, I’ve helped develop 32 millionaire traders, many of them came from humble beginnings. Take inspiration from them, and remember, we’re all on our own journey.
  • FOMO. If you’re day trading penny stocks, then you’re someone who loves action. It’s common for penny stocks to move 20%, 50%, 100%, or even more in a single day. Missing out on moves can create FOMO, leading to bad decision-making. And even force you into tilt.
  • Style-Drifiting. I make money on 3 out of 4 trades I place because I know my setups like the back of my hand. I know where my lane is, and I stay in it. However, achieving that level of discipline didn’t happen overnight. Often I’ll see traders jump into a trade because someone called it out in the chatroom, even though it’s not their setup or style of trade. Losing money on something you shouldn’t have been involved in can trigger you to go on it.

Strategies You Can Implement For Avoiding Tilt

timothy sykes in matera in 2022
© Millionaire Media, LLC
  • Develop A Trading Plan and Sticking To It. Having a clear and well-defined trading plan can help you stay focused and avoid making impulsive decisions. Remember, tilt occurs when you’re boiled up with rage and anger. Having a trading plan can keep you calm and rational. Even if you don’t make money on a trade, you’ll still feel better about yourself if you stick with your plan.
  • Take Breaks. If I stayed in front of my computer, I would probably trade all day. While that might sound fun to some folks, it’s not for me. I prefer to be out, traveling, and working on my charitable foundation. Financial freedom means having the ability to do what you want when you want. If I’m stuck in front of my screen all day, how free am I?
  • Keep A Trading Journal—one of the reasons why I love Profit.ly is because it allows me to journal all my trades. Journaling gives you another opportunity to look at your decision-making objectively. When we’re in trades it’s easy to get caught up in the moment. However, dissecting your trades and decisions when you’re not in those positions can help you see things more clearly.
  • Set Risk Limit Rules. Some traders struggling with risk management and dealing with emotions will set risk limits for themselves. You can do this two ways. First, set a specific loss limit per trade. For example, if you want to risk $200 on a trade, then once you’re down $200 on it, you close it out. Second, you can set daily risk limits. For example, let’s say you have a problem dealing with losses, and once they reach a certain level, you’re triggered to overtrade or revenge trade.
  • Work With A Mentor. Sometimes we know what we need to do but struggle to follow through. Having someone around who is constantly teaching you best practices and reinforcing them to you daily can be what you need to take your trading to the next level. If that sounds like something you need, I invite you to apply as one of my challenge students.  

Bottom Line

Trading isn’t always about you vs. the markets. In many cases, it’s you vs. you. You’re letting emotions get the best of you when you go on tilt. Awareness is key to defeating it. If you need someone to help you stay on your game, click here to learn more. 

How much has this post helped you?

Leave a reply

Author card Timothy Sykes picture

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

Post image

Get my weekly watchlist, free

Sign up to jump start your trading education!

* 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”