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Trading Psychology

5 Key Differences Between Top Traders and Newbies

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Written by Timothy Sykes
Updated 11/16/2023 9 min read

In the cut throat world of trading the line between success and failure often hinges on subtle differences in approach and mindset.

Having become a millionaire trader in my early 20s, and helped coach over 30 of my students into becoming millionaire traders…I know this better than most.

Reaching the top isn’t just about learning strategies…

It requires the total package.

And while newbies often find themselves trapped in cycles of losses and frustration…top traders navigate the same waters with consistency and profitability.

But what sets them apart?

That’s exactly what I’m diving into today.

The way I see it is there are five critical distinctions that define the gap between top traders and those who struggle.

Understanding these differences can be the key to unlocking your potential

#1: Emotional Discipline and Patience

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Top traders treat trading like a business. They understand that emotional discipline and patience are non-negotiable.

They don’t let temporary setbacks cloud their judgment and are willing to wait for higher-probability setups.

Back in May I suffered one of my biggest losses in years…

I easily could have gotten overly emotional about it and try to “win back” my losses quickly.

But I knew that could put me in an even deeper hole.

So I decided to trade smaller…and slowly build back up and try to recover my losses.

It took me months…but I eventually made those losses back.

Newbie traders often succumb to emotions like fear and greed. They might rush into trades out of FOMO…

…exit profitable trades prematurely due to fear of loss

…Or hold onto losers too long because they are too stubborn to accept a loss.

#2: Risk Management and Capital Preservation

Top traders put risk management and capital preservation over profits.

They understand that long-term success in trading is not about how much you make on winning trades…but how little you lose on the losers.

And that’s why I have such a gripe with short sellers. Many of them have no concept of risk management.

Who cares how much you make if on the next trade you lose double or triple that?

Yes…I trade small.

But over time those small wins add up.

On the other hand, newbie traders are solely focused on making money and profits. The idea of risk management is foreign to them.

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They jump into plays without a clear exit strategy…and are quick to blame others after a big loss.

#3: Continuous Learning and Adaptability

Tim Sykes holding An American Hedge Fund in Italy after creating his top penny stocks list
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Top traders are lifelong learners. They continuously adapt their strategies to changing market conditions and always look for ways to improve their performance.

This year alone I’ve made adjustments…playing more short squeeze plays and earnings winners.

But when it comes to most newbies…

They try to stick to a single strategy or setup…even when it stops working…and fail to adapt to new market conditions.

That’s why a lot of the traders who found success in 2020 managed to wipe out all their gains. They failed to make adjustments and suffered greatly for it.

#4: Utilizing Tools and Resources

risks of penny stocks
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Top traders are leveraging various tools and resources to gain the slightest edge.

One of the most promising tools I’ve come across hands down is XGPT. 

If you still don’t know what this game-changer is all about…THEN WATCH THIS DEMO. 

Most newbies on the other hand are overly cynical, they think everything is a scam. And instead of testing out new tools they prefer to be cheap, and follow free tips from random twitter accounts rather than do their own research.

#5: Understanding of Market Psychology

stock reverse split advantages
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Top traders have a deep understanding of market psychology…

And can often anticipate how other traders might react under certain market conditions.

Of course, this isn’t a skill that’s acquired overnight. But if you study hard each night, you can get better faster.

Always ask yourself…what’s working in this market and why.

I hate trading short squeezes because the stocks are super volatile and unpredictable. However, I’ve seen so many of them work, including trades I’ve been involved in.

But when that strategy fades…a new one will arise.

Newbie traders are too focused on wins and losses…profits and losses…that they don’t fully grasp how sentiment and psychology drive market movements and can be caught off-guard by sudden shifts.

📈 Ready to Elevate Your Trading Game?

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Trading is not just about setups and strategies; it’s a complex landscape where only the best thrive. Do you find yourself struggling to keep up? Wondering what separates the top traders from those who consistently face setbacks?

🔍 Discover the 5 Key Distinctions Between Top Traders and Newbies

Join my team in a comprehensive live training session, where I’ll reveal the critical differences that can transform your trading journey.

From the importance of emotional discipline and risk management to leveraging the latest tools, this session is packed with insights you don’t want to miss.

🧠 Learn How to Master Emotional Discipline and Patience

Get insights on how to handle trading pressures without letting emotions dictate your decisions.

💡 Understand Risk Management and Capital Preservation

Find out why protecting your capital is more crucial than chasing big profits.

📚 Continuous Learning and Adaptability

Discover how to stay ahead in a constantly evolving market.

🛠️ Utilize Cutting-Edge Tools and Resources

Learn about innovative tools like XGPT and how they can provide an edge.

🕵️ Decode Market Psychology

Grasp the subtleties of market psychology and anticipate market movements effectively.

This is your chance to learn from a millionaire trader and mentor who has navigated these waters successfully and helped over 30 students become millionaires themselves.

Don’t miss out on this opportunity to get a deeper understanding of what it takes to excel in trading and how to avoid the pitfalls that trap many newbies.

🚀 Join Our Upcoming Live Training Sessions!

Get ready to dive deep into actionable strategies, witness real-time analysis, and learn how to anticipate market moves. Step into the world of informed trading and turn market noise into opportunities.

👉 CLICK HERE TO SECURE YOUR PLACE IN OUR LIVE TRAINING SESSION

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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”