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Trading Lessons

Why I See a Traders Bull Market

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Written by Timothy Sykes
Updated 11/16/2022 6 min read

2022 hasn’t been an easy market for anyone.

I read one headline that said the average retail portfolio is down 44%.

I watched countless traders get sucked in by promoters as momentum names like Carvana (NASDAQ: CVNA) and Peloton (NASDAQ: PTON), holding onto losing positions that only got worse.

Those that did turn a profit were forced to resign themselves to smaller profits to avoid getting chopped up.

Luckily, many of my Millionaire Challenge students heeded my warning from last November.

They’ve managed to stay in the green while so many others watched their 401Ks dwindle.

I went from making over $1 Million in 2021 to only earning $130K this year.

But I DID turn a profit.

This was a year for learning, not earning.

Instead, I focused my students on studying hard, identifying key patterns like my Supernova, and practicing solid risk management.

Because eventually, markets

But the tides are turning…

We could be in for one of the best markets for traders since early 2021.

Check out this YouTube video where I laid out my entire thesis.

Now, some folks will read the headers in this post and think I’m about to dive in head first.

But that’s not the case.

Let me explain how I plan to approach the next few months.

Because while there are tremendous opportunities, there’s also plenty of danger.

Trading is a Means to an End

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People confuse trading and investing all the time.

As a trader, I don’t worry about where the market is or when it’s going to bottom.

I’m more concerned with the opportunities and the risks.

2022 had so many negative catalysts that could have sent stocks spiraling:

  • Inflation
  • War
  • Energy

The list goes on and on.

I spent more time on guard for a market puke than a run.

That’s why I kept my position sizes small, took profits early, and more importantly, cut my losses quickly.

I was in ‘protection’ mode.

Now, we’re starting to see what pundits like to call ‘green shoots.’

The economic data stopped deteriorating.

It’s not gotten better, but it’s slowly not getting any worse.

Typically markets bottom months before it’s reflected in the data.

This doesn’t mean the bear market is over.

What it does mean is there are likely to be more trading opportunities.

And for me, that’s what matters most.

Watch for Short Squeezes

With bear markets come short sellers.

As markets rise, those same traders start to get squeezed out of their positions.

Case and point – Meta Materials (OTC: MMTLP).

I’ve been all over this stock lately as it went from a Supernova to a multi-week runner.

XCPCNL Business Services Corp. (OTC: XCPL) is another stock that’s been great for morning panic dip buys.

What’s different now is many stocks that typically faded after their first run are holding up for multiple days.

It’s not everywhere. But it’s happening in NASDAQ and OTC penny stocks.

The January Effect

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This seasonal pattern isn’t anything new.

However, I look at it a little differently than most folks.

Investors like to sell their losing positions towards the end of the year to lock in losses for tax purposes.

This pushes already beaten-down stocks even lower, creating extremely oversold conditions.

That’s why you see many of the worst performing names from the prior year bounce back in January. Hence the January Effect.

Now, because everyone knows about this, you’ll see folks try to front-run this idea, leading to names popping in December and as early as November.

A great example of this is ToughBuilt Industries (NASDAQ: TBLT).

The long-term chart is terrible.

But a great earnings catalyst boosted shares for a couple of days, creating some nice trade opportunities.

When you dig into the intraday chart, you’ll see something that looks like stair steps.

This type of price action creates trading opportunities, even if only for a day.

Keep an Open Mind

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People have this idea that you need to stick with your bullish or bearish bias.

They accuse me of changing my views too easily.

I tell them, yeah, I do.

That’s trading.

My opinion doesn’t matter.

The charts, the news, and the patterns are the only things that matter.

It takes practice, but once you push your ego aside and simply look at what’s in front of you, trading becomes SO much easier.


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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”