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Why I Don’t Gauge My Trades Based On PnL

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Written by Timothy Sykes
Updated 9/15/2023 7 min read

Way too many traders are just focused on the money…

I know it’s tough, I get it…

You think if you’re up money, you’re doing well…

Or if you’re down money, you’re doing poorly.

I hate to break it to you, but that’s not reality. 

There will be times where you make money on a horrible trade, and lose money on a good trade…

And those who get lucky on horrible trades are the ones who typically don’t last long in this market.  

So today,  I don’t want you to gauge how successful you are based on the money you earned…

Instead, I want you to gauge your trading performance by asking yourself these three questions. 

Do You Have A Trading Plan? 

Most newbies don’t have a game plan before they trade. 

They’re just browsing the internet for top stocks to trade, watching CNBC to see what they’re doing…

And if you’re making your decision based on other traders, you’re doing it all wrong.   

EVERY morning, I’m scanning the market for big percent gainers…

And right now, we’re seeing so many premarket spikers that are offering us opportunities!

Here are just a few examples I want you to go back and take a look at…

  • Axcella Health Inc. (NASDAQ: AXLA)
  • First Wave BioPharma, Inc. (NASDAQ: FWBI)
  • Faraday Future Intelligent Electric Inc. (NASDAQ: FFIE)

These are just a few of my recent trades that have spiked in the morning and I was able to dip buy these recent runners.  

Most of these short squeezes don’t last more than a day or two…

And your job as a trader is knowing how to capitalize on the meat of the move.

Let me be honest for a second…

I don’t care if the stock goes bankrupt…

I don’t care if it fades 50% by the end of the day… 

The vast majority of these trades will fade…

But the majority of the opportunities we’re seeing are first thing in the morning.  

All it takes is one trade to blow you up, which I’ll show you what I mean in just a minute.

So before you buy based on what other traders are doing…. 

Ask yourself, what’s YOUR game plan?

And I hope your answer was focusing on those early morning short squeezes!

Are You Tweaking Your Trading Process?

Optimizing your process isn’t always easy.

It requires you to spend time practicing and studying, but you need to know what to look for.

Over the years I’ve tweaked my strategy plenty of times based on what the market is giving me…

And right now, I’m focusing on these short squeeze plays.

If you don’t know where to start, I encourage you to join our FREE trading sessions to help you get a better understanding of what other millionaire traders are focusing on.

It doesn’t mean you need to trade what they’re looking at, but it will help you get a better understanding of what setups you need to look for.  

Earlier I mentioned how the majority of these plays will fade…

Take a look at MicroCloud Hologram Inc. (NASDAQ: HOLO)

Source: StocksToTrade

HOLO got absolutely crushed last week, but before that, it kept getting squeezed higher. 

This is something I like to show all of my students because it’s a good lesson for those who are overly aggressive with their trades and hold onto them longer than they should.  

None of you should be holding onto your trades hoping for the best…

And this is a good example of showing you what could happen if you don’t cut your losses quickly. 

These stocks are spiking due to these over-aggressive short sellers, and eventually, they are right…

So you need to learn to take the meat of the move and get out quickly. 

Let me show you what I mean…

Despite the recent drop in price on HOLO, I saw it squeezing higher on Friday morning…

Here’s the chart…

Source: StocksToTrade

I bought HOLO at $1.38 and sold it at $1.47 for a 6.52% profit.  (risked $3,864).  

I even expected it to squeeze higher, but I wanted to just lock in this single and get out.

This is an example of what I mean by tweaking your process…

Not every trade is going to be perfect, but knowing that these beaten-down stocks are getting squeezed higher in the morning…

That’s what you need to be focusing on and looking to dip buy these early morning opportunities. 

This trade wasn’t perfect by any means…

More Breaking News

But these are the patterns that are working right now and this is a solid trade based on what’s working in the overall market.  

Are You Dedicated?

This journey isn’t going to be quick…

And unfortunately, most individuals who get into trading are looking to get rich overnight.  

This is a marathon, not a sprint, so I want all of you to study as much as possible to gain a better understanding of this market. 

Review your trades…

See what other traders are saying…

And learn to make your own analysis based on what works best for you.  

You don’t need to be hitting home runs on every trade…

Just look to take the meat of the move and lock in those singles. 

Also, don’t forget to join our FREE trading sessions to get a better understanding on what setups are working the best. 

When you go back and look at your latest trade, just make sure you ask yourself…

Did you have a plan?

Was it a big percent gainer? 

Keep studying and focusing on the process!

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”