Somebody recently sent me an article about a study that claims it’s virtually impossible to day trade for a living. They wanted to know what I think about the study and why penny stocks are different.
If you’ve explored a potential stock trading career, you could easily be convinced it’s impossible. Especially if you listen to the wrong people. Since there are so many claims and assumptions about trading…
… and, frankly, about me…
… and now this study…
… it’s time to bust this open.
The article quotes several traders — and what they had to say wasn’t positive…
“I would say maybe 2%-3% of traders could do it day in and day out.”
“I would not recommend it. It is very tough.”
“It is exceptionally difficult […] but not impossible.”
Then there’s the study. (The link opens the abstract — you can download the full study there.) The research showed roughly 30% of traders who traded for one day showed a profit. And the percentage decreased over time … so by the time you get to 300 days of trading, only 3% were profitable.
Table of Contents
- 1 Penny Stocks Bust the Thesis
- 2 My Strategies Are NOT What Most Traders Do
- 3 Embrace the Truth About Trading
- 4 You Choose Which Game to Play
- 5 Patience Will Set You Free
Penny Stocks Bust the Thesis
I wasn’t consulted for that article. And this is exactly what I would have said to bust the whole article’s thesis…
Most Trading Sucks
I bring down the real statistics. And guess what? I’m not afraid of them. I’m transparent with them. This is why brokers don’t wanna work with me. I tell it like it is.
Watch my YouTube videos, video lessons, and webinars.
My students hear me say these things all the time…
Why are you trading forex? Five out of six forex traders lose everything in the first six months.
Why are you trading options? Most options traders I know blow up.
Why are you using leverage?
If you’re doing those things … or trading futures like the traders in the study…
I agree it’s virtually impossible. I’ve tried it. I wouldn’t do that.
My Strategies Are NOT What Most Traders Do
For me, the interesting thing is … I’m not in this just for a small profit. A lot of people think it’s tough to even be profitable. Let alone make millions of dollars, right? WTH? I’m the one saying I can turn a few thousand into a few million. Forget about just being profitable.
But the study claims it’s nearly impossible to be a profitable trader … it must be so, right?
But it’s because I’m not day trading.
I’m not playing Amazon puts. Or guessing what Apple or the Chinese GDP is gonna do. I’m not trying to trade the euro vs. the dollar. This is NOT looking at level 2 and VWAP.
I’m not doing what most traders do.
In my recent videos, I’ve been ripping on traders who grind all day. It’s madness. Some traders have seven longs and three shorts going at the same time.
Penny Stocks and the Power of Informational Inefficiency
With penny stocks — my strategy in particular — we take advantage of informational inefficiencies. Check out my free penny stock guide.
That’s why I think of myself as a retired trader. And I only come out of retirement when there’s an exemplary setup. Namely, an informational inefficiency. Like if there’s a first green day with an earnings winner.
Back in July, TTCM was a first green day. It had big volume, broke out over previous highs, and had positive news.
Here’s the TTCM chart to give you an idea what’s possible:
I bought TTCM at $0.0093 — roughly a penny — and flipped it at $0.0138. So I made 48% overnight. (Actually, it was over the weekend.) And then the stock tripled over the next few days. It was a near-perfect setup — I described the trade in more detail in this post. See the details of this trade on my Profit.ly page here.
With TTCM, I sold before it even doubled. And yet, it was one of my best trades. I can’t tell you how many people messaged me when I sold saying things like, “You’re gonna be sorry. Why are you selling it?”
I actually bought and sold it many times during the runup. Each time, I’d get messages saying “You should just hold.”
Even my students got trolled with hold ’em messages…
Like this one:
$TTCM so you made $160 with this trade. You could have made $80K if you kept the shares a couple of months!
— Peter Moody (@NorthernArctic) July 15, 2019
Remember, hold and hope is not a strategy. You have to follow the rules. Read “The Complete Penny Stock Course” — learn the rules.
As you can see from the chart above, the stock is down nearly 70% from its highs.
With BILZF it was very similar. I sold for a 43% profit and then the stock doubled over the next 20 minutes. And it’s also down from its highs. You can check out the details of my BILZF trade here.
By the way, it wasn’t just me. My hard studying students also made bank on TTCM. Check this out…
Student Tweets from TTCM’s July Run
Took the meat of the move with $TTCM this morning. 80k shares entry at $0.012 and exit at $0.014. The lessons that @timothysykes teaches go a long way in becoming a successful trader. I still have plenty to learn. Thanks Tim 🙏🏽
— the_tipsy_nomad (@JaretRoberto) July 15, 2019
@ARisti0714 had this to say:
Good week stuck to good setups grabbed $TTCM @.0061 yesturday and sold today in the .010s $.011s after the Multi month B/O left some for over the weekend it closed really strong and locked in $1400. and closed the week $2500+ ready for my birthday weekend 🎉🎉🔥🔥@timothysykes
— Carlos (@Aristi0714) July 12, 2019
And this from @AnalyticalRuss:
$TTCM out because I didn’t like the price action. Will be back in if it breaks .02. $4k profit for the day. Thanks @timothysykes for the alert on that over the weekend via https://t.co/Qq97Py4SxB! pic.twitter.com/r9HRSVVCEJ
— Joshua_Russell (@AnalyticalRuss) July 15, 2019
@SublimeTrades tweeted this:
Finally some wins after a rough 5 day red streak. I swung $TTCM and added more this morning. Work interfered with managing the trade though and I gave back about $900 unrealized on it. Still ended the day up about $1,100 (5.38 R). Back on track and on to the next. @timothysykes pic.twitter.com/mzi8MSNxk0
— John Papa (@SublimeTrades) July 18, 2019
Notice how @SublimeTrades is working on the process. So when the study says you can’t learn from trading, it’s just plain wrong. The question is, will you look at every trade as a lesson? It’s true degenerate gamblers don’t learn. But that’s not what I teach.
Embrace the Truth About Trading
Someone asked me if I was afraid of the study about day trading getting out.
The answer is … NO! As I often say, it’s good to be real in an industry full of fakes. It doesn’t matter whether it’s TTCM, BILZF, or any of the thousands of trades throughout my career of 20+ years…
… I’m totally transparent. I share every trade. Every detail.
And I know I’m not always perfect. But you don’t have to be perfect.
Because the whole world hates on penny stocks. There’s really not much meticulous competition in these stocks. Most people trading these stocks are friggin’ idiots. They believe the stock is gonna be the next Microsoft.
You Choose Which Game to Play
By knowing how flawed the overall day trading industry is…
… and knowing the ugly stats…
… it forces me to say I don’t wanna play that game.
I’m doing something very different.
So how is it possible I’m making 40%? Especially when this game is so hard that most people can’t even make a profit — forget about 40% — they can’t make any profit.
Theoretically, if a trader could consistently make 5% overnight, they’d be profitable. So how am I making 40% when they can’t even make a consistent 2%, 3%, or 5% on trades?
This is a niche that NO ONE ELSE considers. It’s overlooked. Or hated on. Penny stocks weren’t considered in the slightest for that study. And that’s fine with me. Let’s keep it a secret. The reality is, I don’t want them to look at this niche.
Let the haters hate. Let the algorithmic and high-frequency traders focus on expensive stocks.
Because I’ve learned — and I teach — that…
Patience Will Set You Free
You can hold and hope … and lose most of the time.
Or, you can day trade and lose most of the time.
But you have another choice. Learn my rules and my niche. Learn to be patient like me. Sometimes I’m overly patient. and it’s NOT fun. It’s frustrating. But…
I win more times than not. And, contrary to what the study and the article says … it IS possible to make a very good living trading. Just don’t do the foolish stuff. Don’t follow the herd.
The Trading Challenge is my most comprehensive training program. If you’re ready to put in the effort required, apply today. But come willing to work. I know a lot of people don’t like that word. But at first, it’s work. It takes time. You have to study hard.
The thing is, if you put in the hard work at the beginning, later you won’t have to grind it out like a day trader. While they’re guessing, you’ll be waiting patiently for only the best setups. And if you can learn to be meticulous … if you can work on the process … then your goals and dreams are possible.
What Students Are Saying
Here are some recent comments and trades by students…
@camtastictrades had this to say about his recent DCGD trade:
— Cameron P (@camtastictrades) October 8, 2019
Or this from @AL401k:
Recently quit my job at a brokerage firm where I sat behind a screen watching rich people get richer. If you want to make a decent amount of money, it will never be working for someone else. Working for myself now while learning from the best in the biz. @timothysykes
— AL_ (@AL401k) October 9, 2019
And this insightful tweet about cutting losses quickly from @drogomirdrogon:
I’m a TimSykes challenge student @timothysykes and a bad relationship breakup just gave me the revelation of how Tim’s #1 rule cut loses quickly when in a bad trade applies not only to penny stocks but to real life relationships. This rule will forever govern my life.
— Prince (@drogomirdrogon) October 9, 2019
On Profit.ly in the Trading Challenge Chat Room
Check out this October 8 trade by Ramesh_Kumar:
09:36 AM Ramesh_Kumar: Long $CLSI @0.083. Anticipating the b/o.
09:47 AM: Ramesh_Kumar Sold half $CLSI @0.099
09:58 AM: Ramesh_Kumar Sold the rest $CLSI @0.10ish. Sudden selling pressure. So took off everything for +$662 profit.
More trades shared by students on October 8:
09:49 AM aceboogie2488: $GATA in .488 out .560
10:17 AM damiano5023: ASUR in at 8.43 out at 8.55 little profit of 142.00
12:07 PM BigAL7: made my first trade after taking some time off from trading $CLSI in at .0884 out at .109
12:20 PM Trade4us: $CLSI in at .094 out at .11
01:12 PM GarrisonMorgan: In $CLSI at .105 out at .111
More Comments from the TimAlerts Chat Room
09:37 AM Vetdealer: $ASUR for $222 profit Yes! (h)(dance).
09:40 AM ronbrown1981: $CLSI, bought .082, sold at .08655 and .0906, 40K shares total.
09:48 AM kobrakai: $CLSI in 0885 out 10cents.
11:18 AM savannahpianist: $CLSI in at 9.75 cents, half out at 10.45 cents.
12:02 PM savannahpianist: $CLSI sold the rest at 10.7 cents.
03:30 PM beland123: sold my $SCON at .2030 for a quick scalp, from .1920, (90$ profits).
03:42 PM PennyStock_MegRussell: just took 100% of the 700% gain from today $COWPP.
04:00 PM charan: Boom nice day today bought CWOPP at 0.044 sold at 0.080.
04:01 PM AdamMoore$NAT too scared to hold overnight, 5 green days in a row, quick $50
As you can see from the comments in chat and on Twitter…
… my strategy is a learnable process. So, yeah, let the academics have their fun. Meanwhile, my students and I will keep playing the best game in town.
What do you think about this post? Comment below, I love to hear from all my readers!