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Why Penny Stocks Are Different From Day Trading

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Written by Timothy Sykes
Updated 1/16/2023 13 min read

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.”

Or this…

“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.

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

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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.

For example, my trade on Dan Bilzerian’s Ignite International Brands (OTCQX: BILZF). Or my other big recent 40% winner that I talked about at the conference, Tautachrome, Inc. (OTCPK: TTCM).

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:

TTCM 1-year chart: first green day, big volume, and breakout over previous highs — courtesy of StocksToTrade.com
TTCM 1-year chart: first green day, big volume, and breakout over previous highs — courtesy of StocksToTrade.com

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:

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


@ARisti0714 had this to say:

And this from @AnalyticalRuss:

@SublimeTrades tweeted this:

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?

It’s because…

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.

Trading Challenge

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…

On Twitter…

@camtastictrades had this to say about his recent DCGD trade:

Or this from @AL401k:

And this insightful tweet about cutting losses quickly from @drogomirdrogon:

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! 

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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

* 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”