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Penny Stock Basics

Why This Is One Of The Most Important Rules I Follow

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Written by Timothy Sykes
Updated 3/20/2023 8 min read

The other day in this blog post, I announced I’d be giving away 1 Bitcoin, which, at the time was worth $6,000.  But, as I write this new blog post, its value has increased to $7,200…I literally got tens of thousands of people applying to win, so its taken some time to go through everyone’s comments…I’ll be announcing the winner in a few days, most likely on Tuesday, along with my thoughts on Bitcoin and cryptocurrencies so stay tuned!

In the meantime, the penny stock market is on fire as my Trading Challenge students and I made $500,000+ already this past week, as I posted the other day:**

My students have made over $500,000 this week on so many crazy stocks like DCIX, TOPS, GLBS, RLOG, FRTA and IZEA as the #stockmarket is just absolutely on fire right now, but more important than just the money, too many people look down on hot #pennystocks like these without bothering to #studyhard so it’s my honor to teach people and cut through all the BS, lies and assumptions with my lessons so it makes me feel like Moses parting the Red Sea…although it’s really just the badass back pool of @tritonluxuryvilla here in #turksandcaicos and wait until you see the front pool overlooking the beach 🙂 📸@alexplore23 #platograph #ilovemyjob #proudteacher #dreamjob #workfromanywhere #dreambig #nodaysoff #knowledgeispower #studyhard #dailymotivation #tritonvilla #moses #redsea #moderndaymoses #jewnalogies

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And, I have to give a special shout out to this greatly dedicated Trading Challenge student:**

…who I previously featured here  who has made $80,000+ this past week and is closing in on $400,000 in profits THIS YEAR after starting with just $4,000 (yes, that’s not just 10x his money, that’s close to 100x his money and he’s just getting started, as he’s been enjoying multiple $20,000 profit days lately as the penny stock market is on fire!)**

The key to making the most money and becoming my next successful student trader and possibly even my next Millionaire Trading Challenge student is learning and then following rules that will separate you from the roughly a majority of traders who consistently lose.

I have SEVERAL posts reviewing the most important rules, like:

117 Stock Trading Rules That Made Me 117% In 117 Days

40 Lessons From Tim Grittani Passing $4 Million In Profits

64 Penny Stock Trading Rules To Honor My $164,000 Profit Week, I’m Mad You Probly Don’t Know Them, Do You?

Print These 36 Commandments That You Should Live By

I’ve actually made several videos emphasizing this key point, check them out:**

And yes, I know that if you have a small account of just a few thousand dollars, it’s impossible for you to make $2,000 per day.  But, if you watch those videos above, the $ I talk about is not what matters most, it’s the whole “going for singles” as opposed to “going for home runs” mentality that too many wannabe traders have and instead of hitting those home runs, they strike out…and then they give up and stop studying, mistakenly believing that trading is harder than it actually is all because they played by the wrong rules and had flawed expectations.

So, I don’t want you to EVER make that mistake — nothing in the stock market, or in life for that matter, is given and you’re going to have to scratch and claw your way up every step of the way and it won’t be easy, and you will sometime make mistakes and lose money, and fail, but then you must learn from those losses and failures and get right back up and use your distaste for failure to push yourself to get much better over time so you never have to experience it again.

If you want a visual analogy to better explain what I mean then watch this great movie clip from the so-so movie “Invictus” about the true story of how the lowly South African rugby team used all their bitterness of defeat over the prior years to actually win the 1995 Rugby World Cup:

You see, I’ve been trading stocks for nearly 20 years now and I’ve had so many defeats, large and small, that I got sick of it and just in the past 2-3 years have I really clamped down on my losses and risk management, because I’d rather trade like a coward and sometimes take profits too soon, than to trade like a gunslinger who has higher highs than a coward trader, but also much lower lows…because it’s those lower lows that can wipe out your account and your confidence and your future.

Safety first isn’t just a little cliche for me, it’s a way of life when talking about trading volatile penny stocks…so the lesson here is to go for singles, not home runs, for me, that means my goal is to make roughly $2,000 per trade and I’ve been doing it consistently for 2 decades, one decade before I got started teaching, and now one decade as a teacher too.**

And as you see from my top Millionaire Trading Challenge students who also trade similarly, the volatility and opportunity in this niche is so great that it’s still possible to grow your account exponentially even when trading like a coward!

Please do leave a comment below this blog post if you get it and promise to do the same as I want more millionaire, cowardly students!

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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”