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Trading Psychology

How To Control Your Impulse To Trade

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs
Updated 10/8/2024 5 min read
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Welcome traders,

The idea of making money from trading stocks is exciting.

And why wouldn’t it be??

As a professional trader, I get to travel the world and trade from anywhere. I’m not bound by a 9 to 5 at the office.

That’s often the dream for my students too …

Take a look at the post on X below, this is exactly what I’m talking about:

But … The stock market isn’t an unlimited money machine.

You might want to make a trade, because you’re excited. Especially as we watch these stocks move up and down by hundreds of percentages in a day. It’s easy to want to snag some cash from the market.

But if there isn’t a setup, you’ll probably lose money.

It’s essential that a trader recognizes the difference between a good setup and a bad setup.

It takes some experience to see these patterns in real time.

But instead of randomly wandering through the market, trying to absorb price data on a whim … Follow a structured approach!

That’s why I made the 10-Day Bootcamp.

At the end of my 10-day crash course, you’ll have all the information that you need to capitalize on the market’s hottest setups.

>> Start the Bootcamp today! <<

And for the sake of today’s trade opportunities, let’s make sure that we’re on the same page.

Here’s what’s working right now:

Strong Stock Spikes

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I’m always using the same framework to trade these runners.

Volatile stocks can follow the same patterns over and over again because people are predictable during times of high stress. Like when they have money in a stock that’s spiking +100%.

The patterns are always the same … But right now, we’re seeing a lot of afternoon spikes and stocks that surge higher during after hours.

See my post on X below:

Chanson International Holding (NASDAQ: CHSN) spiked 200%* during after hours on Friday, October 4.

Here’s a chart, every candle represents one trading minute (it’s tinted red because the stock was halted when I took this screenshot):

CHSN chart intraday, 1-minute candles Source: StocksToTrade

In a similar move on Monday, October 7, Ambow Education Holding Ltd. (AMEX: AMBO) spiked 240%* from 1 P.M. Eastern into after hours.

Here’s a chart:

AMBO chart intraday, 1-minute candles Source: StocksToTrade

My students and I are in a perfect position to profit off of these runners.

But it requires patience! We need the wait for the right setup.

Moe knows exactly what I’m talking about. See their post on X below:

Source

We have to wait for the stock to match our framework. Otherwise we’re just gambling on stock movements.

And gamblers get eaten alive out here.

To truly test your patience as a trader, I have a test for you …

Wait until Friday to trade.

There’s a lot of volatility all week long, but the biggest moves usually come on Friday afternoon, as stocks approach the weekend.

And thanks to the incoming weekend, we often see a very specific pattern manifest in the market on Fridays.

This price action starts to set up on Friday afternoon. Make sure you’re paying attention around 3 P.M. Eastern.

My video tutorial is below, burn this pattern into your brain:

Control your urge to overtrade this week.

Instead, start the 10-Day Bootcamp and get ready for a Friday setup!

Focus on the process. Not the profits.

Cheers.

 

*Past performance does not indicate future results

 

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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”