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A Strategy for New Traders

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Jeff Zananiri
Updated 10/30/2026 6 min read
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Every once in a while someone asks…

“Tim, if you had to start from zero, what would you do?”

It’s crazy now to think about how I got started, turning a few thousand into a few million dollars in high school and college.*

I traded a lot of OTCs back then (and I continued to trade OTCs for years).

But today? I have nothing to do with OTC stocks anymore.

Don’t get me wrong…

I love OTCs and I hope they come back. But in the meantime, I’ve had to adapt.

So, the first thing you should know if you’re starting out today is…

Adapt or Perish

You cannot stick with a strategy if it’s not working anymore.

OTCs stopped working because smaller companies have much stricter reporting rules now.

When that change came into effect, it prohibited the companies from lying and pumping up their stocks like they used to.

So, many traders who used to focus on OTCs changed over to Nasdaq stocks.

That includes short sellers.

I personally don’t short sell penny stocks any more because the squeezes have gotten crazier.

But those squeezes create HUGE opportunities for long-biased traders.

I’m not the biggest fan of trading short squeezes. But there is more upside and if you know the rules, there’s potentially more reward.

Today there are TONS of small- and micro-cap Nasdaq plays. Which brings me to…

3 Criteria for Finding the Best Setups

My strategy for new traders hinges on understanding that you have to follow the money.

© Millionaire Media
© Millionaire Media

In other words, where is money flowing in the market that can create the biggest moves?

Here’s what I look for:

  • Big Percent Gainers. This is nothing new. I’ve always looked for big percent gainers, whether I was trading OTCs or Nasdaq stocks (both long or short).
  • Liquidity. You have to be able to get in and out of a trade, which means there needs to be liquidity.
  • Volatility. I’m aware of news catalysts and chat rooms. But I almost don’t care what the news is (or who’s pumping it), as long as there’s volatility.

Another thing for new traders in this market is to…

Take Advantage of Extended Hours Opportunities

Post image

Get my after-hours watchlist, free

The Night Tape, every trading day after the closing bell, plus The Second Session guide.

Most of my trades right now are either premarket or after hours.

It seems crazy to me because I never focused on premarket or after-hours trading until recently.

I spent almost two decades telling people to be very careful about trading extended hours.

Now I think it’s one of the best ways to grow a small account.

Finally…

Start Small and Size Up Later

Your goal should be to work on the process and lock in singles.

When you lose, lose small.

If you do that, you can grow a small account over time and size up as you gain experience.

To find out more about my strategy for new traders, check this out…

Millionaire Moves

Recently, I sat down with student-turned-master Matt Monaco to talk about what we’d do if we had to start over.

© Millionaire Media
© Millionaire Media

One thing we both agreed on is how much things have changed. That said, we had very different answers about what we would do today.

Watch and take notes, because Matt is one of the best traders (and trading teachers) I know…

If I Started Trading Today, I’d Use This Strategy

How did Matt get started?

Like all my millionaire students, he joined my Trading Challenge.

If you’re serious about taking it to the next level…

Apply for the Trading Challenge Now

Key Takeaway

Many big traders make fun of me because after 25+ years I’ve only made roughly $8M.*

I’m fine with that, because I don’t try to trade big.

I trade to teach new traders how to grow a small account.

Remember, even pros and multi-millionaire traders lose. Sometimes, they lose big.

Focus on your education and focus on the process.

It’s the best strategy for new traders in today’s market.

Cheers,

– Tim Sykes

*Results not typical. Past performance is not indicative of future results.

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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”