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What I Do When The Market Turns Ugly

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Written by Timothy Sykes
Updated 1/19/2023 7 min read

The hustle-and-grind mentality has been popularized over the years by Gary Vaynerchuk.

Someone I admire…and who I’ve had dinner with in the past.

However, most traders focus on the WRONG thing.

They believe success in the markets comes from staying in front of their computer and trading all day.

And that’s not something I believe in.

If you want to grind, get better, and eventually become a consistently profitable trader…

Then you MUST study my videos, watch my lessons, review your trades, and master the setups.

Over the years I have established a rigorous methodology that I adhere to, which has led to a success rate of over 76% of my trades.

There are times when I get super aggressive with my trading…and days I might not place a single trade.

Unlike so many of the idiots on Fin Twit…I don’t need a hot market to make money.

So how do I stay profitable even when the market looks shaky?

Why Traders Benefit From Having This

Trading is a battlefield, so are you ready?

Back when we sat in history class, we learned about world history dating all the way to 500 BC and beyond.

And what we learned from the past helped us not to make the same mistakes in the future.

Even doctors created medical journals documenting what worked and didn’t work…

And learned from what didn’t work to help them improve their process.

The same thing applies to trading, and I’ve developed a framework that can help traders understand the trading process…

Unfortunately, it’s not 100%, but it’s pretty damn close…

And yes, you still need to be able to recognize the right pattern when it presents itself.

Yes, certain days are slower than others, this is why I always go back to my trading journal.

It helps me review trades that worked, or didn’t work, and what I could do to improve overall.

Nothing is going to fix the mistakes we’ve already made, but what it will do is help you prevent them from making them again.

Trading is all about finding the right strategies and patterns that work, and one of my favorites is the morning panic.

Not every trade is going to be ideal, but over the years of studying, I’ve learned when I could expect a panic…

And what the ideal panic looks like.

But it’s important to be patient and disciplined, otherwise, you could get stuck into trades that look like this…

Avoid Choppy Trades 

Whenever any of us place a trade, we get an adrenaline rush once we hit the button to buy and anxiously wait to see what happens.

The stock may tick higher, or it may tick lower, giving us a feeling of anger or excitement.

Trading can be a very emotional game, and if your first trade doesn’t work as planned, you’re rushing to find the next one to make your money back…

But at that point, you’re rushing to just find any type of trade instead of doing your research and finding the best plays available to you.

We all will suffer losses, but limiting your losses is critical.

When the market continues in this downward direction, I am patiently waiting…

In fact, I have not been so patient when the market wasn’t great, causing me to lose money.

More Breaking News

Here are my trades

Unfortunately, no one is perfect, but when the market is slow and there aren’t many options, I like to study what an ideal setup looks like.

Every day I populate my watchlist, and here is a stock that I am waiting to see either breaks out or has a morning panic…

Western Sierra Resource Corporation (OTC: WSRC)

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WSRC chart 1-minute candles Source: StocksToTrade

Take a look at the chart, pretty choppy, right?

Even though at the time I am writing this, it’s up nearly 12%.

Sounds good when you are just looking for big percent gainers, but there isn’t an actual play for you to execute.

The reason these stocks get so choppy is that they don’t have the volume to create the volatility I look for.

Here is another example of a multi-day runner, but the play was so choppy this morning, a morning panic wasn’t worth it, so I didn’t force it.

Clean Vision Corporation (OTC: CLNV)

CLNV chart 1-minute candles Source: StocksToTrade

This is another ugly play.

You want to look for patterns like this…

VENG chart 1-minute candles Source: StocksToTrade

Unfortunately, I missed this trade because I was flying to Dubai.

But I am not upset about it, I hope you were able to spot this dip buying opportunity from its recent run-up!

Look At This

We all want to find the trades, but there are a lot of indicators that we need to factor in before the ideal play comes into place.

I teach a lot of my students about my sliding scale, and if you are just starting and learning how to find the best opportunities…

Try using this.

Even if the stock looks nearly perfect, it can do something completely opposite.

Every day before I trade, I look for 3 key things:

I trade penny stocks because they are volatile, not because they are great companies…

And recognizing key plays on stocks that are spiking on possible news and have high volume…

Or they have a low float which could lead to a possible short squeeze…

And it can be used to your advantage if you have a small trading account.

Take It One Step At A Time

Trading can be mentally frustrating and if you don’t have the right mindset, you can force trades that aren’t there.

I never said it was going to be easy, the market has a mind of its own…

But on days like yesterday, it’s important to review and not develop any bad habits by forcing trades on poor setups.

Just because you missed a trading day it isn’t the end of the world, that’s the beauty of trading, you get to make your OWN schedule.

Don’t feel like you are missing out just because you don’t trade…

What you want to do is make sure you don’t miss out on the perfect opportunity down the road because you didn’t take the time to plan.

STUDY UP!

-Tim


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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”