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Why You Must Accept Failure First

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Written by Timothy Sykes
Updated 10/28/2022 7 min read

At any given point in your life, has there been a moment where you have failed?

Maybe it was in sports, a school test, or a project with work…

The same thing is going to happen with trading, we all experience losing trades and even I’ve had failing trades…

But how you handle those failures will help determine your outcome.

Trading isn’t designed to be a get-rich-quick scheme, it requires studying and determination to better understand the way the market works.

Throughout this week, many of you may have read about the recent tech earnings and are waiting to see how the market plans out…

Regardless of what the outcome may be, there are still plenty of opportunities out there, but how you find and handle them is all up to you.

So today, I am going to share with you some key points on how you should shift your mindset…

And how to plan and protect yourself in a market like this…

P.S – Jeff Kellogg knows what it feels like losing in his first year of trading, but failure wasn’t an option for him.  Here is what he changed to improve his trading career. 

Risk Management

Risk management is important in many professions, not just trading.

Every trader needs to understand risk management, if you don’t, you will eventually have bigger losses compared to gains.

As the market continues to be unpredictable, it is important to understand the risk of every trade…

And just deciding to sit out until the market rebounds is not risk management.

Do you think Wallstreet is just sitting back and waiting for the market to bounce before they start trading again?

Absolutely not!  Just because the market bounces doesn’t mean every stock goes up…

The same thing happens when the market goes down, not every stock is red.

You see, traders on Wallstreet understand the trends in the market and know how to spot these opportunities.

So how does risk management exactly work?  Let’s focus on two key pieces of it…

Position Sizing 

Your position size is going to depend on the size of your account and how experienced you are.

Are you going to dump 100% of your money into one stock in hopes it doubles?  I sure hope not, that isn’t trading…

That is just straight gambling in the stock market.

With position sizing, you need to determine how much you are willing to lose.

It all comes down to how experienced you are and how comfortable you are with identifying these setups I share with you every week.

It is all about how comfortable you are with these setups, but also how experienced you are.

I have seen trades move as much as 50% in a matter of minutes.  You definitely don’t want to be on the wrong side of that.

If a trade never works out, it’s important to follow my #1 rule…

But ultimately it is important to size accordingly based on how much you are willing to risk and understand that if you made 10 trades, not all of them may result in a profit.

For every trade I am in, I try to set a goal to make 5-10%, sometimes more.

More Breaking News

As a trader, you shouldn’t focus on a dollar amount, but rather on a percentage gain when entering a trade.

Setting A Stop Loss

Trading is inherently risky, so setting a stop loss is absolutely critical.

Without it, you won’t know when to cut your losses and you are hoping the stock decides to go back up.

Many traders think this stock HAS to go back up, but it doesn’t.

For every trade, I calculate what I am willing to lose and where I will cut losses.

Here is an example…

Source:StocksToTrade

This is important to have because no trader wants to lose all of their earnings on one single trade.

Every trader needs to know how to identify these key areas and this is how I plan it.

If the stock is also not performing the way you intend it to, get out.  I do this all the time to prevent any further losses and it’s on to finding the next trade.

Self Doubt 

How often do you doubt yourself after a few losing trades?

Imagine losing $1 million dollars…

The value of the dollar varies for everyone but losing in general stinks.

Everyone here today needs to understand their losses and learn from them.

If you are not studying and learning from your losses, they will catch up to you.

It is important to review and dissect your failing trades in hopes of not making it again, and if you don’t, you’re not learning anything.

Just because you suffer a few losing trades, you shouldn’t decide that trading isn’t for you.

I have had students who went months without trading just to study so they were better prepared.

I have also had students who lost their first year, but they realized it was part of trading and never gave up.

You need to ask yourself, how badly do you want it? How badly do you want financial freedom?

Don’t ever doubt your potential, and the more you prepare and study the more you will evolve as a trader!

Missed Opportunities 

Everyone here will miss a big trade, I have done it plenty of times…

But that is going to happen, so don’t let FOMO kick in and you buy at the wrong time.

In fact, I missed this one…

Just because you missed an opportunity it doesn’t mean the end of the world.

You see, when I miss an opportunity and still hear about it, I do this…

There will always be opportunities, but it’s important not to trade for the sake of trading.

Final Thoughts

As a trader, we have to accept that there will be good days…

And there will be bad days.

But it’s important to understand that everything I teach you is going to help you better understand how trading pennystocks work.

If I was just giving you the top 5 hottest stocks in the market, would you know how to trade them?

Being able to spot an opportunity is one part of the puzzle,  but you also need to know how to trade them.

Continue to practice and study every day!

I don’t want you to miss the next opportunity out there!

Cheers,

Tim

P.S –  Did you miss out on these two huge opportunities this week?  What could an extra 157% do for you in just 2 days?


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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”