My Advice to Young Traders

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Contents

My Advice for new Day Traders

Day trading isn’t easy. And that is an major understatement. It’s been about 50 times harder than I thought it would be. So let me sum up some of the knowledge that I’ve accumulated thus far (some of it at great cost).

If I knew these things from the start, I could have probably saved thousands of dollars, a lot of time and a ton of unnecessary emotional stress due to losses and confusion.

Trade Tiny; 100 share lots

Your one responsibility in being a day trader is to protect your capital. If you lose all of your money, you are out of the game. Maybe you want to open another account? Can you stomach that after losing the first?

The one way to protect against this while you are learning is to trade tiny and focus solely on learning and being consistent.

Even if your profitable trades have a negative Net PL after trade commissions, who cares? Consider the cost of commissions as the cost of learning.

Limiting your downside risk by trading small is huge when starting out.

Chasing other people’s trades doesn’t work (aka Beware of the FURUs)

There are many, many trade alert services. They don’t work. You can’t follow them because it’s almost always impossible to get the same entry prices and positions are closed out before you even have a profit.

Trade alerting is sometimes referred to as front-running. The people who offer such services are often referred to as FURUs (Fake Gurus).

This is why in 4 steps:

  1. The FURU takes a long position in a stock.
  2. The FURU alerts the trade to his followers and his members subsequently begin to buy that stock causing a quick price movement in the FURUs favor.
  3. The FURU sees a profit and sells into that spike locking in gains.
  4. As the FURU followers buying into the alert begin to dry up, The FURU alerts that he has closed out the position and now the opposite happens. The price begins to fall as many of the followers are now trying to get out at any price.

All of the FURU’s subscribers who chased are often referred to as bag-holders or sheep. This is how many trade alert service guarantee their own profits.

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The second part of this scam is the constant cycling of members in and out of the service. People losing money eventually get fed up and leave the service while the FURU boasts about huge gains on Twitter (or elsewhere) with pics of Lamborghinis and stacks of money suckering in new users to be the new sheep and bag-holders.

Lesson: Avoid trade alert services. Learn what to trade, why and how to manage those trades. To survive in day trading, you need to be self-sufficient.

Too Much Info: Youtube, Books, Twitter, Chatrooms, Webinars

I’ve read books, attended webinars and have watched an endless number of youtube videos on how to trade. Half of all that content being made by FURUs and almost all totally useless.

If I could go back, I would skip half of the books I read and almost all of the services I’ve joined and just sign up to a live stream trading service to just watch what a real trader does day and day out.

There is no better way to see what a real trader trades and how he does it than just watching it live.

It cuts through all of the barriers. It gives you direct access into the mind of an already profitable trader. You see how they trade, what they trade and listen to their reasoning behind it all.

I joinedLiveStreamTrading a couple months back and highly recommend it. After all of the studying, reading and services I’ve been through, only by watching a real trader have I made my greatest progress.

Technical knowledge of trading is just 20% of what is required

Trading requires an edge. An edge is simply a higher probability that one thing is going to happen over another. An edge that repeats is called a system.

Learning a system is relatively easy for any moderately intelligent person. Stock price movements repeat over time across different stocks and news catalysts. To be a day trader, you must identify and correctly trade and manage those trades. This is how day trading works.

What I didn’t know early on is that learning the system is the easiest part.

The hardest part by far has been the following.

Discipline

Having the discipline to actually follow the chosen system 100% of the time is extremely hard.

Trading is actually very boring and in those times of boredom you can often convince yourself to take trades that don’t fit your system and very often result in losses.

Emotions

Day trading is about probabilities. Nothing is guaranteed 100%. With a system you are only guaranteed that something happens for the majority of the time.

This means that you have to accept occasional losses and learn how to minimize those losses when they do occur.

And being a new trader, large losses occur.

Try losing 30% of your money and see how your emotions are doing.

Try waiting two hours for a stock setup only to miss it and instead you chase your entry at the exact same time that it reverses and turns your trade immediately into a loser.

Consistency

This is the ability to know what works and to only stick to what works. Random trades or chasing entries are all enemies. Consistency is often referred to as one of the most important traits for successful day traders.

To be consistent requires you to know about your emotional weaknesses and triggers and the having the discipline to avoid those situations entirely.

Those situations are avoided by having good entries, locking in profits and following your system…consistently.

Analysis & Revision; Rinse and Repeat

Another important part of trading is periodically going back and analyzing your recent trades. You must know what is working and what isn’t. What are you good at and what are your weaknesses.

Some use a plain notebook as a journal and others write in blogs. For me, I’ve found that daily journaling, trade analysis and importing trades into TraderVue works best.

The End

There are an almost infinite things that you can do wrong in trading and very few things that are right. You need to give yourself every edge in finding those few things that work and sticking to them.

If I could go back and give myself advice, this is what I would say:

  1. Trade tiny 50–100 share lots until consistency is proven. You can always size up later.
  2. Learn the technicals but don’t get bogged down.
  3. Join a live streaming service such as LiveStreamTrading: Learn faster by watching a successful trader live during market hours and let him/her explain to your their reasoning; the what, why and how.
  4. Journal, analyze and track your progress daily. Whether it’s MS Excel, a notebook or TraderVue, whatever works.

Best of luck and congrats on making it to the end! Feel free to reach out to me anytime on Twitter.

Although I linked to LiveStreamTrading and TraderVue above, I have no affiliation with them beyond the membership that I pay for. The TraderVue link does have a ref code that gives me a discount on my monthly fee.

Meet My Newest Six-Figure Trading Students (They’re SO Young…)

Dominic, Jack, and Kyle all presented at this year’s annual conference. And they were all once my trading students (You can watch their conference presentations here: TISummit 2020 DVD presale.)

THEY ALL DID A GREAT JOB!

left to right: Jack Kellogg, Dominic Mastromatteo, Kyle Williams, Timothy Sykes – photo courtesy of Don Mash

Keep in mind these guys worked their asses off to get where they are. Their results are not typical. Read on to find out how they became self-sufficient traders.

Table of Contents

Jackaroo Wears His Chain Outside His Shirt

So I posted a video on Twitter with these three guys. I asked them if they had anything to say about their success. When I got to Jack and how much he’d made, I asked him why he wears his chain on the outside. (I was ribbing him about it all weekend.)

So I asked Jack if he was a fan of the movie A Night at the Roxbury starring Will Ferrell and Chris Kattan.

What happened next blew my mind…

These Three Traders Are So Young

NOT ONE of them knew the movie. Seriously. Dom didn’t recognize the reference. And Kyle and Jack hadn’t seen it either.

The movie came out in 1998. So I’m like, “What! Really?”

Check out the tweet:

Meet my 3 newest $100,000+ profit https://t.co/EcfUM6l2S3 students @traderkylec @Dom_Mastro10 @Jackaroo_Trades surprise they’re real and they’re all barely 20 years old lol so they don’t know a 1998 movie LOL pic.twitter.com/6WZvrfXsaj

Even though we all look alike, they’re benefitting from my 20 years of experience. Thanks to the Challenge, they’re skipping a ton of frustration and confusion. And that’s what it’s all about.

How Dom, Jack, and Kyle Became Self-Sufficient Trading Students

Self-sufficiency. It might be one of the most important differences between what I teach and what the fakes teach.

All three of these young traders are self-sufficient now. That doesn’t mean they’ve stopped learning. By my standards, they’re all still newbies. But they know when they’ve made a mistake. They understand my basic rules. They each have a pattern or setup they know is their bread and butter. They’ve learned to cut losses quickly.

Dom and the OTSwizzle

Dom gave an in-depth presentation covering everything from risk management to building the story of a stock chart. He talked about what he wished he’d known from day one. And he spent time on the quickest way to profitability.

Here are some key points from Dom’s presentation:

  • Begin by studying the Trading Challenge materials. Make sure you understand all trading vernacular. Spend at least two months on this.
  • Watch every DVD and video lesson. Pay attention to the patterns that make the most sense to you.
  • Trade for one to three months using the setups that make the most sense. Track every trade.
  • Figure out what setups work for you — based on the actual numbers.

That’s just one small part of Dom’s killer presentation. He also explained his favorite setup which he calls the OTSwizzle. (Dom, are you sure you haven’t watched that movie? Because OTSwizzle sounds like something the Butabi brothers would say…)

Check out this tweet of Dom’s closing remarks posted by his dad, Don:

⁦@Dom_Mastro10⁩ A golden nugget from a wonderful heartfelt, honest, hard working guy. I’m so proud to call you my son and teacher. #TIsummit2020 ⁦@timothysykes⁩ pic.twitter.com/JqFm1sFK5I

I suggest you get the DVD and watch it several times. Also, join the Trading Challenge. Or if you’re not ready for the Challenge, subscribe to Penny Stocking Silver.

When you get the DVD, be sure to take notes when you watch…

© 2020 Millionaire Media, LLC

From “The Big Short” to the Orlando Stage — All While Still in College

Kyle talked about the difference between trading OTCs and listed stocks. He said that even though he’s learning about listed stocks, a majority of his gains are from OTCs. He talked about working on the risk vs. reward with listed stocks.

Take a look at Kyle’s profit chart here. It’s impressive. Kyle lost consistently for nearly a year from when he started in July 2020. And from his low in May 2020, it took another six months to get back to break even. From break even to getting over the PDT was another 10 months!

THAT’S DEDICATION TO THE PROCESS!

Kyle first got interested in trading penny stocks after watching The Big Short.” So at least I know he watches movies…

Jack, on the other hand, just likes to wear his chain on the outside of his shirt and play video games when he’s not trading. But he’s a badass young trader so I’ll forgive him…

“Please, NO!” Jack’s Turtle Beach Confession

Jack had one of the best receptions of the entire weekend. And I think it’s because he told all about his worst ever loss on Turtle Beach (NASDAQ: HEAR). He went deep into the feelings he experienced during the trade. And how he managed to cut losses intelligently on advice from Tim Grittani.

Jack also talked about his favorite setups, like first green days and panic dip buys. And, he also covered trader mindset tips. It was especially cool — and gratifying — to hear him talk about transparency.

Check out this recent interview I did with Jack and Dom. Their insight at such a young age is inspirational. Learn it, live it, love it:

When They Were Busy Being Born, I Was Making My First Million

That’s so weird — but I love it.

I’m so proud of these guys. Not just for the money they’ve made, but for the incredible focus and dedication they’ve put into the process. They all talked about spending hours immersed in studying. And each of them had to learn to lose well before they became consistent.

Trading Students: The Challenge

All three of these guys are members of the Trading Challenge. All three talked about the importance of the community, of networking with other traders, and soaking up EVERY SINGLE DVD … VIDEO LESSON … AND WEBINAR!

They didn’t try to cut corners. They all got where they are by working their asses off. When you make the decision right now to join the Trading Challenge, you’re one step closer. If you’re accepted, you’ll get access to EVERYTHING Dom, Jack, and Kyle used to become self-sufficient. Plus, you’ll see them in the Challenge chat room every day.

You want this? Go for it. Even if you’re too young to know A Night at the Roxbury.”

© 2020 Millionaire Media, LLC

What TISummit Attendees and Students Are Saying

More from TISummit attendees and students:

From @SublimeTrades (another up and coming badass trader):

The wealth of knowledge being imparted on us all.

Or this from @RouxBourbon:

There are so so many #OTC plays right now. #SPY may be down but penny stocks are hot! #CVSI #WCVC #CLSI #SPNV #UNRG #GTXO Thank you @timothysykes @traderkylec @Jackaroo_Trades @Dom_Mastro10 @MikeHuddie for telling me at the #TISummit to change my focus! pic.twitter.com/dV4Ql3nSOM

And this tweet yesterday from @TraderTrav81:

Bought $RTTR at .385 and sold at .43 for a nice little 11% single on a slow day. Thanks @timothysykes @StocksToTrade pic.twitter.com/NSLsy6u2oA

Recent Comments From the Trading Challenge Chat Room

Crypto_M → timothysykes: “I joined the challenge the day after the conference. I studied the first 2 dvds last week. This week I have been studying and watching the markets on TOS all this week. I was BLOWN away at how fast things move. I played college football and understand the speed difference from high school to college and then to the pro’s. I am excited to study more to get my mind right for the speed of this PRO market. Thanks for cataloging your trading for guys like me to learn.”

Just to show how hard Crypto_M is working … check this out:

Crypto_M → timothysykes: I know that some of you will think this doesn’t matter but I have only been in the challenge for 2 weeks and have studied about 10 dvds. Today was my first paper trade. I took 1000 of $TTNP at .41 when it broke the HOD. My RR was.03 and Return .08. Needless to say the trade worked out just as Tim teaches. In at .41 out at .48”

Crypto_M, it does matter. Keep studying and practicing. And remember, it’s a marathon and not a sprint.

How about this recent win from Kyle…

Kylecw2: “all covered $CVSI for $800 not enough range.”

© 2020 Millionaire Media, LLC

More Challenge Chat Room Comments

the_tipsy_nomad: “Quick 5% gain on $SPNV for $300 profit. Not bad for a 10min hold. Not getting greedy, taking my single for the day.”

somsakun555: “Yeh!! sold $SPNV almost 20% gain from dip buying, 0.38 to 0.448. Give me some more hope of a day trader career after many losses. Thank you everybody for all your guidance.”

jvjtrading: sold .47 $TTNP from .37. 25% win. to bad it was only partial fill.”

SatelliteIncomeUnlimited: “$ADXS 217.00 profit.. sold at the break out, bought around .388 sold in to .4099.”

scottsaylor11: “Very nice on $clsi. I couldn’t help but lock it all in .077 from .0675. +240.”

Plus This Awesome Comment From the TimAlerts Chat Room

vnickn: “$SRNE short at 2.77, covered 1.87… good thing I decided to check my E*TRADE app at a red light. Had to pull over to close that trade… +2700.”

What’s your take on Jack, Kyle, and Dom’s success? What inspiration can you get from their stories to help you become a better trader? Comment below, I love to hear from all my readers!

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About

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

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      Hey Everyone,

      As many of you already know I grew up in a middle class family and didn’t have many luxuries. But through trading I was able to change my circumstances –not just for me — but for my parents as well. I now want to help you and thousands of other people from all around the world achieve similar results!

      Which is why I’ve launched my Trading Challenge. I’m extremely determined to create a millionaire trader out of one my students and hopefully it will be you.

      So when you get a chance make sure you check it out.

      PS: Don’t forget to check out my free Penny Stock Guide, it will teach you everything you need to know about trading. :)

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      After 20 years in finance, here’s my advice to all the young bankers investing in crypto

      You’re an analyst or associate in an investment bank, so have you bought crypto assets yet?

      Maybe you should’ve: there are a lot of young traders and investors out there.

      However, as a banking MD with two decades’ experience, I’d like to repeat to you what Warren Buffett has to say:

      Rule number 1: Don’t lose money.

      Rule number 2: Don’t forget rule number 1.

      Seriously every decade every generation has it bubbles, has its excitement. When I was 22 in 1999 it was tech stocks that were booming. Stuff was going up and down 5-10% a day, and you felt you needed to get involved. I remember opening a Charles Schwab trading account age 20 in University to start trading AOL and Yahoo shares. It went on like that for a while, and then it ended.

      A few years later, I saw the same cycle in 2006 and 2007. Capitalism creates new ideas, those new ideas create excitement and a ‘gold rush’. That leads to prices up moving up. That leads to capital flowing in.

      It’s a timeless cycle.

      It’s not the only one though. There’s another cycle on Wall Street and that is fear and greed. Greed and fear. Rinse and repeat.

      The beauty of being in finance for almost two decades is that you start seeing human nature everywhere. You start seeing the way people think, the way they behave. Yes, the technologies, the acronyms, the companies change, but human behavior stays the same and that is the beauty of markets.

      My advice to you before investing or trading – either in crypto or anything else, is therefore to study human nature. Study human behavior. Study yourself: what’s making you invest in crypto? What’s got you so excited? Is it FOMO – fear of missing it out?

      If it is, watch yourself. The beautiful thing I’ve learnt about FOMO is that markets always go up and down you are never going to miss out. If you find something really attractive now, follow it, understand it, track it, trust me you’ll get a good time to buy it soon.

      The times when I’ve seen people really mess themselves up financially is when they’ve moved based on FOMO and made decisions based on envy and what they see other people doing. Forget about how much money other people are making. STOP think rationally. THINK honestly about what the right thing to do is right now. Ignore the herd.

      If – after doing the work, using your best judgment and thinking rationally – you still decide that you want to invest in crypto or anything else, then go for it.

      A simple trick for slowing down your reptile, fear and greed-based brain and switching on your rational Buffett brain is to just write down your decisions. For example, I am buying Bitcoin now because….I expect this to happen, for this reason. I will get out if this happens, I will add if something else happens. A simple trading plan.

      This is what the best traders and investors do. Outline their investment thesis and then test their predictions versus what actually happened. This is my advice to you.

      The author is one of a group of senior bankers who blog at the site What I Learned on Wall Street (WilowWallStreet.com).

      Have a confidential story, tip, or comment you’d like to share? Contact: [email protected]

      Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t.)

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