The Art of Trading
Tim Sykes is a man who is full of energy. You may be familiar with his popular Instagram profile which shows him traveling the world, driving expensive cars, and generally doing a whole lot of whatever he wants.
He can do this because he is known as the world’s number one trader. An American investor, author, and educator, Tim became a self-made millionaire by the age of 21.
As a teenager he turned $12,000 of Bar Mitzvah money into $1.6 million, and later created the number-one ranked short sellers investment fund.
A star of the hit TV documentary series Wall Street Warriors, Tim now spends his time teaching his trading strategies to thousands of students from around the world.
Tim makes it a point to be sure all of his stock trades are completely transparent. He wants the public to be able to look at what he is doing so they can see and understand how he makes his money. Tim is a great guy who is always looking to make a positive change in the world.
Trading Stocks vs. Investing
Today I wanted to share with you his views on the art of trading. In his opinion, it is a lot easier to be a trader than an investor.
As an investor you can grow your money over time, but as a trader, you can make $2,000 in 20 minutes. As Tim states, “$2000 a day keeps the real job away.”
So how does Time do this?
How can you win big and lose small?
Tim explains that what he is doing is, “trading inefficiencies in the stock market.” He deals specifically with low priced stocks which can be tricky because a lot of them are scams. A lot are speculative companies with very few products that may go out of business very quickly.
But Tim isn’t investing in these business, he’s trading their stock. A trader, by definition, has a short time frame. They are looking at how stocks move in relation to one another and make quick decisions. An investor on the other hand is looking for long term returns.
The key for Tim is to keep an eye out for the small stocks with “good news.” You have to be willing to do meticulous research on the markets and be constantly looking for small changes that can turn into big trades.
The Bloody Reality of Trading
From my own personal experiences working on Wall Street, I realized that what I learned about trading I didn’t get from a textbook at MIT.
I discovered that trading was about my own emotions and also that I wasn’t very good at trading!
I was always more of a derivatives guy and a market maker but I wanted to talk about Tim’s experience as a trader and how it compared to mine.
Tim remarked that one of the hardest things about trading is that not only are you competing against all the other traders, but you’re competing against yourself.
You have to be very good at pattern recognition to make small gains quickly. For example, back when the internet was blowing up, Tim made a ton of money off of trading stocks from companies who changed their names to dotcoms. Every time he saw a company do this, he would trade their stock and it worked 80%-90% of the time. He identified the pattern and used it to his advantage. The exact same pattern repeated itself recently with companies that began to get into Bitcoin and cryptocurrency.
The More Things Change, The More They Stay The Same
Another major rule of trading is to cut losses quickly. Tim loses about ⅓ of the time, but he always keeps his losses at 1% or 2% whereas he keeps his gains at 10% to 20%.
It can also be easy to get wrapped up in your research. You spend so much time trying to figure out what the right thing to trade is that it can be hard to recognize when you’ve made a bad call. A lot of new traders do this and try to fight the market for the sake of their egos, but remember when you fight the market, you will lose.
What you have to do is go in with a plan, stick to that plan, and execute that plan. Tim likens this trading to a battlefield and compares himself to a drill sergeant commanding his students to follow his orders. This is because the harsh reality is that 90% of traders lose, so you have to be very serious, realistic, and smart about your trading strategy.
Trading requires mental discipline as well. Trading can become like gambling; it gets addictive and it’s very hard to step back and reassess. Many traders see the opportunity to make huge amounts of money, but with high risks comes higher reward. This is why Tim advocates for focusing on smaller stocks. He may only make $100-$1000, but he knows he isn’t going to lose everything.
Tim states, “never go all in.” When you learn how to win consistently you will be much better off in the long run.
As a former Wall Street banker myself, I loved talking to Tim about his trading strategies. I actually scheduled a second talk with him just so I could have an even more detailed conversation about exactly how he trades stocks, minimizes loses, and maximizes gains.
If you’re interested in learning more and tuning into that conversation for free go to https://londonreal.tv/e/timothy-sykes/ to check it out and be sure to let me know what you think of our talk.
Get educated on the reality of trading and start making smart financial moves today!
Editor, Brian Rose Uncensored