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Patterns To Watch

How To Avoid The Worst Setup In The Market

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs
Updated 2/9/2026 5 min read
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Every week, I see it happen …

Another trader gets wiped out by the same setup. Their entire account: Gone.

The worst part is, they never see it coming. And it could happen to anyone who’s unfamiliar with this play.

It’s not a black swan event either. This setup is lurking in the market right now, waiting for unsuspecting newbies who don’t know how to recognize the warning signs yet.

The best traders continue to avoid this setup like the plague.

They’ve been burned before, or they’ve watched enough friends blow up to know better.

But new traders fall for it every single week.

The setup always looks tempting. It might even look “textbook”.

There’s usually a catalyst, volume starts to spike, maybe you see some green candles and think you’re early to the move.

But you’re not early. You’re walking into a trap.

I’ve seen six-figure traders fall back to square one because they didn’t recognize this pattern in time. I’ve watched students ignore the warning signs, get emotional, and hold through the destruction.

Spot this setup and protect yourself against it, otherwise you’re gambling with your entire account every time you place a trade.

Pay attention.

The Boogey Man

This trade hides in the shadows, ready to reach out and grab you. A lot like the Boogey Man.

But unlike the monster made up by parents to frighten their children into behaving, this Boogey Man is real.

I’ve seen it.

After more than two decades of trading in the market, I’ve seen this ghoul more times than I can count. And chances are, you’ve seen it too.

We’re going about our day as usual: Running scans, drawing popular support and resistance lines on key stocks, and we don’t see anything good enough to trade …

That’s when it strikes.

That little voice in the back of your head:

  • “This setup actually isn’t as bad as I thought, maybe I’ll make a trade.”
  • “I’ve been on a roll recently, none of these setups are perfect, but I literally can’t lose”.
  • “One trade can’t hurt. Just so I’m not sitting here bored.”

You’re the Boogey Man!

Look at my post below:

There are two recent posts from StocksToTrade that touch on this topic too.

See below:

The market is under a lot of stress right now.

  • Big tech stocks just pulled back.
  • The larger market sank alongside tech stocks.
  • The multi-month precious metals uptrend imploded.

There’s a lot of volatility, and volatility is good for traders, but only if we see our patterns on the charts.

Sometimes volatility manifests as a bunch of chop without a discernible direction.

It’s OK to sit things out until the market cleans up a bit.

My Patterns in the Price Action

The best trade is sometimes no trade at all.

I have specific patterns that I look for in the market:

And I’ve traded with the same patterns for over two decades because they keep showing up in the market.

They’re a manifestation of human emotion on a stock chart. People behave predictably when they’re stressed.

I only make a trade when I see these patterns clearly on a chart. Otherwise I’m just gambling …

Stop gambling on setups when there are much better trades on the horizon! You’re literally throwing away money.

From now on, only make a trade when you see one of our patterns.

And if you’re unsure what to look for …

Watch my FREE two-day bootcamp on February 13 and 14.

I’m joined by my millionaire students Bryce Tuohey and Matt Monaco.

They used to be just like you: Small-account traders hoping to learn a process for success in the market.

Now their millionaires.

>> Reserve Your Spot For My Free Trading Bootcamp <<

When it’s over, you’ll know when to trade and when to sit on your hands.

Cheers

 

 

*Past performance does not indicate future results

 

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Author card Timothy Sykes picture

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”