Those were heady days — when even a freshman in college could make a 100K trade in a single day…
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Back to Boston: A Trip Down Memory Lane
Recently I made a visit back to Tufts University. If you’ve read my book, “An American Hedge Fund,” you know that’s where I had my first $100K+ day. It’s where I made my first $700K. And it’s where I took the entire dorm out to iconic Boston restaurant, FiRE+iCE.
(Get your free copy of “An American Hedge Fund.” Once you get the book, read it from start to finish — it’s a real eye opener. If you absolutely can’t wait to read about my $123K day check out Chapter 6: Once in A Lifetime. )
So, while in Boston, I once again visited FiRE+iCE. We got lots of photos and videos. At some point in the future I’ll post a few. It was pretty cool to visit my old stomping grounds and reminisce about treating the entire dorm to a meal. (It’s all in chapter 6 of my book.)
It’s a great reminder how much trading has changed my life. And now it’s an honor to share my 20+ years of experience with the Trading Challenge. Apply today.
Let’s get straight to some questions…
My results are not typical. I’ve spent 20+ years gaining knowledge and experience. Be prepared to work hard. Most traders — roughly 90% — lose. While losses happen to every trader, don’t let yourself become one of the failed ‘former traders’ who never got it right.
Questions from Students
The first question this week is about informational inefficiencies. It’s one of the biggest and best things about penny stocks…
“What kinds of informational inefficiencies should we be looking at?”
Start with good news that people can’t act on right away. So if there’s good news at 3 p.m. — like at the conference with BILZF — most people aren’t gonna see it in the last hour. Instead, they’ll hear about it overnight, especially something like an Instagram story.
But it could be any good news that most people will miss…
The $123K profit I talk about in “An American Hedge Fund” is a great example. The positive news came out on a Friday. The company, Illinois Superconductor, put out a press release saying they were gonna be on TV. But not until Sunday.
My thesis was that 99.9% of people didn’t see the press release. Instead, they would first see the news when they watched TV. Sure enough, they saw the news on Sunday but couldn’t buy the stock until Monday.
The lesson: Start thinking about news, but not just in terms of breaking news. The beautiful thing about penny stocks is that people don’t have the opportunity to act on good news right away.
So, if you’re quick and meticulous…
… you can get in when very few people see it. And you can get out for substantial profits when the slower, less meticulous people buy later.
This is different from big companies like Apple. If Apple has breaking news, everyone’s already covering it. Everyone’s seen it. There are no inefficiencies.
Next question…
“In Profit.ly commentary, you said…
“‘With multi-week breakouts you usually have two opportunities to profit, the initial breakout and the support hold.’
“Would you please explain?”
Yeah, so you’re just looking for the initial breakout over the previous highs. Then, usually, the stock will come back down to the breakout level. If it comes back down and holds the breakout level again, you can get a bounce or another breakout right after that.
So you don’t always have to buy right away. Sometimes if you miss the first breakout it’s OK.
Also, sometimes the stock will come back down to the breakout level and fail. So the first breakout is a fakeout. Which means you can’t say all breakouts are gonna succeed.
Remember, this isn’t an exact science. As always, follow Rule #1: Cut losses quickly.
“Tim, it seems like a lot of people still want to cut costs using crappy brokers. You’ve talked about this a lot but will you please go over it again?”
Bad executions, missed opportunities … the list goes on.
Everyone wants to cheap it out. It seems everyone wants to put in less time to become a millionaire. They expect to put in less money, not pay commissions…
They’re focusing on the wrong thing. I just wrote about this last week when all the brokers announced commission-free trading. After you read this, read that post and check your mindset.
Too many people are trying to save $5 and $10 picking up pennies but missing the hundred dollar bills. So, for me, I’d rather students focus on this question…
How Do You Actually Get Rich?
It’s NOT by cost-cutting small, stupid, crap. You have to learn to think like a rich person. A rich person understands exponential growth. Poor people are always worried about trying to nickel and dime everything.
So they miss out on the big trends. They miss the potential for exponential growth while they’re busy trying to save 1%–3%…
Rich people are less fearful of missing out on small savings. We’re going for bigger stuff.
Create a BIG Mindset
I would happily pay $1,000 in commissions on a trade that could bring in $10K.
A poor person would say “Oh, I would never pay $1,000 in commissions!” Why? Because they can’t even fathom making $10K on a trade. They have a small mindset.
That’s why the $123K trade from my dorm room was such a big deal for me. Yeah, the big win was great. But it went deeper.
In one day I made more money than some lawyers and doctors made in a year. As a freshman in college, it opened me up to the big dollar game.
That’s what I want you to focus on. I want you to have your first $100K or $10K day. Then you’ll realize it’s not about these ticky-tacky $5 savings. It’s BS that brokers, frankly, don’t really care about. They’re trying to satisfy the customers. They’re trying to bend to their wills. But it doesn’t address the real issues.
When You Miss a Big Problem By Focusing on the Small
It’s really no different than the video of the turtle with a plastic straw stuck in its nose from a few years back. It went viral and everyone started complaining to food companies.
“Hey, why are you serving plastic straws?”
It created this massive movement. And guess what? Now there are paper straws. Some companies banned plastic straws. Some cities, like New York, Seattle, and Miami Beach banned them. Now states like Hawaii and California are following suit. Over in the U.K., plastic straws will be banned from next year. In 2021, a ban goes into effect across the entire EU.
This is cool because it shows the power of viral content. But it leads some people to falsely believe we’ve cured the plastic problem. When, in fact, it’s not true. It cures a tiny fraction of a much bigger problem.
So people make the mistake of thinking something is big when it’s not. It’s an example of being narrow-minded.
A trader thinking commissions are a big deal is similar. It’s being narrow-minded. Don’t be narrow-minded. Change your mindset and see the bigger picture.
What Students Are Saying
You might not know this, so I want to put it out there. Some people aren’t quite ready for the Trading Challenge — and that’s OK. We have other options available like TimAlerts and Pennystocking Silver.
Check out these recent wins from the TimAlerts chat room…
Etdealer: “XELA got mine $204 profit and out for day. good luck all(clap).”
Aidan7dasilva: “$714 dollar week not too bad.”
GooniesTrader81: “$TTNP fit my pattern. Was a sniper. 3000s @ $0.41 sold at $0.45 into strength. 9 minute trade. Definitely sold WAY TOO SOON like Tim always does, but I’m happy with my $120 profit. Missed out on $300+ more. That’s okay. On to the next.”
CovaEspa1: “Sold $UNRG, 1750sh, from .25, sold at .44.”
Big482: “Sold $ADXS $186.84 profit.”
Even the newbies share their paper trades…
Slayertrade: “Paper traded the breakout of $NAT at 2.76 Friday bought at 2.72 held over the weekend and out at 3.01 this morning. good learning!”
And these wins from today’s Trading Challenge chat room…
GarrisonMorgan: “DUDE!!! First trade as a challenge student on $SNNA in 3000 shares at .30 out at .35! $156 profit risking only $850! Wow!!!!”
the_tipsy_nomad: “Locked in $475 on $HMLA. My goal was to take 5-10% profit, my goal was met so I won’t get greedy. My entry was 100k shares at 6 cents. I was risking 1-2%. Seeing now that I got out way too early lol. Singles add up so I’m not mad at taking safe profits. This is my 5th green day in a row now. Stay safe out there ladies and gents.”
And the_tipsy_nomad also shared this one on Twitter…
Locked in safe profits of $475 on $HMLA in an hour. This is my 5th Green Day in a row. It’s very reassuring to see the benefits of of studying every day. In the short time of being @timothysykes challenge student I’m slowing molding myself into becoming a self sufficient trader.
— the_tipsy_nomad (@JaretRoberto) October 7, 2019
More recent tweets from students…
Here’s one from @yojennsemite:
This morning, was up early and identified #XELA as a 70 Point on the Tim Sykes sliding scale. In at 1.41 at open, out at 1.56 for a 10% gain five minutes later. Took the meat. $250 gain. Thanks Tim! @timothysykes
— Yojennsemite (@yojennsemite) October 4, 2019
And another from @SavannahPianist:
Another nice OTC breakout on $AGGI. Very small position and still pocketing $335. I’m loving this OTC mania. @timothysykes pic.twitter.com/vFBqwrulMR
— Timothy Blake Eason (@SavannahPianist) October 4, 2019
Trading Challenge
If you’re ready to learn the nuances of trading like these students, apply for the Trading Challenge today. But remember, it’s a marathon and not a sprint. There’s no replacement for hard work and experience.
Are you a trader? Have you missed great opportunities by focusing on the wrong thing? Share your experience below. New to trading? How will you change your mindset to focus on the right things? Comment below, I love to hear from all my readers!
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