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Which Of These 2 Trades Do You Prefer?

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Written by Timothy Sykes
Updated 12/29/2022 6 min read

Imagine I offered you two setups with identical payouts.

One is an overnight swing trade.

The other is a day trade lasting seconds.

Which would you prefer?

This isn’t an easy question to answer, but it’s CRITICAL to every trader’s long-term success.

Being halfway across the world opening schools in Bali, it would certainly be easier for me to swing trade.

But that doesn’t mean it’s the BEST setup for me or you.

The better question to ask is, ‘How do I choose the right trade for me?”

To answer that, I want you to set aside any preconceived notions you have about swing or day trading.

I’m going to present you two trades I took this week:

The YouTube video below analyzes both in great detail.

I want you to focus on the patterns and setups, noting how both fit into the 7-Step Penny Stock Framework.

Then, I’ll cover the pros and cons of each setup so you can answer the ULTIMATE question.

Morning Panics

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If I could teach you anything, let it be my morning panic dip buys.

This is by far my favorite setup because it’s both consistent and common.

You can find it in NASDAQ stocks just as often as OTCs.

Plus, it works on the front side and backside of Supernova patterns that follow my 7-Step Penny Stock Framework.

VENG is a perfect example of a morning panic that played out to perfection.

As the video highlights, Millionaire Challenge students got my real-time commentary as the stock dropped at the open.

Morning panic dip buys scare a lot of traders.

The phrase ‘don’t catch a falling knife’ gets stuck in their head and they can’t see past it.

Let me clear something up.

I don’t just grab stocks in freefall hoping for a bounce.

Nor do I buy a stock just because it hit a specific support level.

I combine my knowledge of stop losses, short sellers, price action, and promoters to identify the ideal price and time to enter a trade.

While that sounds straightforward, it takes practice, like any skill.

Thus, it requires a bit more work and preparation to achieve success.

1st Green Day Swings

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Most folks prefer swing trades because they require less work.

You have more flexibility to analyze charts and place trades on your schedule.

But they require a lot more patience.

Setups like my 1st Green Day aren’t uncommon by any stretch, but they don’t occur as often as morning panic dip buys.

Plus, I tend to only trade this pattern on OTC stocks.

GLYC presents this setup perfectly.

After a strong run, GLYC consolidated for several weeks in a narrow range.

It broke out on huge volume, creating a large green candlestick.

My idea was to buy the stock near the close and look for a gap up into the next day’s open.

Pretty straightforward.

However, there’s an additional risk with swing trades you don’t get with day trades – overnight news.

I trade penny stocks that follow my 7-Step Penny Stock Framework knowing they’ll eventually fail.

Nothing prevents that from happening one day to the next.

I can buy near the high and wake up the next day to a huge gap down.

With day trades, the risk is easier to define and stop out for a small loss.

You don’t get that luxury with a swing trade.

When you hold overnight, you’re stuck with the stock until the premarket the following day.

That can lead to larger losses than day trades.

If you look through my track record, you’ll notice that my losses on panic dip buys are often small. Sometimes I even manage a tiny gain.

I have more control over where I enter and exit a day trade than I do with a swing trade.

That makes it easier to lose small and fast.

Common Elements

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Regardless of which setup you choose, realize they both follow the same framework.

Millionaire student Kyle Williams loves to short-sell.

Mark Croock likes to trade options.

Former NFL Star Ellis Hobbs III plays both sides.

My Millionaire Challenge is designed to provide you with the tools to construct your own path.

With thousands of hours of content, there is something for everyone, regardless of your account size, experience, or success.

Click here to sign up today.

—Tim


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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. Read More

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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 (205) 851-0506 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”