Every morning I lay out my watchlist into three groups.
The first is the previous day spikers… which consist of stocks I like playing for potential breakouts.
The second is pre-market spikers. These are your large percentage gainers with unusual trading volume.
And the third is multi-day runners. These are stocks that have experienced a solid uptrend…and stocks I would potentially look to get long if I see a panic sell off near the open.
The bigger the intraday panic…the better!
And it’s a pattern I’m seeing working a lot in this micro-cap mania.
Niiiiiiice $MIGI bouncing perfectly too, the https://t.co/4lKUY5BE04 pattern is BACK!
— Timothy Sykes (@timothysykes) December 28, 2023
And today I’m going to share with you the 7 steps to mastering the panic dip buy.
Table of Contents
Step #1: Understand The Pattern
The key is to identify strong catalyst stocks that have experienced strong multi-day runs.
As for trading them…I’m waiting for the perfect storm.
A stock that’s been climbing suddenly takes a nosedive at or around the opening bell.
For further details on the pattern, watch the video below:
Step #2: Prepare for the Big Dip
Successful trading isn’t just about recognizing patterns…you also have to be ready to act.
This means keeping an eye on these stocks and waiting patiently for that big dip to occur.
For example, I traded the ticker symbol UP four times.
No, it wasn’t random…and I wasn’t revenge trading.
In fact, UP, along with tickers MIGI, ALT, LMFA, and ABSI were all on my top multi-day runner watchlist.
Before the opening bell, I knew I might be interested in playing these stocks if they experienced a big morning panic sell off.
One thing that I knew was UP, had a history of making quick bounces off panic morning sell offs.
So I wanted to be ready in case it happened again.
Here’s how I traded UP:
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Step #3: You Must Strike When The Iron Is Hot
I’m generally expecting a quick snap back after the panic sell off. That means once you see the price experience a panic sell off…you must be ready to move.
Yes, it is absolutely scary.
That’s why you size correctly…and you prepare to cut losses quickly.
That said, the window to move is short.
$CCCC +$360 Bought this stock at the open on a small panic down to 3.20. Amazing trade! great bounce back from my previous loss. The stock hit as high as $6, but I'll lock in my single! Thanks @StocksToTrade for the alert, and thanks @timothysykes for the lessons! pic.twitter.com/WxPN1zSA9y
— Haychmalik (@haychmalik7) December 13, 2023
Step #4: Selling Smart
Yes…some of these moves can be absolutely wild…with shares rising 200%. 300%, and even 1000% intraday.
But I’m sticking around that long. I’m thinking about safety at all times. I’m looking to make a quick 5-10%, sometimes I do better, but I don’t try to get greedy.
Getting greedy can lead to other emotional pitfalls.
And then before you know it…you turned a nice winning trade into a devastating loss.
WOW $POL $9s, remember to take profits into strength, don't get greedy, congrats to all longs, let's thanks the shorts…and use @sttbreakingnews they nailed it before it 4x today alone, whewwwwww, thank you seriously shorts, it's allllll you guys
— Timothy Sykes (@timothysykes) December 20, 2023
Step #5: Study, Study, Study
Right now this pattern is crushing it. However, that isn’t always the case. And that’s the thing you must know about trading. It’s never constant. There are always things that are changing.
That’s why it pays to study your past trades and to do your homework.
9:40pm study check, retweet/favorite this if you’re still up studying and working hard to get wiser/better prepared in the future…HOW BAD DO YOU WANT SUCCESS?! YOU CHOOSE!
— Timothy Sykes (@timothysykes) December 28, 2023
Step #6: Be Disciplined
Sometimes you’ll get the urge to buy a dip instead of waiting for the PURE panic…
Or miss your entry and chase up at a higher price.
Those are avoidable mistakes. To help reduce them, create rules for yourself and follow them.
In addition, you want to be disciplined when it comes to your risk management. If the trade isn’t working then you must be willing to cut losses quickly.
Last thing you want is to be a deer in the headlights while the stock is nosediving.
Step #7: Patiently Stalk
I may have five to ten stocks that fit my panic dip buy setup. But I may only trade one or none of them.
In other words, you’ve got to be patient with this strategy.
You want to wait for pure panic…and if you don’t see it…then don’t force other trades.
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