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Trading Recap

The Best Panic Of 2023?

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Written by Timothy Sykes
Updated 8/18/2023 4 min read

Luck is when preparation and opportunity meet.

And last Wednesday, my students had a chance to show how much they’ve learned…

One of them said…

The best panic maybe all year…

Another one said…

The easiest 12% I’ve made in a month. 

The crazy thing about it is the average trader doesn’t even know how to spot these opportunities, let alone how to take advantage of them.

But since you’re reading this, I will let you in on this.

The only thing I ask you to do is to study this pattern…because there’s no doubt in my mind, we’ll see this pattern again.

Boy Is It Choppy Out There

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If you’ve been reading this blog then you know I’ve been calling for a sell-off.

No, I’m not bearish or anything like that.

But I do know that we can’t go straight up forever.

Healthy markets need pullbacks and corrections. And we’re starting to see that in the Nasdaq.

Some of the top stocks that lead this rally have sold off from highs. Stocks like AAPL, TSLA, META, and MSFT are trading well at their most recent highs.

That said, the price action in the market has been choppy.

And while I don’t trade the overall market or large caps for that matter, it’s important for me to know how everything is trading.

Why?

Because most stocks tend to follow the overall market.

Also, during sell-offs, I want to be quicker with my trades. That means I want to take profits faster, and of course, cut losses quickly.

The two best setups I’ve found working have been buying strong multi-day runners during sell-offs. And buying heavily shorted stocks during panic sell-offs.

And on Wednesday I called out a beautiful one in the ticker symbol TTOO.

Source: StocksToTrade

The stock was a big earnings winner that became a short squeeze.

It went from $0.28 to a high of $0.73 in a few short days.

But on Wednesday at the open, the stock opened up and started selling off HARD.

It went as low as $0.40!

A drop of more than 45% in just a couple of minutes.

Savvy students who have studied the panic dip buy saw it as an opportunity.

The stock quickly bounced off its lows, reaching nearly $0.60.

Source: StocksToTrade

The Psychology Behind The Strategy

trading psychology books every trader should read

Make no mistake about it, TTOO has run up a lot recently. And shorts are looking for an opportunity to crush the stock.

Many shorts will wait till there is weakness before they attack the stock.

However, they are getting over-aggressive.

And that over-aggression is trapping more shorts. Which is why we’re seeing more and more squeezes lately.

Savvy traders who pick up on this can take advantage of these panic sell-offs.

Something I’ve been doing lately and showing my students how to do.

Taking The Next Step

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Becoming a consistently profitable trader won’t happen overnight.

It requires commitment and perseverance.

I want to help you reach your maximum potential.

That’s why I’m inviting you to join one of my free live classes. 

Discover what separates elite traders from the rest.

CLICK HERE IF YOU’RE READY TO TAKE THE NEXT STEP. 

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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 (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”