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Trading Recap

Breaking Down $EVTL Weekend Winner

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Written by Timothy Sykes
Updated 7/18/2022 5 min read

Despite what you may have heard, real money isn’t made by reading chart patterns alone.

Stocks don’t just magically jump because there was “a bull flag.”

And in the world of small caps and penny stocks, that’s especially true.

One of the first lessons I teach my students is how to look for news catalysts.

First, I need to find the RIGHT NEWS at the RIGHT TIME.

Thankfully, the Breaking News group on our StocksToTrade platform has me covered.

Our analysts quickly sift through feeds to deliver relevant, timely stories for traders.

So, when this dropped on Friday…

I quickly dug in.

It turns out that this was an incredible story, one that was different from all the rest I had seen that day.

Now, a lot of traders struggle to decide which stories matter. It almost seems like there’s no rhyme or reason.

But beneath it all, there’s a method to the madness.

I want to show you how to quickly pinpoint the headlines that offer the most potential.

Then, I’ll combine it with chart patterns and price action so you know exactly how to find and execute these trades profitably.

Vertical Aerospace Ltd. (NASDAQ: EVTL)

Let’s start by looking at the news surrounding Vertical Aerospace Ltd. (NASDAQ: EVTL).

With less than 30 minutes until the close on Friday, I got the following headline:

American Airlines to pre-pay for 50 air taxis from Vertical Aerospace.

Reading through the article, it turns out that American Airlines agreed to pre-order up to 250 of UK-based Vertical’s eVTOL aircraft for $1 billion with the option to buy 100 more.

But these aircraft aren’t your typical big jetliner.

These are tiny pods for a pilot and four passengers capable of flying more than 100 miles at speeds of over 200 mph.

Last year, the company reported pre-orders of 1,350 aircraft worth $5 billion from American Airlines and Virgin Galactic.

You can find out more about this company on its website.

This news was significant because it was the first real cash paid by customers for the company’s products.

You see, in order for a news story to have a lasting impact, it needs something tangible like drug companies with FDA approvals, or in this case, a customer paying for preorders.

That’s where most people mess up.

They assume any story about a hot sector is tradeable.

But that’s not always the case.

Some stories have material impacts on the company, but not all of them last.

For example, when the initial preorders were announced, it counted as a material story, but not one with staying power.

Now, I still want a headline about a company with timeliness to it and preferably a hot industry.

Right now, that includes energy, electric vehicles, software, etc.

Then there’s the timing of the news story.

This one broke on Friday.

I watched the stock as it grinded higher throughout the day on fairly heavy volume.

With shares set to close near the highs, it left promoters all weekend to hype up the stock, getting people interested in buying shares.

Ultimately, that’s what kept the stock afloat and pushing higher through the weekend and into Monday.

So, I used the panic dip buy late on Friday to grab shares before the close.

As you can see, the stock did pop in afterhours but then settled down.

I used that postmarket pop to lock in a nice chunk of profits, while leaving a portion of the trade to carry into the following week.

When Monday, rolled around, shares lifted well over the highs from Friday as promoters pumped the stock heavily.

Had I been awake early enough, I would’ve sold my trailer in the premarket.

Instead, I exited my final batch at the open.

Final Thoughts

I want to start by pointing out that I didn’t take the trade when the news came out.

Instead, I waited until I saw a setup that matched my strategy.

That’s an important point most traders miss. They see a stock moving and feel the need to jump on without a plan.

Don’t get sucked into the hype.

Even with the best news stories I always wait until I find my setup.

Treat the news story and setup as two independent criteria that both need to be met before you take a trade.

Do that and you’ll be well on your way to profitable plays.


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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. Read More

* 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”