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Can Dip Buying Be Less Stressful?

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Written by Timothy Sykes
Updated 3/14/2023 6 min read

The latest bank crisis has Wall Street running scared.

After all, if there’s one thing the market hates, it’s uncertainty.

And you’d think being a trader right now is super stressful.

Well…it can be.

That is if you’re trading stocks tied to the macro news.

But I’m not interested in sleepless nights and worrying about how my portfolio will look the next day.

And if you want a healthy life filled with purpose, you shouldn’t be either.

I’ve made $2.39M in trading profits over the last three years.

And I did it mainly by trading a small account. Moreover, my risk was calculated, I didn’t have to swing for the fences, and my PnL didn’t look like a rollercoaster ride.

That’s how I teach my students how to trade.

Despite all the madness you hear about in the markets, your trading doesn’t have to reflect it.

I’m about to show you how I consistently beat the markets in a low-stress way.

Read more…

Safety First

There’s a wild misconception that if you want to be successful in trading, you must get comfortable taking any outsized risk.

In fact, I’ve made over $2.39 million in trading profits over the last three years, mainly by taking small positions and hitting on quick profits.

Small profits add up.

That’s why I will never look down on my new students who earn $5 to $50 when they start. We all have to start somewhere.

Many of my millionaire students started off making small profits. And that took them a while.

Most of them didn’t make any profits in their first year.

Small gains add up.

Keeping Trading Stress-Free

Many traders got caught up last week trying to buy regional bank stocks on dips.

When was the right time to buy SBNY? Looks like never. The stock kept dropping until trading got halted.

And while some traders may have had success on Monday or Tuesday buying the dips in regional bank stocks, I stayed away.

Why?

Because I didn’t know which ones were going to go up and which ones were going to stay depressed.

You see, I prefer to trade setups that I’m familiar with. Setups that I’ve traded many times over and have had success with in the past.

Stick With What You Know

The reason why I trade penny stocks is that I believe they trade predictably.

I’m not a genius by any stretch of the imagination. But I manage to win 3 out of 4 trades I place. Moreover, I’ve made several million dollars trading this way, confirming my beliefs.

Source: Profit.ly

How I Stay Safe In A Wild Market

Penny stock companies will pay consultants and promoters to build hype around their companies. They’ll often pay these consultants and promoters with stock.

In other words, the promoters and consultants will receive shares for free.

Now, if the majority of these companies are junk…what do you think the promoters will do once they get their shares?

THEY’LL SELL THEM.

They don’t care about execution or getting filled at a good price. Why should they? They got free shares, and they want to cash out.

One of the trades I look for is the panic dip buy.

I look for panic sellers at or near the open and try to scoop up shares when I see them being sold off aggressively.

It’s exactly what I did when I saw this in the ticker symbol GDVM

How did I know this was a good stock candidate for a panic dip buy?

I look at the stock chart over a series of months…

If you look at the chart above, you’ll see the stock has a history of spiking higher, and then selling off hard.

I use this service to help me identify when there is a catalyst.  

So I felt comfortable dip buying this stock…

Here’s how it played out:

I took it for a quick +10% gain…

I know…not as exciting as catching one of these bank stocks off the lows and riding them higher…

But guess what?

I don’t trade for thrills or excitement.

I prefer to take trades I believe are safe and easy.

And like I said earlier, small wins add up.

Why stress yourself out by slapping large positions in trades you are unsure of?

Wouldn’t you rather find patterns that are predictable and stress-free?

If so, then you should sign up to one of my trainings to find out more. 

 

 


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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”