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Penny Stock Basics

How Can Penny Stocks Make You Successful?

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Written by Timothy Sykes
Updated 1/24/2023 9 min read

This is a common question I get all the time among potential members of the Tim Sykes Millionaire Challenge: how can penny stocks make you successful?

Long story short, because they’re so volatile, if you learn how to ride the momentum up AND down, you can turn a few thousand dollars into six or seven figures within a few years as SEVERAL of my top students and I have proven over and over and over again.

Penny stocks offer a way to make a profit with minimal investment because they’re so cheaply priced. Now that gift is also their curse as this can make many people wary, in a “if it seems too good to be true, it probably is” sort of way. But here, I’ll break down how and why penny stocks are the real deal if you trade them with proper rules. In reading this, you’ll gain a better understanding of how trading penny stocks can be part of helping you become my next financial success story like this guy and this guy and this guy

1. There’s a system that can be mastered. Before we can adequately discuss the subject of how can penny stocks make you profitable we need to get straight on something. You’re not going to instantly become a millionaire on your first trade, or possibly even your first hundred trades or in month one, two, three or even 6…more like year 2, 3 and 4. It’s going to require a lot of learning about the specifics of trading penny stocks.

For members of the Tim Sykes Million Challenge Team, this is a snap, because my program is specifically designed to teach them what they need to know. Learning the basics is vital, of course, but I teach my students more. I teach them specific systems and techniques for trading which can allow them to become successful. By learning and committing the system to heart, you can begin to profit in a big way from trading penny stocks.

2. This niche is volatile. Yes, you read that right. The market for penny stocks is very volatile: prices can go up and down extremely rapidly. This means that penny stocking comes with a significant amount of risk. However, as you’ll learn in just about any business seminar, risk is often in direct proportion to the potential reward.

penny stock checklist

Because penny stocking is risky and the market is volatile, many actually steer clear of penny stocks. This is both a bad and a good thing at once. It’s bad because individuals who avoid penny stocks are losing out on the chance to make staggering sums of cash. But it’s a great thing because it means that if you decide to trade penny stocks, there is less competition. If you’re willing to learn the system and master ways to mitigate risk, there’s a wide open world of money to be made.

Look at these great 5-day charts of some recent hot penny stocks of the past week to see the kind of upside I’m talking about:

3. There are different regulations. One of the biggest complaints you’ll hear from penny stocking naysayers is that the regulations aren’t as stringent as on the larger national exchanges. Actually, this is very true. The companies themselves usually are not exceptional, and they don’t have to disclose as much as larger companies traded on, say, the New York Stock Exchange. However, this is only a bad thing if you’re not willing to do your research. Plenty of self-serving penny stock promoters will try to sell you nothing stocks; ignore them and do your own research like my top millionaire trading challenge students and I do.

While there’s a certain safety to trading stocks from more established companies on larger exchanges, there’s far less profit, percent-wise to be made that way. There is greater risk in trading penny stocks, but you can mitigate that risk by doing a little legwork of your own and following rules like these, especially rule #1 which is cut losses quickly. Research the companies and find out what they are all about and see what they’ve done in the past and how they’re doing now. Often, by doing a little bit of your own research, you can make up for what is unknown and risky.

4. Penny stocks reward self starters. In reading #2 and #3 above, you probably have a good idea of some of the things that scare people off of trading penny stocks. Let them be scared, because that means there is more profit to be made for those willing to take the time to research and become self-sufficient like all my top Millionaire Trading Challenge students are!

Let me be clear, penny stocks are not for everyone as to be successful in this niche you MUST be able to dig in and do your own research. You also need to develop great risk tolerance and be willing to work hard. Surprisingly, few are willing to do this. However, if you are a self starter who is capable of thinking for him or herself and who is willing to seek out teachings and guidance and who can handle this level of responsibility and maintain self motivation, this is part of how can penny stocks make you successful.

5. Penny stocks are accessible to all traders. You don’t need to have a specific degree, experience or even much money to trade penny stocks. Now, because of this fact, many people jump in without the proper preparation…and lose a ton of money, then proceed to badmouth penny stocks for the rest of their lives.

So how can penny stocks make you successful with a different attitude?

Here’s how. If you do pursue learning about penny stocks in the right way by memorizing guides like this and through my Trading Challenge mentorship, then the accessibility of penny stocks means that you can basically start trading as soon as you are ready, even with a small account. For some students that is right away; for others, they prefer a period of watchful waiting. But when you are ready to get trading, you don’t necessarily have to jump through hoops to get started.

6. They offer a great chance for return. How can penny stocks make you successful ? One of the primary ways in which they can do so is with their incredible potential for return, since they start with such a small base price. Penny stocks have incredibly low prices; some are a few dollars, some are literally pennies per share. When buying in a large quantity, you have the potential to earn a ton of money if the stock rises, sometimes exponentially, and you lock in your profits before it it has a chance to fall…take for example, one of my hottest trading challenge students right now, Roland, who locked in $40,000+ in profits on EKSO last week:

…before EKSO later proceeded to fall as I posted in the chart above and now Roland has turned $4,000 into $400,000+ in 2017 alone, all by simply taking advantage of this niche’s volatility.

Hopefully you can see reading through this post, penny stocks are not for everyone as they do come with a significant level of risk, and the degree of discipline and work ethic required make it even tougher.

But thanks to The internet and crucial trading software like this, you have the ability to research and find opportunities on your own, they can provide an incredible chance to become extremely wealthy within a few years that no other market niche offers. It’s worked for me and several of my Millionaire Trading Challenge students; could you be the next success story?

Leave a comment below if you get what I’m saying and you promise to study your butt off and capitalize on this niche’s opportunity!


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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”