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Trading Tips-Tim Sykes Penny Stock

Eager for an Edge? The 2 Trading Strategies I Can’t Ignore

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Written by Timothy Sykes
Updated 8/16/2023 7 min read

If you haven’t heard…most people who try to trade lose money.

Now, there are several reasons why that is.

They don’t have the knowledge, skills, discipline, and patience to make it.

Notice I didn’t mention money.

So many folks think you need a lot of money to get started…but that’s not true.

Most of my millionaire students only started with a few thousand dollars and built it over time.

Today I’m going to share with you two specific strategies that I believe traders with a small account should learn.

Not only have they been making me money lately but my win rate with them has been high…and I’ve managed risk effectively.

Finding Edge In The Market

tim sykes on edge
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One of the worst things I see newbie traders do is give themselves unrealistic expectations.

I tell all my students that their chances of making money in year one are not good.

You need to build up your knowledge bank and put in screen time.

Not to mention, discover which strategies work best for your personality.

And let’s not forget the emotional side of trading…which, like everything else…takes time to get comfortable with.

Ultimately, you want to get to a point where you understand how a setup works, why it works, and how to take advantage of it.

Then you must establish the discipline to focus on that setup and not get lured into trading stuff you don’t know.

Here’s the thing…

Some setups and patterns work better than others during different market conditions.

That’s why you have to constantly review your trades and stuff that’s working.

That said, here’s where I’m finding edge in the market.

Buying Strong Stocks: Multi-Day and Multi-Week Runners

Source: etrade

Yesterday AAOI climbed by more than 8%…

However, the move wasn’t just a one-off…this stock has been steadily climbing since June. In fact, I remember trading this in the $5s.

Another recent multi-day runner has been the ticker symbol GNS.

Source: StocksToTrade

This stock has gone from $0.50 to a high of $1.57 yesterday.

So how am I playing these multi-day runners?

I’m buying them on weakness…usually near or around the open.

Another thing I like to do is look at the big picture.

When you’re day trading, you might look at minute-bar or 5-minute bar charts…which is fine.

But I like to look at daily and weekly-bar charts to understand where long-term support and resistance are.

In any event, I’m always on the lookout for these strong up-trending stocks and trying to take advantage of a play if I see weakness intraday.

If you have a small trading account, this is a setup I think can serve you well if you learn how it works.

Letting The Short Sellers Drown

what are diluted shares
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The problem with short sellers is that they are right the majority of the time.

Now, you might be thinking, how is that a problem?

Well, trading isn’t about just being right or wrong.

You also need to manage risk.

For example, if you short a stock at $5 and it shoots up to $25 first and then goes to $3…guess what?

Chances are you got crushed on that trade.

That’s why you need super deep pockets and a great deal of experience.

But today’s short seller is overaggressive…they are not thinking about risk management…just that their idea is right.

So what am I doing?

Playing into their weakness.

I’m looking for terrible stocks being shorted aggressively, and I’m trying to buy them during panic sell-offs.

For example, stocks like WeWork…

Source: etrade

Earlier this month the company said it had substantial doubt on whether it would continue as a business.

Of course, that’s negative. And the stock is probably a zero at some time.

But it went from $.12 to $0.32 in just two days.

Last week I got into a similar type of play…I bought shares of the ticker symbol DRUG.

This stock was up huge in the pre-market on solid news. It was being heavily shorted, and I saw an opportunity to buy on weakness.

I got in at $4.95 and out at $5.78 in a matter of minutes.

Source: StocksToTrade

As you can see from the chart, the stock did sell off after my exit.

That said, these are very fast trades.

And if I’m not right on the trade I’m not sticking around, hoping and praying that it goes back up.

I’m always focused on risk management and cutting losses quickly whenever I’m wrong.

The Two Accounts You Must Build

tim sykes in yosemite
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I tell my students that there are two accounts they must build up.

Their knowledge account and their brokerage account.

We can’t control the market, and sometimes there aren’t that many good trading opportunities.

But we can always grow our knowledge account. 

And that’s something I want to help you with.

That’s why my team and I are committed to building your knowledge account up.

We host live training sessions every day. In these sessions, you’ll learn what stocks are making waves, and how we’re trading them to make money in the market.

The best part is we’re bringing this to you at zero cost.

All you have to do is register right here

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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

* 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”