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Penny Stock Basics

4 Things to Watch in 2020 — Part 3: Former Runners

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Written by Timothy Sykes
Updated 4/18/2023 17 min read

In part 3 of the 4 Things to Watch in 2020 series, we’re gonna take a look at former runners. If you haven’t read Part 1: Short Squeezes and Part 2: Hot Biotechs

… be sure to read them as soon as you finish reading this post. Take notes from this series. These are just a few of the stocks I’ve watched recently.

Along with the stocks in this post, watch former runners related to the coronavirus outbreak. Many of the same stocks that spiked during the 2014 Ebola outbreak are in play again. I’m working on a dedicated coronavirus post now.

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After two decades of trading, I’ve noticed…

Stocks Have Characteristics

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Stocks tend to have characteristics. What do I mean by that?

If a stock behaves a certain way one time, it can happen again. And if it does happen again, the chance of it happening multiple times increases.

I’m fortunate because I’ve been doing this for over 20 years. So I know these characteristics pretty much inside out. So this is about learning one particular characteristic of penny stocks…

Former runners can run again.

In other words, history repeats. (Remember it’s not an exact science. This is something to watch for … not a prediction service.)

Before I get to examples, there’s one other thing to consider. Some stocks have stories…

Pay Attention to Story Stocks

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So, I always say focus on big percent gainers. But you also have to focus on a few story stocks. What’s a story stock? They’re stocks where the story behind the company or its products excites investors.

Two of the former runner examples in this post are story stocks. You’ll see what I mean with Astrotech and Ignite brands.

Let’s get to some examples of former runners I’m watching.

Recent Examples of Former Runners

This list of four former runners I’ve been watching and/or trading is only a small sample.

So use these examples to drive home the idea. When a stock runs, check to see if it has a history of running.

Ignite International Brands Ltd (OTCQX: BILZF)

The first example of a former runner I’m watching is Ignite — Dan Bilzerian’s weed company.

Take a look at the BILZF six-month chart:

BILZF chart former runner
BILZF chart: 6-month, daily candle, story stock, former runner — courtesy of StocksToTrade.com

The chart doesn’t look like much, especially over the past 100 days. But it did have a big spike from the $1.20s all the way to $4 in 24 hours. (See the huge volume spike on the chart.)

The spike happened when Bilzerian posted to his social media account. What did he say? He let his followers know that they could now invest in his company with a U.S. ticker.

BILZF Is a Story Stock

BILZF is an example of a story stock. Dan Bilzerian has a huge social media following. So even though the chart is kinda quiet now…

… if he posts something or if there’s news … it could spike again. So you still have to watch it.

I last traded this stock in September during my annual conference. But I’m still watching it for two reasons. First, the guy has a lot of followers. Second, he knows how to make money.

So you gotta think he’s working on some deals. Any one of those deals — when they get announced — could spike the stock. My guess is, he’ll probably be proud of any deal and post it on social media.

So you won’t just have the press release from the deal, you’ll also get Bilzerian’s social media post. And in his post, he’ll talk about the press release and talk about the deal. He might even link to the deal.

He’s basically his own publicist (given his following). So this stock is worth watching.

Note: On January 20, Ignite announced it’s adding beverages to its list of products. The stock really didn’t do much. Again, I’ll keep watching in case Dan Bilzerian’s followers get interested. As I write, he hasn’t posted about the deal on social.

On to another example of a former runner…

ShiftPixy, Inc. (NASDAQ: PIXY)

PIXY is in a totally different sector. It’s involved with the gig economy — kinda Uber-like but for staffing. It recently sold off 60% of its business to focus primarily on restaurants. I traded this stock on January 24. It was a very undisciplined trade and resulted in my biggest loss this year.

Learn the lessons from that trade in this post about trading discipline. But first, let’s see why the stock was on my watch list.

Here’s the PIXY one-month chart:

PIXY one month chart former runner
PIXY chart: 1-month, 2-minute candle, spiked on solid news — courtesy of StocksToTrade.com

The stock spiked from $7 all the way up to $28 on the news. Then it dropped back to trade in a range between roughly $13.50 and $16.50 for several days. But even though it was down, it proved it can spike. If you look at a one-year chart, it doesn’t look that amazing.

But this isn’t the first spike. You have to go back further. Here’s the three-year chart:

PIXY 3-year chart former spiker
PIXY chart: 3-year, daily candle, former runner — courtesy of StocksToTrade.com

As you can see, PIXY had a big one-day spike back in December 2017. Then another in March 2018 … and another in July 2018. They might not look like much on the chart, but they were big percent gains. And they’re proof the stock can spike, which is why PIXY was on my watch list.

The next example is another story stock…

Astrotech Corporation (NASDAQ: ASTC)

I’ve traded ASTC multiple times. Every single time it spiked, there was news about its detection equipment. It has this new security detection equipment for airports. Theoretically, if more airports use the detection equipment, it could be a big hit.

Take a look at the ASTC two-year chart:

ASTC chart story stock
ASTC chart: 2-year, daily candle, former runner, story stock — courtesy of StocksToTrade.com

As you can see, ASTC had several big one-day spikes in June, September, and December 2018. Then another in November 2019.

It never really sustains its gains. I think the technology is probably a little more complicated than the company lets on. But … it has spiked in the past.

So remember plays that have spiked in the past. They’re not necessarily gonna spike on any given day. But they can.

Again, it’s not an exact science. My goal is to make you aware of the possibility of another spike in the future. So remember former runners.

Here’s the final example…

Trillium Therapeutics Inc. (NASDAQ: TRIL)

TRIL is the most recent of the three. The stock has a terrible two-year chart. Check it out…

TRIL 2 year chart ugly
TRIL chart: 2-year, daily candlestick, ugly long-term chart — courtesy of StocksToTrade.com

But if you look back — or if you remember — it had a helluva run-up back in 2015.

Check out the TRIL five-year chart:

TRIL 5-year chart former runner
TRIL chart: 5-year chart, daily candle, former runner — courtesy of StocksToTrade.com

Even though it doesn’t look like that much on the chart … when it goes from $9 to $18 in a few weeks…

… then goes from $5 to $12 over a few weeks…

… you start to learn how it runs.

TRIL tends to run for several weeks at a time. This latest runup — over the past month — is no different. Versus ASTC where it was very much one-and-done over five years…

ASTC 5-year chart one and done spiker
ASTC chart: 5-year chart, daily candle, one-and-done spiker — courtesy of StocksToTrade.com

So it’s not only a matter of remembering former runners. You also have to remember how they ran… 

Study the Past for Penny Stock Trading Success

If you really want long-term success trading penny stocks it’s imperative you study the past. I say it all the time. Over and over again. Study the past to prepare for the future.

New to penny stocks? Get access to my FREE penny stock guide here. Go through it at least five times.

In the Stock Market, Experience Pays

Again, I’ve been doing this for over 20 years. During that time, I’ve learned to recognize certain characteristics. And I remember stock tickers — especially if I’ve traded them. But it’s part of the deal. You kinda have to get to know this.

Admittedly, I have an advantage. If you weren’t around for any of the previous spikes, you wouldn’t know the difference between ASTC and TRIL. Unless you study the past.

But I was there for every single one of those spikes. I remember how ASTC was all one-and-dones. And I remember how TRIL went further, and longer, than most people expected.

Know Your Stock Market History

This is a great example of why I tell students to study the past. Look at longer-term charts. If you see something running, take a deep breath and check. Use StocksToTrade to see if it’s a former runner. If it is … how did it run in the past? What kind of volume did it have? Take time to prepare instead of just jumping in.

If you miss it? There will always be another trade. Next time you’ll know what to look for … faster.

Understand What’s Happening Now

Another thing you should consider…

It’s not enough just knowing former runners. And it’s not enough to know how they ran in the past. You also need to know what’s happening now.

Here’s an example…

How to Use History to Gain an Advantage

As you know from 4 Things to Watch in 2020 — Part 1: Short Squeezes, short sellers are over-aggressive right now. And short sellers who’ve been around a while remember stocks like TRIL and ASTC.

So what do they do? They pound on stocks with a bad history of holding spikes.

What you get is an almost perfect storm. First, the short selling space is overcrowded. There are just too many people trying to short. Second, they’re overly aggressive. Finally, factor in the longest bull market in history…

… with the possibility of a stock actually holding its spike and you get…

short squeeze mania.

A great example is CounterPath Corporation (NASDAQ: CPAH). I wrote about CPAH in part 1 of this series. Not only did it actually hold its spike, it continued to spike on January 10. Why? Because it had good news with Honeywell.

But the reason the spike was so big was … so many short sellers got over-aggressive and got squeezed.

So you gotta know a stock’s past history. But also know that it doesn’t work 100% of the time.

Here’s how to gain an advantage…

Get Experience

All traders lose. Just accept it. You will lose some of the time. I lose roughly 25% of the time … and I have exceptional skills developed over two decades. (See every trade I make here.)

You must gain experience. You have to work on your process. So the key is to…

Keep Losses Small While You Develop Your Process

Rule #1 is to cut losses quickly. If you have the self-discipline to always cut losses quickly, it keeps you in the game. Then you can find your best setups and work on your process.

Remember, it’s a marathon and not a sprint.

Keep Studying the Past

This post focuses on former runners … so it should be obvious. But too many people get lazy and don’t wanna keep studying. Keep studying. The more you study, the easier it’ll be to recognize patterns.

Here’s a good place to start…

And it’s not just the patterns. By studying the past you’ll learn about all the indicators that can move a stock. You’ll learn about sector momentum. You’ll see how news can affect certain stocks.

Remember the Lessons of the Past

This applies to big market moves and also certain types of news catalysts.

For example, the recent Wuhan coronavirus headlines are similar to the Ebola outbreak a few years back. That turned out to be mostly hype — thankfully. But you never know how far these can go.

Note: I’m not planning to be aggressive with virus stocks during this scare. First, it’s tough … you’re dependent on breaking news and bad news. Or news of more deaths — which I don’t like. Second, it’s not predictable. You actually have to be there when the news hits.

The point is, remember the lessons. I’m basically a glorified history teacher.

To sum it up…

… traders with more experience, who stay in this game, look back at history, and don’t forget the lessons of the past…

… have an advantage.

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Like anything in life, just knowing the information isn’t enough. If you want to gain financial freedom trading penny stocks, you have your work cut out for you.

Based on 20 years of experience trading and a decade of teaching…

I suggest you get a mentor.

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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”