Why Did FTX and So Many Traders Blow Up?

By Timothy Sykes

Last updated on November 10, 2022
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It pains me to watch traders lose it all.

Knowing that promoters sucked in folks right at the top makes me downright angry.

FTX and Sam Bankman-Fried is just the latest in a sad history of folks getting swindled out of their hard-earned money.

Just in the last few months, I watched Intelligent Living Application Group Inc. (NASDAQ: ILAG) and AMTD Digital Inc. (NYSE: HKD) blow up short sellers left and right.

And it always happens for the same two reasons: transparency and aggression.

Nearly every day, I tell students in my Millionaire Challenge to stay safe and trade warily.

It’s why I’m green on the year, up over $100,000 in trading profits, as are many of my top students, including Jack Kellogg, who’s not only green on the year but crossed $10 million in lifetime earnings.

I want YOU to be safe, whether you’re my student or not.

That’s why EVERYONE needs to know how to handle sketchy stocks and assets…

Because we can USE their suspect behavior against them.

Here’s how…

Assume Everyone Is Lying

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Why is it we act shocked when we find out a company lied?

Cryptocurrencies remain largely unregulated, leaving investors to fend for themselves.

We saw Matt Damon, Kim Kardashian, and so many other influencers hype pure garbage as investable assets.

Investments provide owners with reasonable confidence in a profitable return on their money.

Look at Carvana (NASDAQ: CVNA).

The stock trades for less than $10 after being close to $400 per share.

It shouldn’t come as a surprise when a company that never turned a profit or generated cash tumbled to the basement.

I trade penny stocks because I can go ahead and assume they’re all scams and manipulated.

I don’t need to worry about whether it’s investable or not. I assume they aren’t.

And that’s a mistake many traders make.

They get caught up in the stories behind this company or that crypto and forget how shady things really are.

Unfortunately, it creates a bias that leaves most folks poorer in the end.

Don’t assume that even a 100-year-old S&P 500 company is immune to problems.

The Kraft Heinz Company (NASDAQ: KHC) saw shares plunge in 2019 after an accounting scandal.

Don’t take anything for granted.

Make Trades Prove Themselves

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No matter the setup, every trade I take is on the clock once I enter my position.

If I buy a morning panic dip, shares need to move higher quickly or I’ll cut it loose.

Go through my trade log on Profitly and you’ll see a lot of tiny wins all over the place.

Penny stocks are volatile.

When one drops 50% from its highs, I don’t want to be wrong and watch it get cut in half again.

So, if I’m going to take on that kind of risk, the setup needs to work as I expect.

Do I miss out on trades that would have worked with just a bit more time?

Absolutely.

I don’t care.

I pride myself on generating consistent profits, with a +75% win rate because I manage every trade assuming it will blow up on me.

If you go in with that mindset, very few actually will.

Use Promoters to Your Advantage

sykes sliding scale
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Just because a stock or crypto goes Supernova doesn’t mean you need to avoid it altogether.

In fact, my 7-Step Penny Stock Framework lays out the schematic I use to decide which setups to deploy on a stock based on the chart.

One of my favorite setups is the morning panic dip buy.

Promoters love to pump up a stock that’s fallen hard, creating panic buying usually near the open.

This creates incredible opportunities to scoop up shares and trade them for a 5%-10% gain, which is perfect for small accounts.

It’s so much easier to find the stocks, cryptos, or whatever being manipulated and use that knowledge to your advantage.

Otherwise, you might end up in a stock like Upstart  Holdings (NASDAQ: UPST), which was talked about everywhere, even on CNBC.

In October, it traded at over $400 per share.

Now, it’s closing in on $10.

These stocks are great to trade IF you manage your risk.

The only way to do that is to assume the worst and trade cautiously.

It’s not sexy. But this isn’t a beauty contest.

—Tim

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Comments (1)
Author imageTimothy Sykes
Hey Everyone,

As many of you already know I grew up in a middle class family and didn't have many luxuries. But through trading I was able to change my circumstances --not just for me -- but for my parents as well. I now want to help you and thousands of other people from all around the world achieve similar results!

Which is why I've launched my Trading Challenge. I’m extremely determined to create a millionaire trader out of one my students and hopefully it will be you.

So when you get a chance make sure you check it out.

PS: Don’t forget to check out my 30 Day Bootcamp, it will teach you everything you need to know about trading.

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