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Trading Tips-Tim Sykes Penny Stock

Hold’em or Fold’em?

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Written by Timothy Sykes
Updated 11/4/2022 5 min read

It’s a trader’s tale as old as time.

I remember it as clearly as if it just happened.

I dove headfirst into a trade, giddy with excitement…and it went nowhere.

An image crossed my mind. I remembered the last time a trade stalled.

Heeding my advice, I cut the trade quickly…only to watch it explode higher seconds after the mouse click.

This go around, I decide to give it a little more space to do its thing.

Suddenly, it cracks the lows on heavy volume and plunges into the abyss.

It feels like no matter what you do, you get it wrong.

So, let me drop some insight on you from more than 20 years of trading…

There is no right answer!

The issue isn’t black and white with established rules.

Instead, I rely on one principal to make my decisions.

It’s simple enough anyone can use it, and it’s a methodical approach to decision-making.

Because if there is no 100% correct answer, then this gets me as close as possible.

Here’s how it works…

Let Your Setup Be Your Guide

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Every trade I take starts with a pattern, with Supernovas as my #1 pick.

With that pattern, I developed my 7-Step PennyStock Trading Framework.

Each phase lends itself to certain setups.

For example, during the ramp and supernova phases, I’m more likely to buy into runners than dips.

On the flip side, I love to dip buy after the cliff dive, especially into morning panics.

These setups provide a clear framework for the trades and tell me EXACTLY what the next step should be.

For example, let’s say I’m working a multiday runner like Global Developments Inc. (OTC: GDVM).

I want to buy into a break of the prior day’s highs.

In this scenario, I look for clues as to whether the trade will work.

When a stock breaks a key resistance, it does one of three things:

  • Reverse
  • Trade sideways
  • Keep running

In this case, I want to protect myself against a reversal.

So, either the stock continues its run pronto, or I cut it loose.

If I get a good enough entry, I may let it run sideways, provided I’m very close to where I’d stop out.

But here’s the rub.

I can break even on 50 of these in a row or take tiny losses. All it takes is one runner to keep going for it to pay off.

Let’s take it from another angle.

Back on the 20th of October, I did a morning panic dip buy in Enzolytics Inc. (OTC: ENZC).

The first thing you should see right away is that I chose this setup after the stock went supernova and was down almost 30% from its highs.

Morning panic dip buys take practice to nail down the right buy area.

However, I don’t always get the low to the penny.

A simple trick to make it easier on yourself is to wait for the low to form and then buy once you get a small bounce in the other direction.

Nonetheless, I want that stock to bounce once I’m in the trade.

It shouldn’t take more than a few minutes.

If it fails to bounce, I cut it loose.

In nearly every case, I don’t give the trade much time to perform.

I treat it with healthy skepticism and EXPECT it to fail.

This protects me from another leg lower that could leave me with a huge loss.

That said, I expect it to move around a lot more than buying into a runner.

So, I adjust my position size accordingly and give it a bit more wiggle room with the price.

Look Wider

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Don’t just limit your analysis to the stock at hand.

Expand your viewpoint. Look at the overall market as well as related penny stocks.

It might be worth giving your trade a little extra time if they’re all catching a bid.

However, I want to be extra cautious in today’s bear market.

It’s more important that I get a good entry that minimizes potential losses and maximizes potential gains.

Do yourself a favor.

Take a look through my trade history here at Profitly. 

It’s free and open to everyone.

See how many times I take small wins or losses.

It happens more often than you’d think.

Don’t get me wrong, when stocks are primed, like early 2021, I’ll add more size and ride them harder.

But this isn’t the right market for that.

Remember, you have to survive first before you can hit your profit goals.


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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”