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What Is Holiday Trading for Penny Stocks?

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Written by Timothy Sykes
Updated 11/24/2021 14 min read

If you’ve been in the chat room or watched any of my DVDs, then you’ve probably heard me talk about holiday trading for penny stocks…

What is it? It’s the effect the holidays have on the market.

How do holidays have an effect on the market? Simple: There are more wannabe traders at home gambling in the market. They’re on holiday, bored at home with their families, and they want to try to make some trades. They don’t know what they’re doing, and that can create predictable patterns.

I like to take advantage of those predictable patterns.

The holidays also bring more volatility. That’s mostly due to reduced trading hours and short-sellers covering their positions. The usual morning volatility carries right through into afternoon action. There’s no midday lull.

There have been some great examples recently of the holiday effect. I’ll share those tickers and charts later on … but first…

How Will You Prepare for Holiday Trading?

I go over holiday trading in my DVDs — TimRAW, Pennystocking, and Pennystocking Framework Part Deux. (They’re on sale for a limited time.)

Use your holiday time to study and prepare for the market. Learn the patterns. Be prepared. This will probably happen again around Christmas and the new year … and most holidays usually, but it’s not an exact science.

In this example, I was ready for a recent Friday morning spike. I even shared it in my watchlist to subscribers. But I chose the wrong ticker. I thought it was going to be CANF, but it turned out the best spike was on ASLN. I’ll show you that chart later…

Here’s a bit of what I alerted in my watchlist:

CANF, ONTX are two premarket winners to watch and remember today is a shortened trading day so holiday trading rules apply, stocks can spike MUCH more than you realize and it can happen quicker than you realize too so be on guard and be safe…because these stocks can crash faster than you think too so watch them closely at the market open, Today is a Friday morning which leads to many spikes on top of a holiday-shortened trading day so beware we can see some REAL volatility today…20-40% morning spikers can often become 50-100% winner in minutes if we do get the holiday trading spikes we have in the past.

As you can see, I was preparing my students for the morning spikes and warning them about the volatility.

I want to help prepare you, too — so you can avoid shorting too soon and getting caught in one of these squeezes. Or even better, help prepare you to buy, since these moves can create huge potential on the long side.

Holiday Trading for Penny Stocks: Replace Over-Trading with Study Time

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Don’t use your holiday time overtrading and over-eating. Put your extra time to good use by studying.

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Watch my DVDs, read “The Complete Penny Stock Course,” and check out all the resources on my blog. Build your knowledge account so you’re prepared to recognize these ahead of time. Study up!

A Warning About Holiday-Trading Short Squeezes

Short-sellers are trying to analyze penny stocks like real companies, using fundamentals.

They say, “Tim, short selling is the way to go, all these companies are worthless…” 

And the truth is, they’re not wrong. Technically, yeah, all these companies are junk. And most of them will eventually go down.

Short-sellers are like the new promoters. And they lure in other newbie short sellers with their logical argument that all the companies are awful and the price will fall.

But they’re not fully transparent. They don’t share their losses when they’re getting squeezed out of their positions. And I know they’re taking losses because I get emails from them. People who aren’t even my students come to me saying, “I should’ve listened to you.”

I tried to warn them…

The problem is there are too many short-sellers these days. They’re getting in too quickly because they’re not prepared. They’re just shorting any stock that’s up on the day.

Huddie, is one of my top students. To date, he reports profiting approximately a quarter of a million dollars primarily from Short selling is a terrible strategy right now, especially risk-to-reward wise. It’s just too crowded. And these short squeezes happen so fast, it can be hard to cut your losses quickly.

New traders especially aren’t prepared for these moves. That’s why I warn new traders about the dangers of shorting, but at the same time, I don’t want them to stop. I’m grateful for the opportunities it creates for the rest of us. Be prepared to take advantage of it from the long side.

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I explain how all this works in this video: watch and learn!

Now let’s look at some chart examples of the most recent holiday spikers…

Stock Study Guide: 4 Holiday Trading Examples

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You may be wondering what’s so special about holiday trading? How’s it different than any other short squeeze? Well, take a look at the charts below and you’ll understand just how powerful these moves can be.

Paringa Resources Limited (NASDAQ: PNRL) — Morning Spike

On Wednesday morning, November 27, the day before Thanksgiving, PNRL had a huge morning spike. It went from the $1s to the $8s within an hour! On Friday, the stock collapsed, opening at $3 and closing in the low $2s. This is a good example of the volatility in the markets around the holidays.

Here’s the PNRL chart:

holiday trading for penny stocks - PNRL stock chart
PNRL chart: November 27 & 29, 2019, holiday stock market volatility — courtesy of StocksToTrade.com

Clovis Oncology, Inc. (NASDAQ: CLVS) — Earnings Winner/Short Squeeze

CLVS is a good example of an earnings winner, straight out of my “How to Make Millions” DVD (all sales proceeds go to charity, by the way).

Earnings winners can run longer than you think. Combine that with a Friday and a shortened holiday trading day, and you can get a pretty powerful move. CLVS squeezed from $12.55 to a high of $16.62! All before 11 a.m. It was the largest one-day move in its entire run-up. The short-sellers are just too early. It creates these giant short squeezes that just keep going.

That’s a great thing for longs!

Since its earnings release on November 7, the stock has gone from the $4.30s to a high of $17.37! It then dropped down to the mid $8s and has bounced back to the $11 range.

holiday trading for penny stocks CLVS chart
CLVS chart: 3-month, daily candlestick, holiday trading — courtesy of StocksToTrade.com

Cancer Genetics, Inc. (NASDAQ: CGIX) — Short Squeeze

CGIX was up trending all day Friday, and then 10 minutes before market close, the stock goes from $7.20 to $9.20 in 3 minutes! That’s short-sellers getting squeezed HARD…

This stock isn’t normally a volatile stock, but with the added volatility from a shortened trading day and a Friday, it created a monster spike.

Take a look at the CGIX chart:

holiday trading for penny stocks - CGIX chart
CGIX chart: November 29, 2019, 1-minute candlestick, holiday trading — courtesy of StocksToTrade.com

ASLAN Pharmaceuticals Limited (NASDAQ: ASLN) — Morning Spike

This stock was the big winner for the day with a huge morning spike. As I said in the watchlist, Friday morning spikes can go up more, and they can be faster than you think.

This stock doesn’t normally spike very fast — it barely moves 50 cents in a day. But with the increased volume it had in the days leading up to the holiday, it made the stock more volatile.

The two previous days the stock was spiking, it couldn’t hold its gains. And the big morning spike was no different. The stock went from $3 to $7 in seven minutes but then quickly faded off.

Some students were wondering if they should dip buy after the big move. I don’t dip buy holiday short squeezes. After the big moves, all the shorts are squeezed out and there are no shorts left to buy, so the buying subsides.

No rational person should buy a stock that’s up $4 in a few minutes with no news. Especially when it couldn’t hold its gains in the previous days.

holiday trading for penny stocks - another ASLN stock chart
ASLN chart: November 29, 2019, 1-minute candlestick, holiday trading — courtesy of StocksToTrade.com

How You Can Prepare for Holiday Trading (Like These Students)

Many of my Trading Challenge students were prepared and they killed it! Notice that nobody nailed it perfectly. You don’t have to hit the exact top and bottom on these plays — just take the meat of the move.

Trading Challenge Chat

November 27:

10:11 AM LKScientist: Traded PNRL… In at 3.64 and out at 5.5. I screwed up my order and ordered 50 shares instead of 500. Still a 51% profit ($93) from $182.

10:59 AM RMcInarnay: took $CLVS from 11.90 to 12.45 🙂

November 29:

09:11 AM CharlieTango: Long ASLN 500 shares @2.77 out @3.3

09:16 AM Petros_rok_nation: ASLN o/n swing, purchased at 2.26 a/h and sold at 3.10.

09:38 AM Peachtart: I sold ASLN WAY too early at 3.64….then it jumped up to over $5 !!! Damn !!

09:49 AM Iceman29: ASLN 288 shares bought @4.50/share out @6.00/share

09:50 AM GrmnWondrBread: ASLN in at 3.83 out at 4.29 for a $34.08 win. Entered CANF at 3.435 in hopes of a reversal and settled at 3.30 at a $10.63 loss. One good one bad…creed got the best of me on this one.

09:51 AM Sierra3: sold ASLN at 4.14 from 3.00 grrrr. hahahahahahaha

09:55 AM RPhTrader: ASLN made around $300, got out early, but happy

09:56 AM NEOTHEONE: bought 1000 shares CANF @$3.35 OUT $3.44…good %8.8

09:57 AM TJinx13: so many short squeezes today

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Market Recap

Holiday trading isn’t tied to any stock, hot sector, or news.

It can be extremely volatile, especially on the shorter trading days. And that can create a lot of opportunities. Be prepared to take advantage of the big moves.

Holiday trading can be a great thing for longs. But if you’re wrong on a trade, remember to cut losses quickly. Especially on stocks that don’t hold their gains.

Be careful with any short positions. Actually, I don’t recommend you short sell at all if you’re a new trader. But if you must, keep your positions small.

Use your holiday downtime to invest in your education. Study, study, study!

I know the extra time and freedom that comes with the holidays is great. Most of you want to relax and take it easy. But if you want to change your life and feel free every day, you need to put in the work now. You won’t get there by being lazy.

I had to work for it and so do you. For me, it’s well worth it.

[Note that these results aren’t typical. It takes time and dedication and to build exceptional trading skills and knowledge. Most traders lose money. Always remember trading is risky … never risk more than you can afford.]

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Author card Timothy Sykes picture

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”