timothy sykes logo

Trading Recap

How I Cut My Trading Risk on This +80% Gapper

Timothy SykesAvatar
Written by Timothy Sykes
Updated 12/18/2023 5 min read

Why do 99% of traders fail?

Because they enter and exit trades at the wrong time.

They try to grab breakouts that become fakeouts.

So, how have I made over $7.5 million, winning 75% of my trades trading those SAME stocks?

Because you don’t need perfect execution to be profitable.

Heck, I’m often getting out of winning trades too early.

But I know how to design a setup to manage my risk better than most.

Let me show you exactly what I mean by using my >Weekend Trade in Cytodyn (OTC: CYDY).

Even though this wasn’t a whopper, I still managed to turn a profit where so many other folks got smoked.

Picking Stocks With Potential

© Millionaire Media, LLC

Think of the best restaurant experience you’ve ever had.

What made it so special?

If you’re like most people, it wasn’t just one thing.

Everything from the food to the service came together to make it perfect.

High-quality trades work the same way.

I don’t just look for one thing, but a combination of factors to support the trade.

Cytodyn caught my eye for a few reasons.

First, >Breaking News Chat highlighted this company.

They >noted in their 8-K filing the permanent FDA hold was now partially lifted.

Essentially, they went from a full stop to some potential. Management believes they can get the entire hold released.

For a stock that’s struggled mightily, this is incredible news.

Second, the reaction to the news in the premarket and at the open was extremely positive.

You can see in the chart below that the stock began to move higher before the main session and nearly doubled from the prior close right after the open.

>

Many traders probably tried to buy this stock, hoping for a breakout.

They got burned instead.

Why did this one not keep running while another stock might?

Here’s the secret – I don’t know.

All I know is how to read the price action in front of me.

And Cytodyn popped and then dropped.

But that gets me to the third point.

Cytodyn fell back towards $0.24 and held there for most of the midday on light volume.

Then, shares started to climb before pulling back to about $0.26 and held.

Even though the stock was well off its highs, it still had buoyancy, with shares up over 30%.

Now, let’s take a step back and look at the whole picture.

This stock has a history of multi-day runs.

>

Friday’s price action could conceivably be the start of one.

In fact, shares had run for about a week within the past month.

Is it a guaranteed run? No.

But, here’s where the rubber meets the road.

Cytodyn closed the day before at $0.19 or so.

Shares were trading around $0.27 when I decided to jump in.

The high for the day was $0.36.

If the stock didn’t do any better than that range, I had $0.08 of downside and $0.09 of upside, or about a 50/50 risk/reward.

Ok, but now add in the possibility of a multi-day run.

Even if the odds are 10% or 5%, the potential extra gives this trade a lot of potential.

However, if the stock dropped below the low of the day at $0.24, I’d cut it quickly.

So in reality, my base case was more like $0.03 of downside to $0.09 of upside or a nice 2:1 risk/reward.

Plus, I’m using the weekend as a way to let promoters build interest to get a nice gap up on Monday morning hopefully.

This trade didn’t become a monster winner. But it was a winner nonetheless.

And as my account history shows, small base hits add up over time.

Ready to Master the Art of Risk Management in Trading?

© Millionaire Media, LLC

Many traders find themselves burned by sudden market shifts, but what if you could turn the tables?

I’ve amassed >over $7.5 million by winning 75% of my trades, not through perfect execution but through superior risk management strategies. The key isn’t just picking stocks with potential; it’s knowing how to manage risk to tilt odds in your favor.

🚀 >Join me in our upcoming live training sessions. Here, I’ll break down my recent Weekend Trade in Cytodyn (OTC: CYDY), demonstrating how I secured a win where others stumbled.

🚀 Learn how to analyze stocks beyond surface-level indicators. Discover how to blend news, market reactions, and price action into a cohesive strategy.

🚀 Understand why it’s not just about the highs and lows of a stock, but the story behind its movement and how to capitalize on it.

Are you ready to elevate your trading game? To shift from playing catch-up with the market to being a step ahead? Your journey to becoming a risk-savvy trader starts here.

👉 >CLICK HERE TO UNLOCK THE SECRETS OF EFFECTIVE TRADING!👈

Post image

Get my weekly watchlist, free

Sign up to jump start your trading education!

 


How much has this post helped you?


Leave a reply


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

Post image

Get my weekly watchlist, free

Sign up to jump start your trading education!

* 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”