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Trading Recap

How I Traded This +300% Runner – $ETCC

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Written by Timothy Sykes
Updated 2/7/2023 5 min read

No one likes to miss out on explosive moves, myself included.

After all, volatility is where the money is made.

Just look at this ridiculous move in Environmental Tectonics Corp. (OTC:ETCC) covered by our Breaking News Team:

However, the worst thing you can do is buy because of fear of missing out (AKA FOMO).

That’s a recipe for disaster.

The good news is that I can teach you how to balance the two rather easily, and it doesn’t take a degree in advanced mathematics or years of experience.

In fact, it’s one of the first lessons I teach students who take my Millionaire Challenge.

You see, most traders only care about gains, thinking about how much money they can make.

The reality is they rarely achieve the ‘maximum potential’ they calculate.

Shooting for unachievable targets keeps you in a trade for too long or with too much at stake.

Instead, I teach my students to think about every trade in terms of risk.

Their #1 goal: keep losses small and cut them fast.

Initially, this leads to a lot of small losses.

However, with experience, those same losses get smaller and smaller, even turning into small gains.

Because winners take care of themselves.

All this sounds great on paper, I’m sure.

So, let me prove it to you using my recent ETCC trade, where I caught a nice chunk of this beautiful runner.

Check out all my trades here on Profitly.

Breaking down breaking news

Virtually every one of my trades starts with a news catalyst.

As I mentioned before, I use our StocksToTrade Breaking News Chat – a team dedicated to quickly sifting through headlines to deliver only the relevant content traders need.

How fast are they?

You be the judge…

Click here for an exclusive trial offer

Now, I want to make two things very clear.

First, not all headlines are created equal.

There is news that’s material to a company, such as FDA approval, contracts, earnings, etc., and there’s non-material news, such as the CEO speaking at a conference or rehashing already-known press releases.

Learning to differentiate between these headlines is fundamental to penny stock trading. It’s so important that it’s a whole module in my Millionaire Challenge education.

Second, I don’t advocate buying a headline, even good ones, immediately.

As you’ll soon find out, there’s a method to how and where I enter these types of trades.

Keeping risk to a minimum

Let’s say you wanted to buy ETCC for a trade.

Here’s the 1-minute chart below.

Where would you buy it?

In my mind, there are only three potential spots: the two orange boxes and a break of the high (white line) near the close.

The two orange boxes highlight panic dips that I like to use for my entries.

A lot of folks think this is like catching a falling knife.

However, I teach my students how to read level 2 data, watch the price action, and strike when the moment is hot.

That’s exactly what I did here when I alerted students to my trade.

Buying on pullbacks provides me with a cushion of safety.

If the stock falls, then I’m already closer than the bottom than I would be if I had bought a breakout.

But more importantly, it falls into a pattern I see with these pumped-up names.

Buying panic dips gives me good entries that, when timed correctly, limit my potential losses.

You see, I’m not going to give this trade much rope to work.

If I don’t see price moving higher, I will cut it loose.

That’s partly why I exited where I did.

You can see that shares pulled back almost 10% off the highs.

I’m not looking to pick up the entire move, just the parts I find predictable.

Now, some traders will take a portion off at their first profit target, say 50%-75% of the trade, and leave a trailer on with a stop back at their entry.

That’s perfectly fine and a good way to catch as much of the move as possible.

It’s up to you and what you’re comfortable with.

Dip buying takes some practice. However, it’s my favorite setup and method to trade stocks.

It might look difficult, but once you join my Millionaire Challenge and start studying hard, you’ll quickly realize that it’s easier than you thought.

And all it takes is one setup to change everything.

–Tim


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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 (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”