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Short Selling- Tim's Trading Challenge

How We Outsmarted Short Sellers on This +300% Spiker

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Written by Timothy Sykes
Updated 12/22/2023 6 min read

It’s easy to find reasons not to trade.

That’s not an option when the market is ripe with opportunities.

The Santa Claus Rally and the January Effect have combined into a perfect storm against short sellers.

But you can’t take advantage of these gifts if you’re unprepared.

My job is to get you ready to capitalize on these opportunities…

…just like we did with the +300% RUNNER NextPlay Technologies (NASDAQ: NXTP) during Friday’s LIVE webinar:

  • Chriscruz1025 → timothysykes: Got in it earlier at 1.80 and sold it at 2.09 ….In $NXTP at 2.24 and out at 3.29 for 46.76% gain!!!! Love it!!
  • dunstan: I’m in at 2.40 $NXTP out at 3.40
  • StockHo: $NXTP was in at 2.39 out 2.57 sold to soon
  • Drelane: $NXTP in at 3.25 out at 3.60
  • GMoney2020 → timothysykes: in $NXTP 3.18 out 3.59 good advice to get out quick. thanks tim

**Disclaimer: Listed claims have not been verified.**

If you’re ready to get serious and learn how actually to exploit short sellers, here’s a guide to help you get started.

Recognizing the Type of Market

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The market isn’t a fixed thing.

Sometimes it’s for learning and sometimes it’s for earning.

You have to recognize the type of market you’re in by seeing which stocks are surging and how they trade.

Right now, there are seasonal patterns at play.

We have the January Effect, which most people misunderstand. This effect starts as early as November. Typically, the most beaten-down stocks will start to surge hard.

Additionally, as we approach and get through Christmas, you get the Santa Claus Rally, another bullish seasonal pattern.

Put those two things together, and it adds a lot of buying volume for short sellers to contend with.

These trends aren’t guaranteed which is why you need to confirm them.

Pay attention to which stocks are moving, how much they move, why they move, and how long they move.

Polished.com (AMEX: POL) is a perfect example.

With no news, this stock surged entirely on the backs of promoters and chat pumps.

Short sellers knew the move had no substance, tried to bet against the stock, and got obliterated.

That’s how you get a move from $2.50 to $10.85, over 400%, in a matter of hours.

Or how about C4 Therapeutics (NASDAQ: CCCC), a multi-day runner with multiple dip buying opportunities along the way:

Then there’s Safety Shot (NASDAQ: SHOT) that fit my 7-Step Penny Stock Framework to the letter.

You have to pay attention to what’s going on around you and recognize that we’re in the middle of an earning environment.

Over the summer, these same types of stocks would pop and drop the same day.

Right now, I’m not trading many Morning Panic Dip Buys, my bread and butter setup. This market is full of Supernovas – short squeezes you can use to build your small account

The market cycles between two extremes of giving and taking.

Our job is to recognize where we’re at and prepare to strike when it’s in our favor.

Preparing Yourself

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The key to trading penny stocks lies in the battle between short sellers and everyone else.

I haven’t been a major short seller for almost a decade because the squeezes are so violent.

While short sellers might win the majority of their trades, they lose so much on just a few that it wipes out all their gains.

I want to be on the other side of those big short seller wipeouts.

That’s why I teach my students to recognize the signs of a potential squeeze.

You need to look for their pain points and see how they react.

At the same time, you watch the buyers, from chat pumpers to promoters, and see how active they are.

It’s the strength and length of this push and pull between buyers and sellers that creates the opportunities.

That’s why I encourage you to study my 7-Step Penny Stock Framework so you can quickly determine where a stock is at in its lifecycle, and then apply the appropriate trading pattern, whether its a morning panic dip buy or a breakout.

Are You Ready to Harness the Power of Market Storms?

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Socks like NextPlay Technologies and Polished.com defied expectations and soared.

This isn’t just a trend – it’s a trading revolution!

These are just the tip of the iceberg. The real game-changer lies in recognizing and capitalizing on these patterns. Don’t be the one who misses out on these explosive gains!

Join Our Upcoming Live Training to Master the Market’s Mysteries!

📈Understand the seismic shifts in the market and using them to your advantage.

📈Get the insights to identify potential supernovas and turn them into profit!

📈See the Market Through a New Lens with Our 7-Step Penny Stock Framework!

Our live training will equip you with the strategies, insights, and confidence to take on the market’s challenges and emerge as a savvy trader.

👉 CLICK HERE TO CLAIM YOUR SPOT 👈

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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”