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Mentor Updates

How to Ride the Hype Train – Millionaire Mentor Update

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Written by Timothy Sykes
Updated 4/18/2023 14 min read

Ride the hype, but never believe it. I say it all the time. But today I want to look at it a little differently. Let’s call it the hype train.

When a penny stock gets pumped or has a perfectly timed press release, newbies LOVE to jump in. Too many think they’re buying the next Microsoft. The reality is, they’re boarding the hype train. The problem is, they don’t know when to get off.

(If you’re brand new to penny stocks, start with this FREE guide.)

And there’s nothing wrong with the hype. Seriously, if you know a promoter, buy them an edible arrangement. Or give them a tip. We need them to do what they do. And we want them to do it better.

Just never get so sucked in that you believe the hype.

The Hype Train Is Departing: “All Aboard!”

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Last week I made $13,031 trading one stock five times over two days.* I’ll review one of the trades. But first, understand that I was riding the hype train. If you follow me on Twitter you’ve seen me tweet it before…

Ride the hype, but NEVER believe it.

(*Please note: My results, along with the results of my top students, are far from typical. Individual results will vary. Most traders lose money. My top students and I have the benefit of many years of hard work and dedication. Trading is inherently risky. Do your due diligence and never risk more than you can afford to lose.)

So what, specifically, made me take the trade? Keep reading for the answer. First, I want you to consider…

The Purpose of the Hype Train

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It’s simple: the hype gets people excited about a company so they’ll buy the stock. It doesn’t matter where the hype starts. It could be company press releases, promoters, or Twitter pumpers. What’s important is to understand the hype gets newbies to believe in the company.

Why? It’s all supply versus demand. When there are more buyers than sellers, the stock price goes up.

Hyping a stock to drive the price up has only one purpose: to give someone the opportunity to sell at a higher price. That’s it.

The Risk of Believing the Hype

Riding the hype train can be fun — and lucrative. But don’t buy into the BS. It’s everywhere and will only break your heart. And potentially your account.

I don’t believe in rumors, but I’m willing to ride the hype train. Before I understood this, I lost $500,000 on one stock. (For the full story, read my best-selling book “An American Hedge Fund”.)

Back then I was riding the hype, but I fully believed it. That loss made me cynical. Be wary. Never believe the promoters and learn to trade with rules. (I trade with these rules.)

In a bubble market, it’s easy to get sucked in. Do yourself a favor: focus on basics. Learning the basics will help prepare you for the crazy market we’ve seen. But if you come to this market believing the hype, you’re gonna get crushed. Even if you make money, you’ll learn the wrong lessons.

In 20+ years of trading, I’ve seen many people ride the hype train until it derailed. One of the best examples was during the pot stock bubble of 2014.

Read “Buying High: How to Get Rich on Pot Stocks” for the full story. It’s a fun read. I suggest you revisit it every time you’re tempted to buy a penny stock based on hype. 

Again, it’s OK to ride the hype but NEVER believe it. Watch this video for a clear understanding of penny stock hype…

Exposing Corruption in the Penny Stock Market

You need to learn how this game works. The kinds of run-ups I love to play happen because of hype. Here are some examples from last week…

Trading Mentor: Hype Train Trading Examples

Novonix Ltd (OTCQX: NVNXF)

Novonix is an electric vehicle (EV) play. The company makes test equipment for lithium-ion battery cells. NVNXF spiked on September 22 when the company released its annual report.

But what you really need to know … is that the hype train was moving full-steam ahead.

September 22 was Tesla’s ‘Battery Day.’ Tesla (NASDAQ: TSLA) is the hottest large-cap stock in the entire market. TSLA is up roughly 450% on the year. It was actually up 565% at the end of August.

So you can imagine, when Novonix released its annual report on the same day as ‘battery day’ … the rumors started flying. The hype train was departing the station. All aboard…

Some people asked how I knew NVNXF would go so far. “How did you know? Did you read the entire annual report?” No. I skimmed the first two pages and read a few paragraphs on page 2.

Here’s the NVNXF intraday chart from September 22 with my first trade:

NVNXF penny stock chart
NVNXF chart: September 22 intraday, hype train supernova — courtesy of StocksToTrade.com

The rumor was that Tesla would mention Novonix as part of battery day. Again, I never believe the hype. I took a very small part of the move — trading conservatively. Some people said “Tim, why do you sell so soon? You should let it ride.”

Learn to Take the Meat of the Move

Even if you catch just a small piece, like I did on this trade, that’s fine. Do NOT feel the pressure to take the entire move. That trade made me a nice $5,360* profit. I’ll take the single any day.

There are SO MANY bad characters in this niche. Laugh at them when they say stupid things like, “It’s not a loss until you sell.”  That’s BS. Learn from the trade. Ride the hype train and then get off. Let the believers turn into hold and hopers.

Let’s look at another trade…

The Peck Company Holdings Inc. (NASDAQ: PECK)

Sympathy plays often come from hype. PECK is a good example. Check out this chain of sympathy plays…

On September 23, SPI Energy (NASDAQ: SPI) announced it was launching a new EV subsidiary. A big short squeeze spiked SPI from $1.07 to $32.47 in one day.

Another stock, Sunworks, Inc. (NASDAQ: SUNW), ran in sympathy to SPI. Then PECK ran in sympathy to SUNW.

So hype can really drive sector momentum. Be aware and take advantage of it. And remember, sometimes the sympathy plays are easier to judge. Why? Because they lag behind the hyped stock by a few minutes or even hours.

Here’s the PECK intraday chart from September 24:

PECK penny stock chart
PECK chart: Sept 24 intraday, hype train sympathy play — courtesy of StocksToTrade.com

As you can see, the stock got halted several times on the way up. I sold right out of the first halt. I don’t trade through multiple halts. For me, that’s too risky. The irony is, even though I made $8,395 on the trade, I left about $40K on the table.*

Let’s look at one final trade on the EV hype train…

DSG Global Inc. (OTCQB: DSGT)

On September 24, DSG Global announced its subsidiary Imperium Motor Corp. was introducing a new high-speed SUV electric vehicle. Check out the chart…

DSGT penny stock chart
DSGT chart: September 24 intraday, hype train failed breakout — courtesy of StocksToTrade.com

As you can see, the stock had a huge morning spike. Even though the chart above doesn’t show it, I traded the stock twice during that spike. You can view my $5,236 win here. And my $3,576 win here.*

So why am I showing you the later, much smaller win? Because in many ways it was my best trade of the day.

In the morning, I look for spikes or dip buys. In the afternoon, I want to see a stock break the day’s high. With DSGT, I did get a little breakout, but it was weak. Again, some students were saying, “Tim, give it a little more time, you’re always out too quickly.”

But it wasn’t a definitive breakout. I tried giving it time, but I’m not gonna overstay my welcome. I refuse to hold and hope like newbies. So when it could barely hold the afternoon breakout, I sold.

That decision protected my earlier gains.

Ride the Hype But NEVER Believe It

I can’t reiterate this enough: NEVER believe the hype. 99.99% of penny stock companies fail. They might change their ticker, merge with another company, or do a reverse merger. But they almost never become real, profitable, companies.

So learn to take advantage of the hype. It’s beautiful to step on the hype train, ride it to the next station, and get off. Let the believers stay on until it derails.

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Some people ask me how they can take advantage of hype-driven stocks if they’re busy. A lot of people don’t want to be full-time penny stock traders. Check it out…

How to Ride the Hype Train for Busy People: Supernova Alerts

If you don’t have time to watch your screen all day, my Supernova Alerts might be for you. Understand this can work for busier people. You’re going for potentially bigger gains.

For me, I like taking singles, which is why I personally don’t trade the supernova alerts — I only alert them. But there are good opportunities for busy people. If that sounds like you…

Watch the no-cost Supernova Alerts presentation here.

Millionaire Mentor Market Wrap

This niche is full of hype and BS. And I love it.

Every day I fight ignorance. I fight misguided research that says, “low-priced stocks aren’t fit to trade. They aren’t predictable.” That’s all BS. The hype makes the penny stock niche easier to predict.

I’m not saying trading is easy. You have to study. But because of the way the hype train works, you can work to gain an edge. Grow your knowledge account and gain experience. Then you can become a self-sufficient trader like my student Matt Monaco.

Matt helped me put together this…

30-Day Trading Bootcamp

So many people don’t know the basics. Do yourself a favor … the Bootcamp is the single best and most up-to-date trading guide I have.

Before we created this in April and May, Matt had only made roughly $35,000 from trading.* I’m not knocking it — Matt was a dedicated student. He was studying. Check out Matt’s profit chart and trades here.

But today Matt is over $322,000 in profits. He’s made $289,000 in the past six months.*

The Bootcamp really helped him to reach the next level. I encourage all my students to watch it multiple times.

Access the 30-Day Bootcamp with BONUSES here. 

Now, for a BIG announcement…

Join Me On October 2 for Market Mastery

Tim Sykes studying and trading
© Millionaire Media, LLC

YES! The next Market Mastery all-day live trading session is coming up this week. Uncertainty is all over the markets. The pandemic, the upcoming election, and continued social unrest make this…

A MUST-ATTEND SESSION.

Take off work, school … whatever you have to do. It’s all archived if you can’t make it, but I highly recommend you be there live.

Join me on Friday, October 2 for Market Mastery.

Trading Challenge

If you’re dedicated, join the Trading Challenge. But only if you’re dedicated. If you’re lazy, don’t bother. I want more millionaire students — and they all come from the Trading Challenge. But it doesn’t happen for people who don’t put in the time.

Apply for the Trading Challenge here.  

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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”