Last week I was in Europe working on a new Karmagawa project. But I also set aside time to enjoy myself…
Another solid +$10k profit week for me this week even though today was disappointing on $EGOC $EVLI $KPAY $GEGI but no time to pout as I'm blessed to be able to trade with this awesome view & now I'm giving a 2-hour Q&A webinar to https://t.co/occ8wKmlgm students! I LOVE MY JOB! pic.twitter.com/2KwCPFjCu7
— Timothy Sykes (@timothysykes) May 14, 2021
I love my job and trading.* And I love doing charity work. But I also know myself well enough to be able to take a step back. So while I worked, I also took the gift the slower market gave.
This is an important lesson…
Table of Contents
- 1 Learn to Modulate
- 2 Trading Mentor: Questions From Students
- 2.1 When you dip buy, is your justification the fact that it spiked previously? Are there other factors?
- 2.2 How can you tell if a company is doing a toxic financing?
- 2.3 How can you tell if a stock is getting promoted or if it’s just trending?
- 2.4 If OTC stocks don’t trade after hours or premarket, how do they gap up or down?
- 2.5 You use mental stops and don’t use market orders. When a stock drops fast, will you chase with a mental stop?
- 3 Trade Review
- 4 Millionaire Mentor Market Wrap
Learn to Modulate
There seems to be a misconception that you should trade every day. Or that you should go big every day. That’s the kind of BS promoters spew, and it’s just not accurate.
Trading should be something you can modulate. You can take bigger position sizes based on the market environment and your comfort with the patterns. Similarly, you can take smaller position sizes, paper trade, or not trade at all.
The main thing everyone should do is study and prepare. When the market’s slow, it’s giving you the gift of more time to study.
Most people aren’t prepared. They don’t know which patterns are good or bad. And they don’t know how to modulate up or down. So when things are slower, it’s the greatest gift the market can give you.
Think of it as the market saying, “You need more time to study. Here’s a day with fewer plays.”
The crazy market we saw in January and February made it tough to study or even live life. I’m really proud of my top students who took advantage of the bull market.* But I’m even more proud they know when to modulate up and down.
One reason they’re able to modulate is because they built small accounts over time. By focusing on the process, they learned…
Why Studying the Past Helps to Maximize Small Gains
As you watch this video, pay attention to Kyle’s position sizes and patience in the beginning. By focusing on the process, Kyle now has the skills to adapt to any market.
Students like Kyle Williams and Matthew Monaco are incredible at maximizing when there are great plays.*** And because they focused so much on the process, they’ve even learned to pivot from penny stocks to crypto.
But they’re just as good at pulling back when there aren’t plays. In last week’s update, the emphasis was on adapting to any market condition. But it’s also true that…
Top Traders Adapt to Themselves
Trading is different for every single person.
Last week in Europe I was enjoying myself. After working my butt off for the past few months, I took a little time for my health. I took time for my mental well-being. I was still trading, but not nearly as much. On Thursday, I didn’t trade at all.
So know yourself. Respect your schedule and other life commitments. Take care of yourself. Don’t try to force the market. Take advantage of the slower market to increase your knowledge account.
Let’s move on to…
Trading Mentor: Questions From Students
I’m getting a lot of questions I’ve answered before in DVDs, video lessons, or archived webinars. When you’re ready to make the decision to join the Trading Challenge, you’ll get access to all those resources.
For now, these questions came up in a recent webinar…
When you dip buy, is your justification the fact that it spiked previously? Are there other factors?
It’s not just that a stock spiked before. Some stocks spike for one day and then fail — they’re one-and-dones. I prefer to dip buy multi-day runners. But it also depends on why the stock spiked and why it’s panicking.
Recently it’s all about the promoters creating big spikes. When the stock starts crashing, the promoters have to support it. Otherwise, the whole thing comes crashing down and their game is up.
But there are other reasons a stock might panic…
Sometimes a stock just gets ahead of itself due to hype. Or maybe the short sellers are finally right. Or there’s a ‘buy the rumor, sell the news’ event. Depending on the news, it can potentially lead to a big bounce.
What if a company does an offering and the stock tanks? That’s a risky dip buy.
It also leads to the next question…
How can you tell if a company is doing a toxic financing?
Just expect the worst out of all of them. Expect that if a company is able to do a financing, it’s going to be a toxic financing.
I REALLY can't say it enough: expect the absolute worst out of everyone & every company in finance & you'll never be disappointed. There's SO MUCH hype/BS/lies being spread every day, the upcoming crash is long overdue to wipe away sooooooooooo much filth. Stay woke/cynical/safe!
— Timothy Sykes (@timothysykes) May 14, 2021
Most of these companies can’t raise hundreds of thousands, let alone millions, of dollars. But if they do, investors demand a ridiculous discount as compensation for the risk.
How can you tell if a stock is getting promoted or if it’s just trending?
StocksToTrade Breaking News alerts the different promoters. Never underestimate how important it is to use STT Breaking News Chat.** Not just to trade, but so that you understand why a stock is moving. You learn SO much.
But it also saves you time. You don’t have to go through dozens of websites like I used to. Your job is infinitely easier.
Need more information? Watch the no-cost Holiday Guide I released in December 2020. It explains how I use STT’s Breaking News Chat to learn why stocks are moving.
If OTC stocks don’t trade after hours or premarket, how do they gap up or down?
As for gap-ups or gap-downs…
Orders pile up and then get executed at 9:30 or 9:31 a.m. Eastern. You see the bid and ask moving up or down based on the number of buyers or sellers. They’ve put in orders that aren’t getting executed.
Keep in mind, a lot of newbies think of these sketchy stocks as investments. And they don’t sit watching the market all day. So they might not see the catalyst or whatever spiked the stock until after hours. And a lot of the time it’s just promoters.
What happens? They put in a buy order based on so-called due diligence. And they do it after hours or premarket. And most of them don’t know enough to use a limit order. They put in a market order that gets filled at whatever price the market maker decides to give them.
Which leads to the last question for this edition of the update…
You use mental stops and don’t use market orders. When a stock drops fast, will you chase with a mental stop?
I never use market orders. I’m fine with missing a play. If I’m in a play and it’s dropping … if the news is terrible … sometimes I just have to suck it up and take a loss. Sometimes I put in an order and the stock goes right through it. Then I have to change my order. It happens. It’s a slippery slope. You don’t want to get stuck in a panic.
This also goes back to the previous question. Right now I think it’s dangerous to hold most of these stocks overnight. The classic first green day pattern is to hold overnight and sell into a gap up at the open.
But right now I’m very cautious about that play. Why? Because if it doesn’t gap up, there’s a very good chance it will panic. If it panics, it can be difficult to get your sell order executed. Especially if you have a big position size.
And now it’s time for…
This week, I’ll review two trades. The first was my biggest win last week.*** The second was my biggest loss. Notice the difference in percent/dollar gains on the win vs. the loss. This is KEY to long-term success as a trader.
Green Globe International, Inc. (OTCPK: GGII)
GGII was #1 on my top penny stocks list last week. It started moving in April when the company announced new management and teased a potential merger. As noted on my watchlist, I was looking for potential dip buys or morning spikes with news and big volume.
Want my NO-COST watchlist delivered to your inbox each week? Register here.
Check out the GGII intraday chart from May 11. It shows two trades. The first was my biggest win of the week***…
As you can see, there wasn’t a huge dip at the open. It was a dip off the gap up high. And it dipped roughly to the previous day close before turning. With OTCs, it’s important to read the Level 2 to see the turn. I managed to catch the bottom almost perfectly.
Also, notice the pullback — where I sold — was right near the premarket high. Again, some brokers allow premarket trades on OTCs. But my exit was based on watching for a wall of sellers on Level 2.
For a crash course on reading Level 2, check out my “Learn Level 2” DVD. It’s six hours of real-time Level 2 analysis. If you plan to trade OTCs, this is a must-watch guide.
Why did the turn happen at the premarket high? Possibly due to…
The Psychology of Groupthink
If enough traders think the same thing, it becomes a self-fulfilling prophecy…
“Oh, that was the premarket high … There’s gonna be resistance there so I’ll just sell.”
Be aware of the psychology of other traders.
That trade was a 20.59% win for $5,823 in profits.*** My goal was 10%–20% so it worked even though I underestimated it.
The second trade on the chart was more of a classic dip buy. I waited for the big sell-off. It was a nice bounce. Notice I didn’t get greedy. By Wednesday it was late in the pattern. So I played the price action and played it safe.
Now for my biggest loss of the week…
Everlert Inc. (OTCPK: EVLI)
Everlert Inc. is yet another OTC with zero revenue, out-of-date filings, and dark or defunct on the OTC markets. On May 4 it started uptrending. On May 14 it spiked on news of new custodianship. This kind of news has been a solid catalyst lately. Twitter pumpers went wild.
Here’s the EVLI chart from May 4 showing my trade…
Notice I didn’t chase. Instead, I waited for the pullback. But there wasn’t much of a bounce so I followed rule #1 and cut losses quickly. It turns out my thesis was right — I was just early. But I’ll always cut rather than allow a loss to turn into a disaster.
This trade was a 5.88% loss totalling $1,378. Keep that in perspective. The difference between my biggest win and biggest loss is roughly four to one.*** That applies to both profit and percentage win/loss.
Burn this into your brain…
If you win more often than lose, and your average win is bigger than your average loss, it is impossible not to be profitable.
Millionaire Mentor Market Wrap
I like to say there are two moving targets in trading – the market and you. It’s important to learn to modulate with both.
Take what the market gives. If it’s a slow market, use the time to study. Modulate up on you. Study more. Once you get free, you can spend more time with your family or doing other things you love.
And when the market is hot, modulate up on trading. Learn to size up. Be a little more aggressive.
No matter what, focus on the process.
If you get it, comment below with “I will modulate!” I love to hear from all my readers, so comment below!
*Tim’s primary income derives from the sale of financial education products and subscription services offered by various businesses and websites in which he has an ownership stake.
**Tim Sykes owns a minority stake in StocksToTrade.Com.
***Please note that Matthew Monaco and Kyle Williams’ trading results are not typical and do not reflect the experience of the majority of individuals using our products. From January 1, 2020, to December 31, 2020, typical users of the products and services offered by this website reported earning, on average, an estimated $49.91 in profit. This figure is taken from tracking user accounts on Profit.ly, a trading community platform. It takes years of dedication, hard work, and discipline to learn how to trade. Individual results will vary. Trading is inherently risky. Before making any trades, remember to do your due diligence and never risk more than you can afford to lose. I’ve also hired Matt and Kyle to help in my education business.