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Trading Lessons

Lessons From The Latest 900% Spiker

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Written by Timothy Sykes
Updated 11/30/2023 10 min read

If you exclude the Magnificent Seven (Apple, Amazon, Alphabet, NVIDIA, Meta, Microsoft and Tesla) the S&P 500 is barely up this year…

However, that doesn’t mean there haven’t been plenty of opportunities…especially lately.

Between myself and XGPT, we’ve picked the single biggest winner in the market three out of the last four days!

BDRX went from $2.51 to a high of $8.81 over the weekend

RDHL which went from $1.03 to a high of $4.10 in two days

MINM which went from $0.79 to $10.28 in one day...

I’ve been getting tons of messages from students who have been nailing these trades.

Now, if you’re someone who is seeing these stocks pop off, but are unsure how to take advantage of them…I’ll walk you through why we’re seeing them and how to take action.

In A Traders Market You Must Be Hyper Focused

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Take away the Magnificent Seven and the market has barely budged this year.

Which means if you are trying to make money from trading you’ve got to be intentional.

In other words, you’ve got to constantly look around and ask yourself: What’s working in this market?

And over the last few months…nothing has worked better than trading short squeezes.

Take for example the ticker symbol MINM, which went from $0.79 to $10.28 in one day!

I got into this trade in the pre-market on a partial fill, buying 1,750 shares at $5.98 and closing them out at $6.81.

I spent approximately $10,465 in capital, and made back $1,452 in profits. 

Now, this was a scary trade for me because the stock was already up so much…

But thanks to VVOS the day before, I thought there was a chance the short squeeze could continue.

VVOS opened at $11.93 and went to a high of $48.79 on Wednesday.

And when a stock like VVOS catches fire…traders are on the hunt for the next one.

So why are we seeing so many short squeezes?

Why Short Squeezes are Proliferating

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Overconfidence of Short Sellers: Many short sellers enter the market with a belief that they have a superior understanding of stock valuations and market trends.

This overconfidence often leads them to overlook key risk factors, setting the stage for a short squeeze.

For example, when VVOS announced it received the first ever FDA 510(k) clearance for oral device treatment of severe obstructive sleep apnea, short sellers were quick to dismiss the news, focusing solely on the company’s need to raise capital.

However, they underestimated the market’s reaction to positive news, and the supply and demand dynamics,

Timing Mishaps: Trading isn’t just about having the right idea; it’s about having the right timing. Short sellers often lack this crucial element.

They might hold a strong thesis on a stock’s potential decline, but if they’re too early in their predictions, the stock can soar to new heights before eventually dropping, causing significant losses in the meantime.

Poor Risk Management: Short selling requires a robust risk management strategy, something many short sellers lack. They often take positions based on conviction rather than a balanced assessment of potential risks and rewards. This lack of risk management can result in catastrophic losses, especially in a market ripe for short squeezes.

 

Understanding the Short Squeeze Environment

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The recent market scenario has been particularly conducive to short squeezes. Stocks like VVOS, MINM, and RDHL have all seen significant surges due to short squeezes. These movements are often driven by a combination of factors:

Market Sentiment: The general sentiment in the market can dramatically affect stock prices. When traders collectively begin to focus on certain stocks, especially those heavily shorted, it creates a ripe environment for a squeeze.

Catalysts: Events like positive earnings reports, favorable regulatory updates, or even influential social media posts can act as catalysts. These events often trigger rapid buying activity, catching short sellers off guard.

 

Market Dynamics: The current market has shown a tendency for rapid shifts. Stocks that were once easy shorts are now experiencing brutal short squeezes. This inverse market behavior demands a keen eye on trends and adaptability from traders.

Strategies for Navigating Short Squeezes

Taking Profits Early: In a market prone to short squeezes, it’s vital to take profits before they evaporate. This approach involves a careful balance of being opportunistic yet cautious.

Avoiding Overnight Holds: The unpredictability of the current market makes holding stocks overnight a risky strategy, especially for companies with weaker fundamentals.

Staying Informed on Trends: Keeping abreast of market trends and understanding the psychological drivers behind stock movements is crucial. This knowledge helps in anticipating market shifts and making informed trading decisions.

To better grasp these concepts make sure you study up on the 7 stock framework:

 

 

AI Can Help You Trade Short Squeezes More Efficiently

Spotting short squeezes isn’t incredibly difficult.

But developing a strategy and a game plan for trading them can be.

However, with the power of AI, specifically, XGPT, it has the potential to lead you to making better trading decisions.

Earlier this week it spotted a massive opportunity in RDHL…which went $1.03 to a high of $4.10 in two days.

As well as countless others…including CYTO yesterday which was up nearly 30%

If you would like to learn how to utilize AI in your trading to make faster, more informed, and potentially more profitable trades…

===> Click here to learn more about XGT

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🚨 Unleash Your Trading Potential in Today’s Volatile Market! 🚨

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If you’re dazzled by the recent jaw-dropping spikes in stocks like MINM, VVOS, and RDHL, and wondering how to spot and capitalize on these opportunities, then you can’t miss our next live training session.

📈 The market is teeming with unpredictable short squeezes and dramatic shifts. These are not ordinary times, and conventional trading strategies might not cut it.

👀 We’re delving deep into the mechanics of short squeezes, revealing why stocks like VVOS soared from $11.93 to a whopping $48.79 and how MINM skyrocketed from $0.79 to an astonishing $10.28.

We’re unpacking everything – from overconfident short sellers to market dynamics that turn “easy shorts” into brutal squeezes.

🔥 Join our live session to learn:

 

  • How to identify potential short squeeze scenarios.
  • The art of taking profits before they disappear.
  • Why avoiding overnight holds is crucial in this market.
  • How to stay ahead by understanding market trends and sentiments.

💡 Whether you’re a seasoned trader or just starting, these insights are vital for anyone looking to thrive in today’s market.

🚀 Don’t just watch from the sidelines as others make their move. Learn to navigate these turbulent market waters with confidence and strategy.

Your Trading GPS in This Uncharted Territory is Waiting.

👉 CLICK HERE TO SECURE YOUR PLACE!


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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”