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Trading Lessons

8 Lessons From This Supernova Season

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Written by Timothy Sykes
Updated 12/7/2023 10 min read
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What’s the most important tell on if a stock will Supernova or not?

It’s NOT…

…the sector

…the catalyst

…Or the float size

NOPE.

What matters most, and what short sellers consistently NEVER understand is that PRICE IS KING.

You can’t fight the tape…and the price don’t lie.

And right now, we’re in the heart of Supernova season.

We’re seeing a handful of smallcap stocks rocket 100%, 200%, and even higher than 300% in one single day!

Here are 8 of the most important lessons from this Supernova season.

Lesson #1: Embrace The Worst

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Supernovas are occurring because short sellers are being overly aggressive.

And the crazy thing is that they’re right 99.9% of the time.

What’s even crazier is that you can have the right idea and you can still go broke in trading.

How?

Because they mess up on two of the most important elements of survival… which is timing and risk management.

Yes, the stock is likely a turd, and likely going to go back down…but when?

Can you absorb a move from $2.36 to $19.19?

Because that’s what the ticker symbol MLGO did…

A few weeks ago VVOS went from $5 to $48.79…

Can you hold that long until it finally corrects?

Some traders who are very experienced and have massive bankrolls can…but for an average trader you can forget about it.

Being on the wrong side of just one of these Supernovas can end your journey right away. 

So here’s what I’m looking for…

Of course, finding a stock with a catalyst helps. The more BS it sounds, the better. I know, that sounds absurd. But short sellers are so stubborn and aggressive. Not to mention, horrible at managing risk.

They all huddle around in discord chat rooms, go on social media and try to warn people about how terrible the company is, why they are likely a pump and dump, and how it’s going to go to zero.

The more complaining they’re doing…the better likelihood they are underwater and we’re setting up for a squeeze.

Again, they are probably right…but when that happens is where they mess up. And that’s the opportunity I’m looking to take advantage of.

I’m not an advocate of any of these companies. I’m an advocate of smart trading. And I see a weakness in short sellers and I want to take advantage of them.

Lesson #2: Trade Scared So Trading Isn’t Scary

Trading these stocks is scary, don’t think they’re not.

After all, it’s not normal for a stock to jump 200%, 300%, or even 400% in a single day.

These stocks are extremely volatile.

But I prefer my students trade these stocks with a small size then going for random tickers and trying to make 2%.

So how do you overcome the fear?

First, trade small.

Second, manage your risk properly.

Even after twenty plus years of trading the fear doesn’t go away. Learn to work with it.

Lesson #3: Ride The Hype…Don’t Believe it

I’m playing these stocks because short sellers are the new promoters. Their aggressiveness and stubbornness is leading to these massive short squeezes.

The ticker symbol SHOT exploded on this PR:

And the shorts called BS on it…

Is the story real or is it a pump and dump?

I don’t care because I’m not an investor.

I’m in these stocks for quick moves.

The short sellers are so focused on the fundamentals…they fail to realize that stocks are moving by the millisecond. I am not trying to be right a few days from now…I’m trying to be right in the next few minutes.

If you think like a trader…you will be fine.

But if you think like an investor or a stubborn short seller…then you’re likely going to struggle.

Lesson #4: It’s Gametime ALL The Time

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In normal market conditions it’s pretty safe to say that the first or last hour of the trading day will be the best times to trade.

However, with all these stubborn short sellers, crying and complaining, we are seeing short squeezes happen at times that were once considered “slow.”

Now, I’m not saying you should sit in front of your screen all day…but be open to more opportunities…because they could pop off at any time.

 

Lesson #5: Forget About Being Perfect

I’m trading in Asia from a laptop…

And my sleep is all messed up.

However, it hasn’t stopped me from catching some of this week’s biggest trading opportunities.

And because these stocks are so volatile, you don’t need perfect execution or entries to potentially profit off them.

My entry in WBUY the other day was less than ideal…

But it didn’t matter.

If you want to read about the trade, you can here on Profit.ly, where I post all my trades…the wins and losses.

My goal is to just try to catch the meat of the move. I’m not trying to get near the lows or out at the highs.

I’m looking for fast and quick profits. And if I’m wrong, I’m out quickly with small losses.

 

Lesson #7: The Right Tools Can Make Your Trading Life Easier

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Catalysts are the initial drivers of these stocks…

Toxic short sellers are what makes them go Supernova.

So how am I finding these plays even though I’m jet lagged and trading at weird hours?

Simple.

I use the StocksToTrade Platform to find me the latest breaking news plays. 

If you’re not using it, I think you’re trading with a major disadvantage.

Lesson #8: Study My 7 Stock Framework

Yes these stocks moonshot…and yes they crash.

It’s not a surprise if you follow my and study my 7 stock framework.

If you don’t know how it works…or need a refresher…then check out the video below:

 

Ready to Master Supernova Stocks with AI? 🚀

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Dive into the thrilling world of supernova stocks where timing, risk management, and smart trading are key.

Embrace the volatility, trade with caution, and seize opportunities in this Supernova season.

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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

* 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 (888) 878-3621 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”