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Mentor Updates

Millionaire Mentor Update: Art Basel, Buying the News, Q&A

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Written by Timothy Sykes
Updated 2/25/2021 12 min read

Want to invest? The first thing you should invest in is your trading education. Trading is what made everything I do — whether teaching, traveling, giving to charity, or going on foodie adventures — possible. So first go for freedom by applying for the Trading Challenge.

As for non-trading investments…

Once in a while I get asked what I would invest in if I had time and wasn’t focused on teaching. One thing I’d consider is art. I know art is a good investment — I’ve seen the stats. So if I had the time, I’d probably do it. But I don’t have the time right now to learn the strategy, which is exactly what it is even if you just love art.

Badboi at Art Basel Miami Beach

With Mat Abad at Art Basel Miami Beach © Millionaire Media, LLC

What kind of art would I invest in? One artist I would definitely invest in is my partner on Karmagawa, Mat Abad (@badboi on Instagram). Mat is now selling prints of his photos with 100% of profits going to charity. He did his first Art Basel show at the recent Miami Beach event on December 4.

Why would I invest in Mat’s prints? It’s not because I’m biased. And I’m not writing about it just because the money will go to charity. Mat is an up-and-coming photographer extraordinaire. I’ve met thousands of photographers in the last few years, and Mat is exceptional. See a small sample of Mat’s work on his website.

So if you’re an art collector, check out Mat’s work. Just so you know, the prints are not inexpensive. This is a serious art-collector-level investment. If you’re an art collector and you want any prints, use the contact email here. Please don’t flood the email account if you’re not serious. As I said, it’s a substantial investment.

If you’re not an art collector — or not yet ready for that level of investment — you can still help the causes Karmagawa supports. Get your hands on some Karmagawa merch here. Use coupon code cybermonday (all one word, lowercase) to save 50% off for a limited time. (Hint: holiday gift giving season is upon us. Why not help spread the word by giving Karmagawa merch to friends and family?)

As always, I’m trading and teaching. With that in mind, let’s get on with the trading lesson of the week…

Penny Stock Trading Lessons

You’ve probably seen the phrase “buy the rumor, sell the news.” And if you follow me, you know I’ve said it in videos and written about it here on the blog. The reason is, a lot of times the big move in a stock happens based on the rumor. So much so that the news is already priced in by the time it’s released.

When that happens, it’s usually best to NOT be in the stock. And you don’t know how the market is actually going to react to the news. So you’ve gotta be careful.

When It Makes Sense to Buy the News

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But there are times when a press release has all the elements necessary to give a stock a boost. Especially if there hasn’t been any kind of pre-emptive rumor.

One thing I like to look for is when a new deal announced by a small company also quotes someone from the big company. Kraig Biocraft Laboratories (OTCQB: KBLB) is a good example from last spring. The company issued a press release that quoted the bigger company, Polartec. Over the course of the next couple months, KBLB was one of the hottest stocks in the market. I wrote about it in this post.

Fast forward to December 6…

QuantGate Systems Inc (OTCPK: PRFC)

I dip bought QuantGate Systems Inc. [formerly Epcylon Technologies Inc] (OTCPK: PRFC) — a strong first green day spiker based on this press release. It announced integration of PRFC’s trading app with online broker TradeStation Securities. (I use these brokers.)

Trading Challenge student/Profit.ly user RouxBourbon alerted the chat room. Pay attention because later in this post I’m going to tell you about becoming a self-sufficient trader. I love it when students alert the chat room with solid news before I do. It proves they’re studying.

02:33 PM RouxBourbon: PRFC otc with news

Take note: the press release quoted the president of TradeStation Securities. So when you get a press release about a collaboration between a small company and a big company…

… and the press release quotes someone from the big company…

… it gives the news more credibility. So it’s a stronger catalyst which can lead to bigger spikes.

When You Hit Your Goals, Get Out

When I bought, my thesis was that the stock could bounce back toward its highs going into the close. In my entry comments on Profit.ly I said I wasn’t sure about holding it overnight. And it was a scary/choppy stock so I decided not to hold. Instead, I took profits once it reached my goals.  (See all my trades here.)

Take Smaller Positions on Speculative Trades

While this trade met some of my Trader Checklist guide criteria, it was also speculative. The long-term chart isn’t great. And the stock is a true penny stock, having started the day Friday below a penny per share. I don’t do as well trading such low priced stocks. So for me, I chose to take a very small dollar amount position size.

Take a look at the PRFC chart on December 6:

prfc stock chart
PRFC chart: December 6, first green day spike on positive news — courtesy of StocksToTrade.com

As you can see from the chart, it was very choppy. It ended up working out — and I’m very happy with the 23.78% win. For more information on trading penny stocks see my FREE penny stock guide here.

Let’s get on with some…

Trading Questions from Students

The first question this week comes from a Trading Challenge student. It was asked during my last live webinar on December 6.

“Once you’ve mastered technical analysis, can you take that skill and trade higher-priced stocks/real companies?”

My strategies are pretty niche. I don’t think you have as much advantage on higher-priced stocks because everyone else is trading them. I prefer to fish in my little pond.

(I highly advise reading “The Complete Penny Stock Course.” I get so many questions answered in the book. See chapter II.5, page 145: Technical Analysis and Price Action.)

I like the penny stock niche because it’s full of morons. That might not sound nice, but the competition is very pathetic. And that creates predictable patterns

When you have bigger companies with higher-priced stocks, the competition is much higher. Why? Because there’s much more money involved. Not only do you have a lot more smart people trading higher-priced stocks, you’re also up against algorithmic traders using very expensive software to do most of the work.

That’s why I trade penny stocks with a small account.

I like to think of it as catching fish in a barrel as opposed to fishing out in the ocean. If you go fishing in the ocean, you’ve gotta wait hours to get a bite. Fishing in a barrel is easy. There’s a lot to learn — especially at first — with penny stocks. But there’s a limit to what you have to learn. And it’s not rocket science.

So I choose easy every single day. Fishing in the ocean is hard and boring.

Next question…

“Tim, why don’t your top students trade the same setups as you all the time?”

It’s amazing how many people try to make this a negative when it’s actually a positive. My top students all studied their butts off and are now self-sufficient traders.

I even get criticism sometimes from people who complain because my top students don’t attend a webinar.

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In a perfect world, I teach you enough where you can answer whatever questions you have … yourself. When that happens, you don’t need me any longer. And that’s a big difference between me and a lot of other so-called gurus.

Trader Training Wheels

I’m just training wheels. I don’t want you to be dependent on me. And you shouldn’t want to be dependent on me or anyone else. If I do my job right, you won’t be dependent. You’ll be self-sufficient. Do the work, build your knowledge base, and become a self-sufficient trader.

Final question for this edition of the update…

“When you take a trade, what percentage of your account do you keep in cash?”

It depends on the play. Sometimes I take a speculative trade where I only buy 1,000 shares of a stock trading at $1 per share. With a play like that, it’s not that I think it’s an amazing play. It could be something like a Friday morning spike, or something up on good news, or whatever. But I take a small position size (or small dollar position like the PRFC trade) because it’s speculative.

Identify a Good Setup and Work Backward

This is important — especially if you’re new to trading penny stocks. There’s a lot more to trading than just saying “Oh, that looks good, I’m gonna use 5% of my trading account.” It doesn’t work that way — unless you wanna learn the hard way.

So to help determine your position size you should be asking some other questions like…

  • What’s the risk?
  • What’s the trading volume? (Hint: you never want to be a big percent of the volume.)
  • What works best for you? You don’t figure this out by blowing up your account. You figure it out by testing with very small position sizes, over time.
  • What works for your schedule? Sometimes there’s a perfect play but I only have 10 minutes to take a trade. In that case I’d take a small position — if I take the trade at all.
  • Where are you trading from? If I’m in a developing country working on a Karmagawa project and I have bad Wi-Fi, I don’t wanna take a big position size.

All those questions are really part of the sliding scale I detail on my “Trader Checklist Part Deux” DVD. I highly recommend you watch it. Study it. Take notes. And use the sliding scale. Every one of the seven indicators comes into play. Once you’ve used the sliding scale enough times, it will become second nature.

Millionaire Mentor Market Wrap

That’s another one in the books.

Have a great week. Study hard. And remember, if there aren’t any good plays, use your time to study more. The better you prepare, the better chance of success. The stock market is a battlefield, so arm yourself.

Comments from Students

Here are just a few of the many comments from students after my last Trading Challenge webinar. The first is from a new Trading Challenge student…

10:31 AM Kbouzan Only one month into the Challenge. Still learning from your past and have watched over 100 hours …. trying to wrap my head around all this great info. So sorry, no good questions at this time.

10:32 AM CrazyWillows timothysykes: WHOOHHOOO that was a great webinar thanks Tim!!!!

10:32 AM Familyguy timothysykes: Thanks for a great webby boss!

10:32 AM tim2867 timothysykes: Thanks for your time.

10:32 AM TonyG1 timothysykes: tks Tim Excellent Webby! Shalom…

During the live trading webinar on December 6, I didn’t take a trade. And I mentioned to everyone on the webinar that you don’t have to take a trade. Glad to see Profit.ly user kicsaknn got the message…

10:34 AM kicsaknn timothysykes: Thank you Tim, valuable lesson. I do not have to trade.

10:35 AM Sky_Hi_Trading timothysykes: Thanks Tim!!! You’re the best!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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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 (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”