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Penny Stock Basics

Millionaire Mentor Update: From City Lights To Painting the Town In Guatemala

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Written by Timothy Sykes
Updated 2/21/2023 11 min read

What. A. Week.

While writing last week’s update I was on the way home from Australia. I mentioned heading to New York to speak at the Trader Expo. It was an excellent event. I spent time at the StocksToTrade kiosk. I actually made a trade from the kiosk using my laptop.

I’ll get more into that trade and a beautiful premarket play that sent the chatroom crazy. First, you can learn how to trade from anywhere with a good wifi connection — even a Trader Expo kiosk — when you apply for the Trading Challenge.

Tim Bohen and I hosted a Q&A: An Evening with Timothy Sykes & Tim Bohen, How to Trade Hot Sectors and Identify Stocks. It was like the bad boys of trading hit the city when we started knocking over chairs. (It was all in good fun.)  There was even a moment of t-shirt throwing that got me in trouble with Bohen. Here it is …

Definitely watch the video to gain honest and hard-hitting insights like …

  • Why it’s not fun getting rich, but it’s fun what you can do with the money.
  • How boring old habits gave Ray Allen two NBA championship rings. They’re also the key to your success as a trader.
  • Why it’s good that all the smartest and richest people hate penny stocks.
  • And … how trading penny stocks is like crocodiles looking for dead ducks. I’m serious. Watch the video. Take notes.

In the video, Tim Bohen gave away the big news about something amazing we experienced on Tuesday the 12th. If you’ve been following me on Twitter, the cat’s out of the bag and you already know. I’m excited to share it with you —  I’m gonna write a whole post about it. It was a dream come true.

For those of you who don’t know, I’ll say it was a great honor for me and the StocksToTrade team. More on that next week. Keep your eyes and ears open for it. [Hint: it’s about the Nasdaq. If you’re not on my email list — get on it. I’ll drop you an email when the post is ready.]

I just got back to the U.S. after spending the last week in Guatemala. As soon as the Trader Expo and Nasdaq thing finished I hopped on a flight to Guatemala. We had two new schools open with my charity.

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We’re also working with a great charity called Pintando. We’re painting a small town called Santa Catarina Palopó to turn it into the Santorini of Guatemala.

The locals realize that traditional economic activities are no longer a sustainable option. In the past, agriculture and fishing could support the entire community. Now it’s not enough. Tourism, textiles, and sales of artisan products are now a major part of the local economy.

So the charity, Pintando, is helping this community transform through art. And they’re going to use the same model for other communities near Lake Atitlán.

We stayed at a stunning hotel nearby called Casa Palopó. This place is a definite must on your bucket list. Great food, incredible panoramic view of the lake … amazing staff. Go check out their website and let me know what you think.

There was only one problem: they don’t have great wifi. It’s unfortunate but so far I haven’t found anywhere in Guatemala with great wifi. It makes trading a little harder but I can’t really complain because we opened the two new schools and had a great time.

Trades Of The Week: Two for the Price of One

I’m including two trades this week because it’s been so mental. Last week I didn’t even have time to write about the trade from the StocksToTrade kiosk at the Trader Expo.

Midday Breakout I Couldn’t Resist — Sky Solar Holdings Ltd (NASDAQ: SKYS)

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So there I was in the STT kiosk at Trader Expo and SKYS spiked on news of a big new investor. I bought the midday breakout — which was moving fast — with a goal of making 10-20%. I don’t trade midday often, but this former runner had volume and the news catalyst. I couldn’t resist. I’ll take the $2,037 profit** on that any day of the week.

Here’s the chart:

SKYS stock chart
SKYS chart: March 11 midday spike.

“Tim, Why Would You Do This?” — Restoration Robotics (NASDAQ: HAIR)

This trade sent my chat room crazy. It was a dip-buy into a panic. So, my classic pattern. It was pre-market but I bought it nicely. I had a lot of doubters saying “Why would you do this?” And then 10, 15, 20 minutes later it worked out it was a good trade.

Take a look at the chart:

HAIR stock chart
HAIR chart: March 15 pre-market dip-buy

There’s a good lesson in this trade …

Yes, it was speculative based on a seeming earnings winner. But it was on a Friday. It’s okay to be a little more aggressive on Fridays once you have experience. By the time I entered my position, there were already nearly 2 million shares traded on the day. Pre-market …

My goal was to take 10-20% on the bounce-back near its highs. It did have a nice little bounce after breaking a wall of sellers at 1.40ish. Nothing huge, but again, it’s good to be aggressive on Friday mornings.

(Please don’t take this as a reason to go make some crazy trade that’s gonna blow-up your account just because it’s Friday. Do your research. Get experience with small trades. Experience played a key part in this trade.)

That said — join the Trading Challenge so you can learn how to do it. It’s not rocket science. Where will you be five years from now? Always a good question to ask when you have to make a decision to invest in yourself.

Big Runners — My Students Play the Hot Market

There are so many plays right now I can’t even keep track. A lot of big runners. This isn’t my pattern because I don’t like to chase. But it’s a hot market and several of my students are doing great.

Head over to my Twitter feed after you read this and check out some of the amazing things my students are posting.

You’ll find everything from people just starting their journey, studying a couple hours a day …

… to students taking singles and crushing.

Like this great trade by Aidan. He works full time and isn’t even a Challenge student yet. He’s developing his skills by working his butt off.

Or this conservative trade by Ryan. He’s learned that “getting out too soon” can be a good problem to have.

And this one by Johann. “Not greedy, just playing the price action.”

It’s inspiring. I’ve been trading for 20 years and teaching for 10. I love hearing about my students earning success through hard work.

It’s that time …

Question of the Week

This one from a student. I made a comment over on Profitly where I share all my trades. The comment was about a pre-market earnings spike gone bad. Instead of an earnings winner it turned into an earnings failure.

Here’s the comment I made on March 14:

UXIN now $1.40/share off its premarket highs, this is why you don’t just buy anything spiking on earnings, make the stocks prove themselves before you risk your hard earned $.

And the question of the week …

What type of proof are you looking for when you say ‘make the stocks prove themselves’?

Price action. If a play is really good enough, it should be able to hold its initial spike. Uxin Ltd (NasdaqGS: UXIN) was a recent runner at the end of 2018. Going into earnings it was uptrending because everyone thought earnings would be good.

It closed in the $4.60s and pre-market it was in the $5.30s. So everyone was “Oh, earnings winner.” But right at the market open it tanked. That is NOT an earnings winner. That’s an earnings failure.

So I don’t even try to dip buy something like that. Some people were trying to dip-buy it. As you can see from the chart below, when a company drops big in response to earnings …

… I don’t know what they said on the earnings call. I don’t know what earnings were. But for some reason, people don’t like it. And usually, this is the result. This is not a dip-buying opportunity.

And, you cannot just buy any stock pre-market because it has news. It has to spike pre-market and then it has to hold its gains during the regular market. Ideally, it should even extend its gain and close high.

Here’s the chart:

UXIN stock chart
UXIN chart: March 14 earnings crash

Pretty disastrous, right?

Now compare that to Aurora Cannabis Inc. (NYSE: ACB) They reported a new billionaire joined the board. You see the spike pre-market but then it held the spike. Then day 3 was when it actually really broke the highs. Day 4 and 5 was when you could have made a dollar a share.

The news was already out. So you don’t have to be there when the news hits. Take a look at the chart:

ACB stock chart

Respect the fact that a lot of these stocks spike on day two, day three … even day four. So you don’t have to be a slave to your computer. And shouldn’t necessarily be focused on what it does initially. The biggest moves sometimes happen later.

There’s a good lesson in the contrast between those two charts. Check them out again.

Millionaire Mentor Market Wrap

I’m considering changing the name of this section of the update to ‘The Closing Bell.’ You’ll understand next week. One of the coolest things I’ve experienced in my 20 years of trading.

The weekend is coming, right? Use it to study. Apply for the Trading Challenge. The year is one-third of the way gone … get on it.

Are you a trader? How are you trading the hot penny stock market? If you’re new to trading I’d love to hear from you, too. Comment below and share on social.

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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

* 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”