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Patterns To Watch

3 Morning Panic Dip Buy Examples

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Written by Timothy Sykes
Updated 1/11/2023 5 min read

Have you ever bought a stock that looks like it’s in freefall…

A stock that’s down more than 50% in a single trading session?

It sounds crazy…but I do it all the time…and I do it consistently and profitably.

Financial ‘masters’ like Jim Cramer incorrectly call it ‘catching a falling knife.’

They brainwash people into believing this cannot be done profitably nor consistently.

I’m living proof these guys are full of garbage.

They make great sound bites but lousy traders.

People defend these numskulls because they’re trying to ‘help educate’ folks.

The problem is, and they know this, is people take action on their recommendations.

They don’t educate people. They hurt people.

Most of their ‘recommendations’ never work and barely outperform the market at best.

I urge you to compare their track record to mine.

Look at how many of my trades are Morning Panic Dip Buys.

It’s not magic or a scam, it’s a time-tested, logic-based strategy.

But don’t take my word for it.

Let me show you a few examples where I combine my 7-Step Penny Stock Framework with the Morning Panic Dip Buy.

But I’ll take it one step further and show you ones that worked AND ones that failed.

Vision Energy Corp. (OTC: VENG)

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Every one of my trades starts with two key elements:

This is the daily chart for VENG leading up to and including the day it plunged.

We’re going to start with Trade #3 as it’s the most recent.

I expected shares would either ride back up to break the recent high or make their final swan dive.

The latter happened.

Intraday, the price action looked like this:

Initially, shares weren’t down that much from the prior day’s close.

But as the morning wore on, the decline picked up volume and speed.

I teach students who take my Millionaire Challenge how to read price action, level 2 days, and identify potential support areas.

In this case, if you go back to the daily chart, you’ll see that VENG found support around $12 back in early and mid-December.

That’s the area I looked for a potential play.

From there, I watched price action and waited.

My initial entry didn’t provide enough of a bounce.

However, and this is a tip I typically reserve for my students, the second bottom tends to hold better if the first doesn’t.

So, I added to the trade, lowered my average entry price, and walked away with a nice profit off the second bounce.

Now let’s take a look at a dip buy that didn’t work out…on the same stock!

Yes, let’s go back to December 30th for this one.

This is Trade #2.

VENG opened up down ~12% after a ~22% drop the day before.

Now the interesting thing is the dip buy worked perfectly the day before for a nice profit:

That was Trade #1.

So what made Trade #2 lose the following day?

Quite simply, it didn’t bounce.

All three trades used the drops that formed as the stock began its final dive.

Trade #2 didn’t have as much liquidity, nor was the drop nearly as pronounced.

That doesn’t make it a bad setup, just not ideal.

The best ones are the most obvious – the ones you don’t need to ask whether it fits the mold.

Trade #2 didn’t bounce.

So, I relied on my #1 rule – cut losses quickly.

I know that not every trade won’t work out. Sometimes I read the tape poorly or buyers don’t follow through.

But with a +75% win rate on my trades, and +30 millionaire students, the proof is in the pudding.

See for yourself.

I’ve posted hundreds of examples on Twitter and there are dozens of videos on YouTube that cover this setup and so much more.

But if you want daily insights…

If you want thousands of hours of video education and content…

Then THIS is where you need to go.

—Tim


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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

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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”