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Trading Recap

Breaking Down My 65%+ Swing Trade

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Written by Timothy Sykes
Updated 6/27/2022 5 min read

I’m super excited…

After weeks of waiting, penny stocks are on fire!

This past weekend, I grabbed a swing trade that netted me over $3,870 IN PROFITS.

Check out all my trades at profit.ly

I was so pumped I got up at 5:00 a.m. to film a recap for my students.

What I loved about this setup was how simple and straightforward it was.

Normally, I’d reserve this kind of content for my paid members.

But I’m going to give you a sneak peek behind the curtains.

Because once you know what to look for, you’ll be able to spot stocks with massive potential.

The Setup

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This trade relied on two components: news and price action.

Last week’s Supreme Court decision to overturn Roe v. Wade sent ripples through markets.

Our Breaking News Team was all over the story, hitting members with headlines on stocks tied to the story…

One of which is Evofem Biosciences Inc. (NASDAQ: EVFM).

The company provides hormone-free contraceptives and STI prevention.

This stock caught my eye because of Friday’s price action.

Even in this one-minute chart, you can see shares rise on volume that is substantially higher than the previous day.

In fact, if you look at the daily chart for the stock, the volume stands out even more.

A great way to search for stocks like these is with a scanner or stock screener.

In our StocksToTrade platform, I use the screener to look for stocks with volume well above its average.

Plus, I can also narrow down my search by the float and other items.

My thesis for the trade was simple. I expected folks to read more and more about the fallout from the court’s decision over the weekend.

Ideally, they would start moving money early Monday.

Execution

Going back to the one-minute chart, I was looking for support around $0.37-$0.38.

You can see in the chart how shares used that as a pivot, initially finding resistance there on the way up, and then using it as support on the way down.

Now, I wasn’t happy to see the stock slide as it moved into the close. That isn’t the type of price action I like to see.

But, given the type of trade this was, I knew that I needed to give it a little more slack than I typically do.

However, I also sized my trade accordingly.

In this trade, I bought 15,000 shares at $0.392 for a total position size of $5,880.

For my day trades, I may go with something closer to $10,000.

Swing trades often carry more risk because they can move so much overnight or over the weekend.

I choose how much I want to put into each trade based on the potential range I see as well as where my entry is compared to a stop.

If you go back and look at EVFM over the last few weeks, you’ll notice that it’s been trading around $0.30.

That was the worst case scenario. But I expected that even if the stock flopped, I’d still have a shot at getting out for a loss of just a few pennies.

Yet, the upside potential on this one seemed enormous.

Had I actually held onto shares for a few more hours, I could’ve possibly picked up as much as another $6,000!

Now, I’m perfectly happy with the gains I made.

If I wanted to work for more, I could’ve sold half near the open, set a worst-case stop back at my entry, and tried to scale out of the position if and when it broke higher.

One last thing I want to point out.

I didn’t enter this stock on the highs. I waited until it pulled back into support.

This is a big part of how I manage risk, keeping my losers small and winners large.

Final Thoughts

All any trader needs is a simple setup that combines price action and news.

Don’t focus on trying to catch every single play out there.

Become an expert on just one pattern.

I recommend my Supernova pattern.

This is one of the easiest setups to spot and helped me earn my first $1 million trading.

Plus, it works on any stock from OTC micro-caps to Tesla.

Click here to learn more about my Supernova pattern.

—Tim


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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”