timothy sykes logo

Trading Tips-Tim Sykes Penny Stock

Never Hold and Hope with Supernovas

Timothy SykesAvatar
Written by Timothy Sykes
Updated 1/25/2023 4 min read

Promoters prey on our emotions.

They claim to have a unique insight that allows them to predict parabolic price moves.

The louder they get, the harder they are to ignore.

Eventually, they suck those last buyers before yanking the rug out from under them.

I caution everyone, not just my students, to never fall in love with a stock.

Those Reddit loudmouths who talked a big game during the meme stock runs were largely silent when those same stocks kicked the bucket.

Right now, those same folks are at it again with IPOs.

They managed to push AMTD Digital (NYSE: HKD) up +12,000% before it crashed.

Stocks that go Supernova follow the same dynamics time and again.

The good news is that it creates opportunities for traders.

Without giving away the farm, I’m going to show you a few key spots to look for setups when stocks go parabolic.

Learn the 7-Step Framework

jack kellogg and sykes in italy
© Millionaire Media, LLC

I encourage everyone to study my 7-step penny stock framework.

Normally, information like this costs thousands of dollars.

But it’s hard not to see how these stocks follow the same pattern over and over.

Take a look at HKD.

It all starts with the initial ramp that gets everyone excited.

This is the point where it should get on everyone’s radar. It may not continue higher and could easily fade away. But you ALWAYS want to keep track of these initial moves – at least until they completely falter.

After the initial move, you either get a sideways consolidation or a pullback.

For those looking to take a long position, to ride the wave, this is where you would consider an entry.

However, this doesn’t work with just any stock that’s had a nice run.

They need to fit in a theme.

Right now, that’s IPOs.

Before that, it was oil & gas stocks.

Themes should be fairly obvious when you look at a cross-section of recent runners.

If you don’t see one, don’t force it.

That’s one of the great things about my chat room. Students get an opportunity to collaborate and share what they see.

Because in this case, two heads are absolutely better than one.

Now, even if you haven’t discovered a theme, you’ll know a Supernova once it starts to crash.

When stocks move lower off the backside of a parabolic move, there’s often opportunities to dip buy.

This isn’t easy at first. But with some practice and discipline, you’ll know where to find potential bounces that you can scalp for 5%-10%.

That same dip buying can be used as the stock fades into oblivion. However, I wait until it gets a decent bounce before considering a dip buy.

I look for stocks up 30% or more.

Here’s what that might look like on Mobilicom Limited (NASDAQ: MOB), a more recent IPO runner.

I noted the parabolic move up and then the crash down.

On that second arrow, I’d typically look for a dip buying opportunity.

This stock didn’t provide much of one, going from $3.50 to $3.75. But it still counts.

However, a nice setup appeared several days later in the area I highlighted in the box.

Shares took out the morning low on some heavy volume. Then, they drifted sideways.

A trader could step in there and buy shares against the low as a potential trade.

As long as you get a decent entry, your maximum loss should only be a few pennies, while your potential profits should be $0.15-$0.30.

If you set up the risk/reward ratio correctly and cut losses quickly, you don’t have to win many trades to turn a profit.

Final Thoughts

high frequency trading
© Millionaire Media, LLC

The first step for any trader is to find patterns that repeat the same price action over and over.

From there, it’s simply a matter of crafting a strategy that exploits those moves.

And there is no better pattern to start with than my Supernova.

—Tim


How much has this post helped you?


Leave a reply


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

Post image

Get my weekly watchlist, free

Sign up to jump start your trading education!

* 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”