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What’s So Great About Penny Stock Sympathy Plays?

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Written by Timothy Sykes
Updated 2/23/2021 10 min read

Unbelievable! Did you know that it’s possible for penny stocks to make big-time moves … for no good reason?

A sympathy play is when an indirect catalyst affects stock prices. One company’s news or earnings can pump up the prices of other stocks within the sector … even if nothing’s really happened

I love penny stock sympathy plays.

These sympathy plays create opportunities for traders.

But how can you take advantage of them? Let’s talk about it using the example of DCGD and the related sympathy plays with CLSI and COWPP

The Curious Case of COWPP

Consider the example of COWPP.

Not too long ago, COWPP was trading for about a penny per share. Within about four days, the price skyrocketed to about 33 cents per share.

I’m a trader and teacher, not a mathematician. But even I can do this math: if you’d bought at the low and sold at the high, you’d have more than 30x your money.

That means if you’d bought $100 worth of that stock, you’d have more than $3,000

I didn’t make that much, but I did make a nice little profit from dip buying this decent runner. It was low volume, so I took a small position hoping it would make a nice bounce as a classic morning panic.

The pattern and price action were solid, but I only got a partial position and didn’t make much money. Now, it’s having trouble at red-to-green levels, and I didn’t want to get greedy. Just as quickly as it began, this stock’s spike could be over.

Was it world-shaking news made this stock price jump?

Not really. It was a sympathy play to DCGD. 

DCGD: The Original Play

DCGD has been the biggest winner of the past few months. It recently catapulted from a quarter of a penny to about $2.20 per share.

Conceivably, if you’d bought $100 of this stock, you could have turned it into $80,000 or more.

True, few people get into a pump like this right when it starts. But even if you’d gotten in on the first day of the pump at about 2 cents, you could have netted a nice little 200% profit.

Best of all? It totally follows a pattern I’ve called out before!

Why I Love Penny Stocks

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Penny stocks can be hated on … they can be ripped on … you can talk smack about their fundamentals…

But here’s my response:

Screw the naysayers who say penny stocks aren’t worth the time.

Screw the negativity and narrow-mindedness. 

Don’t listen to the naysayers! Be a warrior.

Focus on big percentage gainers, follow the rules, and you’ll see that penny stocks offer a TON of opportunities for traders.

Wanna learn all my rules and patterns? Read “The Complete Penny Stock Course.”

The Costello Connection

At the center of all of these sympathy plays? A guy named Justin Costello.

First, he was attached to news about DCGD. People got excited about it based on promotion, even though the company put out a press release saying they had no idea about it.

It was enough to make the stock go crazy.

Costello’s name was then connected to CLSI, inspiring a related play. It went from about a penny to 10 cents … 10 times your money in a few days. It was following a pattern that my students saw:

… and I was able to get in on the action early enough to profit:

Now, COWPP is the latest stock rumored to have a Costello connection.

In this case, the sympathy plays were inspired by a person. But it could be based on a hot sector or a hot product. No two sympathy plays are identical, but it’s always a similar story.

And it usually happens fast.

Screw FOMO — Think Ahead

Did you miss out on the first play? Don’t worry too much … and definitely don’t try to force it!

I traded DCGD a few times … I never took advantage as much as possible, though.

I got a lot of flack for getting back in at about 50 cents. Who cares?

All said and done, I made about $10K on DCGD … I’m not complaining, because you never go broke taking profits! 

With this cycle of sympathy plays, every play was a little different. But they all followed the same general pattern. And patterns are what you should be looking for.

If you missed the initial runner, FOMO is understandable. But don’t act on it. 

You don’t want to chase the initial one. Instead, be proactive and be on the lookout for sympathy plays. 

Don’t chase. Recognize that big percent winners can lead to other big percent winners that are related.

Use StocksToTrade to find big percent winners … that’s how I found CLSI and COWPP!

Speeding Sympathy Plays

This is important: Sympathy plays tend to accelerate quickly compared to the original play that inspired them.

For example…

DCGD took several months to run up…

CLSI took several weeks…

… and then COWPP took just a few days.

The original play that spikes big will take the longest because there’s no precedent.

But as time goes on and the rumors grow, more people are watching and looking for the pattern.

Don’t fall into the trap of chasing. Be smart: Start thinking about what could be another related play.

And remember: if you miss out on this round of sympathy plays, there will always be more! Don’t fall prey to FOMO.

Ready for a full penny stock trading immersion, apply for the Trading Challenge.

Recent Tweets, Comments, and Trades from Students

I’m so proud when I read the success stories and lessons my students learn from sympathy plays like this:

From Profit.ly

Profit.ly user AMejroyce made a nice profit on DCGD:

“Long for the first time (for real): $DCGD, made a nice little profit, $150.00…very first profit ever, thanks Sykes, Grittani, others here, I’ve learned quite a bit. I caught a falling knife and didn’t bleed.”

Profit.ly user Jackaroo got in on the action with CLSI:

“locked $CLSI 35k from .0335, sell .046s. $400-ish. nice way to start the week”

Profit.ly user ronbrown1981 took profits before continuing with the trade:

“$CLSI, bought .082, sold at .08655 and .0906, 40K shares total”

Even at higher prices, students were still making good trades. Profit.ly user savannahpianist traded higher but got out in time:

“$CLSI in at 9.75 cents, half out at 10.45 cents”

Some students, like Profit.ly user PennyStock_MegRussellETI, had great success:

“just took 100% of the 700% gain from today $COWPP”

So did Profitl.y user dani_jeane:

“In $COWPP @ .078 out at .1594 100+ percent profit!!”

Student Tweets

@camtastictrades knew what was up with DCGD:

@Hasenrahal1 made a profit on CLSI:

@geb2012 has been studying hard since July … didn’t get in on the trade but was watching and saw the pattern coming…

@KKleomenes tried dip buying for the first time with COWPP:

@cfcmickt got in late, but made a nice profit nonetheless:

[Note that these results aren’t typical. I’ve put in the time and dedication and have exceptional skills and knowledge. Most traders lose money. Always remember trading is risky … never risk more than you can afford.]

Do you have questions about sympathy plays? I have answers. Leave a comment below. I love hearing from my readers. 

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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

* 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”