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Trading Recap

How I’m Profiting From This Crazy Trend In The Market

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Written by Timothy Sykes
Updated 6/28/2023 6 min read

There’s an old expression on Wall Street that goes sell in May…and go away. 

I normally subscribe to the idea but not this year.

We’ve seen some monster moves lately. I’m talking about +200% gainers in BDTX, MEDS doubling in 24 hours, and AHI skyrocketing by +1,000%.

Not exactly the dull days of summer.

But if you want any chance of taking advantage of moves like the ones mentioned above, then you MUST know about the latest trend in the market.

I spotted it about a week ago…and I’ve been riding it to profits ever since.

I’ll show you what it is and why it’s so incredibly powerful in this market.

The Early Bird Catches The Worm

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Summer trading is notorious for its slowness. We tend to see a drop off in volume and a decrease in volatility.

However, that’s not what I’ve been seeing lately.

We are seeing some incredible trading opportunities.

And you know what else?

A majority of these plays are being developed in the pre-market.

That is, some stocks are catching monster bids in the pre-market.

Some of them have catalysts like BDTX.

Source: StocksToTrade

Shares of Black Diamond Therapeutics took off on Tuesday in the pre-market after the company released this headline:

Black Diamond Therapeutics Announces Initial Dose Escalation Data Demonstrating Anti-Tumor Activity of BDTX-1535 in Non-Small Cell Lung Cancer Patients Across Multiple EGFR Mutation Families

Others, like the ticker symbol AHI…are going nuts off with no news whatsoever.

Shares of AHI $0.30 to $3.88 in just two days…earlier this month.

Typically these stocks will fade during the open and sometimes throughout the day.

However, that’s not what we’re seeing.

Shorts Are Getting Trapped

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Most companies releasing this pre-market news are pretty crappy.

And despite shares spiking, they are likely to go back down.

That’s not a revelation by any means.

But you know what?

It doesn’t matter.

Short sellers can get wiped out along the way.

I’ve seen it countless times.

For example, if you short a stock at $3 and go to $30 in one day…will you have the stomach to hold it? Can you afford to hold it?

That’s why you have to be either insane to short-sell certain stocks or have a bankroll so BIG you can absorb the blows.

Just look at some of the moves lately in:

MEDS

BDTX

How I’m Playing This Action

jack kellogg and sykes in italy
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I’ve had some pretty bad losses in the pre-market over my career.

So when I see a stock taking off in the pre-market, there’s a good chance I don’t move right away.

Instead, I’ll watch it.

I’ll go over the charts and look at different time frames.

Some things I’m looking for include:

I don’t care about short interest because I don’t believe we can get an accurate reading. Plus, determining whether a stock is squeezing doesn’t take a genius.

If the volume is strong, I’m looking for an opportunity to panic dip buy…

Like I did in BDTX the other day.

I entered the trade at $3.20 and peeled out at $3.42 for a solid 6.9% winner.

Of course, the stock went to nearly $7.

But you must remember, these are crappy companies, and you never know when the rug will be pulled.

It’s better for me to take quick profits and move on.

But that’s me.

I’m trying to teach my students how to trade safely. 

And that’s why I trade the way I do.

Remember, my goal is to teach my students a process. It’s up to them to personalize it.

Bottom Line

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Short sellers are like angry vegans. They try to shame you into being long these crappy stocks. And pretend they are high and mighty.

At the end of the day…we are all just speculating here.

And the key to winning at speculation is prop risk management.

Something these short sellers have no concept of. And the reason why I’ve lost so much respect for them.

But I don’t hate them…

Because without them, there wouldn’t be as many summer trading opportunities.

By the way, there is no better time than now to invest in your trading education. If you want to be my next millionaire student, CLICK THIS LINK TO GET STARTED. 


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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”