Tim Sykes has spent over two decades studying penny stock manipulation – not to participate in it, but to document it, expose it, and teach regular investors how to protect themselves from becoming victims.
His approach is skeptical and evidence-based. He advises his audience to “expect the worst out of everybody” and to view penny stock promotions as a “game of smoke and mirrors.” But his goal isn’t cynicism for its own sake – it’s education as a form of protection.
Table of Contents
Definition of a Pump-and-Dump
“99% of penny stocks are scams, and will eventually go out of business.” — Tim Sykes
The only thing they’re good for is making money by trading them – but most people lose money because of the shadiness of this niche.
I'll keep buying these pumps all the way up, the higher the better, just know it'll be ugly when the pumps crash/get halted & newbies will blindly go down with the ship. Don't mention fundamentals with me, no pump has them and if you think so, then you're brainwashed by promoters
— Timothy Sykes (@timothysykes) February 15, 2021
A pump-and-dump is a coordinated effort where insiders or promoters artificially inflate a stock’s price through hype (the “pump”), creating the illusion of momentum and opportunity. Regular investors buy in based on this manufactured excitement – and that’s exactly when the insiders and promoters sell their shares at a profit (the “dump”), leaving latecomers holding worthless stock.
The pattern is simple: Promoters everywhere start saying “this stock is going to be the next big thing.” Retail investors buy based on this hype. Smart money sells into that demand. The stock crashes. The promoters win. Everyone else loses.
Why Tim Sykes Teaches This
If these are scams, why teach people about them in detail?
This is a reasonable question and Tim Sykes’ answer is clear: Education is protection.
The People Who Lose Are the Ones Who Don’t Understand
The investors who lose 80–90% of their money in pump-and-dumps are the ones who:
- Don’t recognize the pattern
- Believe the promotional hype is real news
- Buy at the top because “it’s going up”
- Hold through the crash because promoters tell them to
The investors who protect themselves are the ones who:
- Recognize the stages of a pump
- Understand the difference between real catalysts and promotional fluff
- Know that when a stock is up 500% in three days on no real news, it’s not an “opportunity” – it’s a trap
Sykes Documents Patterns – He Doesn’t Create Them
These manipulation patterns existed long before Tim Sykes and will exist long after him. He didn’t invent pump-and-dumps; he’s spent two decades documenting how they work so regular people can see them coming.
Transparency as Accountability
There’s a fundamental difference between promoters and educators:
| Promoters | Tim Sykes |
|---|---|
| Tell you to buy and hold | Teaches when to sell into strength |
| Hide their positions | Publishes every trade in real-time on Profit.ly with timestamps |
| Get paid to hype specific stocks | Makes money by trading repeating patterns |
| Disappear after the dump | Has a 20+ year verifiable track record |
| Create the hype | Teaches his readers to recognize the hype |
| Operate anonymously or through shell accounts | Operates publicly under his real name |
Anyone can verify Sykes’ trades — here are 9,372 trades he’s made dating back to 1999. Anyone can see his entries, exits, wins, and losses. That level of transparency is the opposite of how promoters operate.
Now that the #atlastrading promoters are free, please retweet & help me motivate them to MAKE PUMPS GREAT AGAIN! Yo @MrZackMorris @Hugh_Henne @dipdeity @PJ_Matlock @Ultra_Calls congrats on the big court win so please can you get back to pumping? Thanks in advance, love ya! 🙏😘 pic.twitter.com/1G6kFFBH5q
— Timothy Sykes (@timothysykes) April 5, 2024
Modern Pump Tactics to Watch For
Sykes warns that the tools of promoters have evolved. While they used to rely on email blasts with legal disclaimers, they have now moved “underground” to avoid regulation.
Social Media Hype: Promoters use Discord, Twitter, WhatsApp, and Telegram to spread “hot tips” without disclaimers. Some promoters tweet 75–100 times per day about a single stock.
Bot Networks: Promoters use dozens, if not hundreds, of bot accounts on social media to create the illusion of widespread interest and organic enthusiasm.
Vague “News” Releases: They release a flurry of press releases or tweets about “big news coming” or revolutionary products to create urgency – without any verifiable substance.
The key insight: If you see a stock spiking with massive social media buzz but no concrete, verifiable news, that’s a red flag. The hype is the product.
Real Catalysts vs. Weak Catalysts
One of the most important skills Sykes teaches is distinguishing between catalysts that actually mean something and vague hype designed to move a stock temporarily.
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Real Catalyst Examples (Legitimate Volatility)
- A company’s clinical study is nearing completion – concrete, verifiable milestone
- A company exercises warrants – this is real news, even if it often causes the stock to drop
- A major player makes a concrete investment (e.g., “Nvidia invests $10 billion into a company”) – verifiable, material transaction
- FDA approval, earnings reports, merger announcements – tangible events with documentation
Weak Catalyst Examples (Promotional Red Flags)
- “We are going to sign an agreement with a very big tech company” – vague, unverifiable
- “Big news coming soon!” – creates urgency without substance
- Revolutionary product claims with no evidence of progress, revenue, or regulatory approval
- “Partnership” announcements with no financial terms disclosed
- “Price target is $90-$110” on a stock trading at $4 – extraordinary upside projections (20-25x) presented as reasonable analysis
- “This is a once-in-a-decade buyout opportunity” – hyperbolic framing designed to manufacture urgency
- “Big Pharma’s blockbuster drug is losing exclusivity, so they have no choice but to acquire this company” – speculative M&A thesis framed as an inevitable conclusion
The 7-Step Pennystocking Framework
Sykes developed his 7-Step Pennystocking Framework based on over a decade of observation. He introduced it in 2011, and remarkably, it still works today because “the rationale behind the price action is still there. Thanks to greed, hype, and manipulation – the 7-step pennystocking framework just keeps giving.”
Remember this chart well, its the basis for my 7-step framework, @30DayBoot & @completepenny & you must study not to fall prey to greed/ignorance or you'll get wrecked like 90% of traders. It's VITAL to sell into excessive strength/hype, do not just hold & hope like most newbies pic.twitter.com/QsAGHsI6lp
— Timothy Sykes (@timothysykes) February 28, 2021
Critical Context: This Is a Recognition Tool, Not a Participation Guide
Think of it as a Venn diagram: The 7-step framework captures the typical pattern of penny stock spikes and crashes. Pump-and-dumps fall within this pattern, but so do other volatile penny stocks driven by weak fundamentals or sector hype.
The framework helps you:
- Recognize where a stock is in its cycle so you don’t buy at the worst possible time
- Understand why stocks behave the way they do so you can make informed decisions
- Identify red flags that suggest manipulation rather than legitimate growth
Sykes emphasizes: “It’s not an exact science, but once you understand what’s happening, you’ll see it again and again.”
The 7 Steps Explained
Step #1: The Pre-Pump or Promotion
At this stage, the stock is quiet – trading flat with low volume. This is when insiders, promoters, or informed traders accumulate shares before the hype campaign begins.
What this means for you: If you’re hearing about a “hot stock” for the first time, you’re probably not at Step #1. The people who profit most got in before you heard about it.
Step #2: The Ramp
The run-up accelerates. There’s consolidation, increasing volume, and building hype – on Twitter, in Discord servers, in chat rooms. The stock starts appearing on scanners and watchlists. More people notice.
What this means for you: This is when FOMO (fear of missing out) kicks in for most retail investors. The hype feels real and urgent. But the informed money is already positioned.
Step #3: The Supernova
This is the explosive spike. The stock goes parabolic – sometimes up 200%, 500%, or more. Social media goes crazy. Everyone’s talking about it. It feels like the opportunity of a lifetime.
What this means for you: This is the most dangerous time to buy. The higher a supernova goes, the more overextended it gets. When you see a stock that’s up 500% in three days and you’re just hearing about it, you’re not early – you’re late. This is typically when promoters and early holders are selling into the excitement.
For a deeper dive on identifying this crucial turning point, read: How to Spot the Top of a Penny Stock Pump
Step #4: The Cliff Dive
What goes up must come down. Once the promotion stops or momentum fades, the bottom falls out. Stocks sometimes drop 50% or more in a single day. A small decline near the top turns into a full-on collapse.
What this means for you: If you bought during the supernova and you’re still holding, this is where the real damage happens. Promoters told you to hold. They were selling while they said it.
Step #5: The Dip Buy
After the cliff dive, there’s sometimes a bounce, and this is Sykes’ favorite time to buy. Dip buyers try to catch the turn. Short sellers cover their positions. The stock may rally 20–50% or more.
What this means for you: This bounce often traps a second wave of buyers who think “it’s coming back.” Sometimes it does bounce significantly – but it rarely returns to the highs.
Related Reading: How To Dip Buy The Best Penny Stock Panics
Step #6: The Dead Pump Bounce
After the initial cliff dive and bounce, there may be secondary bounces. But like a bouncing ball, the stock loses momentum with each bounce. The highs get lower each time.
What this means for you: Bag holders (people who bought at the top and refused to sell) often hold through multiple bounces, hoping each one will “bring it back.” It rarely does.
Step #7: The Long Kiss Goodnight
The gradual decline over days, weeks, or months. The hype is gone. Volume dries up. The stock fades into irrelevance.
Sykes says: “Penny stock pumps don’t end with the company changing the world with its amazing product. They end by going bankrupt, and taking the people who held their stock with them..”
What this means for you: If you’re still holding a stock at this stage, hoping it will recover, you’re likely going to wait forever. The promotion is over. The story has moved on. Your capital is trapped.
Definitely ride the hype/pumps as high as possible, but NEVER believe the promoters who are too chickenshit to show their real names/ALL trades publicly. Learn to sell into into strength & cut losses quickly, NEVER get married to the junk that only rise due to Robinhooders buying
— Timothy Sykes (@timothysykes) July 11, 2020
The Framework Can Play Out in Any Timeframe
One critical insight: the 7-step framework can play out over months – or in a single day. Sykes has shown intraday charts where stocks go through all seven steps between market open and close.
This means the pattern is fractal. You might see it on a yearly chart, a weekly chart, or a 15-minute chart. Once you recognize the shape, you’ll see it everywhere.
How This Knowledge Protects You
Here’s the practical application of everything above:
You Won’t Buy at the Top
If you understand Step #3 (Supernova), you know that when a stock is up 500% in three days and everyone on social media is screaming about it, you’re not early – you’re late. You’re the exit liquidity for the people who got in at Step #1.
You Won’t Hold Through the Crash
If you understand Step #4 (Cliff Dive), you know that “holding through the dip” on a promoted penny stock is usually a path to 80–90% losses. When promoters say “hold strong,” they’re selling.
You Won’t Wait for a Recovery That Never Comes
If you understand Step #7 (Long Kiss Goodnight), you know that hoping a crashed pump will “come back to your entry price” is usually wishful thinking. The promotion is over. The story has moved on.
You Can Evaluate News Critically
If you understand real vs. weak catalysts, you can look at a press release and ask: “Is this concrete and verifiable, or is it vague hype designed to move the stock?” That single question can save you from countless bad decisions.
You Recognize the Game
Most importantly, you understand that what looks like a “hot tip” or an “opportunity” is often a carefully orchestrated transfer of wealth – from retail investors who don’t understand the pattern to insiders who do.
The goal isn’t to make you cynical. It’s to make you informed.
Education as Protection
Tim Sykes’ approach to pump-and-dump stocks isn’t about profiting from manipulation – it’s about understanding manipulation so you don’t become its victim.
Traders who swing for home runs on these crappy stocks will eventually end up losing money. Traders who go for small gains are the ones who profit in this dangerous niche.
That’s why Sykes teaches this. Not to create more participants in the scheme, but to create fewer victims of it.
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