How I Protected Myself From This Market Selloff

By Updated on August 25, 2023

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While most traders were locked in on Nvidia, and the sinking tech sector yesterday, I had a different plan.

No…it didn’t involve shorting the Nasdaq.

Or some other bet against stocks.

But it was just as profitable and a lot easier in my opinion.

It’s crazy to me that so many people try to make trading so difficult, trying to guess what will happen to the overall market when this option is on the table.

For example, while the QQQs were puking yesterday, I plucked out a fast winner in one of the unlikeliest stocks.

I’m about to show you how I did it.

Serious Question: Before We Get Started

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The reason why stocks like Nvidia get so much attention is because a lot of institutions own the stock. And since most people are passive investors you’ll find stocks like Nvidia, Apple, and Microsoft in a lot of retirement accounts.

But that’s not all…

Since these companies are so large and have such a huge impact on the economy…there’s an army of Wall Street analysts who follow their every move.

Now, I don’t know about you…

But why would I want to be competing against Wall Street pros who have better information, buying power, and resources than me?

I don’t…

And you probably shouldn’t either.

After all, what is your edge over them?

Instead, I prefer to compete against weaker, dumber, and overly emotional traders.

Competition I know I can beat.

Competition I have been beating for +20 years and making millions off.

You see, at the end of the day, we trade to make money.

Why would I want to make it hard on myself?

Picking Battles You Can Win

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Fundamentals matter…especially if you’re a long-term investor.

However, they rarely have a place in trading.

If you’re in a trade for a few seconds or minutes, do you think fundamentals are more important than price action and the laws of supply and demand?

Heck no.

However, that’s not how short sellers think. And this major flaw makes them extremely vulnerable.

And while it sucks for them they use broken logic…it’s an opportunity for traders like myself.

An opportunity I look to exploit daily.

Take, for example, my trade in the ticker symbol MULN yesterday.

The fundamentals of this company are horrible. And I would never invest in this stock.

However, I’m not an investor, I’m a trader.

I let price action dictate whether I get in or not…

That said, the stock was up big the previous day…going from $0.39 to $0.80.

Source: StocksToTrade

Did it deserve to be up that much, probably not.

But this game is all about supply and demand. If the buyers are more aggressive then sellers the price will rise.

And if too many shorts are in the stock…buying pressure will create a squeeze.

On Thursday, the stock opened up significantly lower…

The overaggressive shorts were probably thinking the stock was a zero.

However, I know when stocks like MULN sell off that hard, it makes sense to buy, based on risk vs. reward.

If you study the market, you’ll know that overagressive shorts are creating huge rallies in garbage stocks…creating massive short squeezes.

So I saw it as an opportunity to buy.

Source: StocksToTrade

I got in at around $0.56 and quickly peeled out near $0.60. 

It might not sound like exciting, but it was nearly a 6% move up in just a few minutes.

The crazy thing is I overestimated the move because it rallied to $.96.

Just goes to show how wrong the shorts were in the morning.

And I’m seeing plays like this occur a lot in this market.

Here’s what to pay attention to:

  • Look for fundamentally weak companies with strong stock price action
  • I don’t look at short interest or anything like that but I look at how a stock trades, sometimes for weeks, this will eventually give a feel on whether shorts or in the stock and when they are getting squeezed
  • Pay attention to stocks that are trading above average trading volume and avoid thinner volume trades

Are You Ready To Level Up?

The strategies I teach my students aren’t conventional. But as you can see, they can be very effective.

If most people who trade lose money would you want to trade the same way they do?

Of course not.

To give you a better understanding of what I mean, I’ve told my team to start putting together live training sessions. 

They are absolutely free for you to attend.



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Comments (1)
Author imageTimothy Sykes
Hey Everyone,

As many of you already know I grew up in a middle class family and didn't have many luxuries. But through trading I was able to change my circumstances --not just for me -- but for my parents as well. I now want to help you and thousands of other people from all around the world achieve similar results!

Which is why I've launched my Trading Challenge. I’m extremely determined to create a millionaire trader out of one my students and hopefully it will be you.

So when you get a chance make sure you check it out.

PS: Don’t forget to check out my 30 Day Bootcamp, it will teach you everything you need to know about trading.

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