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Respect the Trump Pump

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Written by Timothy Sykes
Updated 10/21/2021 5 min read

Respect the Trump Pump: Key Takeaways

  • StocksToTrade’s Breaking News Chat alerted the Trump SPAC news premarket this morning*…
  • Retail traders pile into Trump SPAC, sending it soaring over 350%…
  • HEED THIS LESSON ABOUT THE DANGERS OF SHORTING…

Here’s how top traders find the hottest news that can supercharge stock spikes

Look at “failed businessman” Donald Trump’s SPAC today…

trump PUMP
DWAC chart, October 21, 2021 — courtesy of StocksToTrade.com

Digital World Acquisition Corp. (NASDAQ: DWAC) had a massive short squeeze as Trump haters and short sellers tried to beat down the stock.

But retail traders piled in and squeezed the naysayers…

StocksToTrade Breaking News Alerts the Trump Pump

My favorite tool for spotting news nailed another huge alert. STT’s Breaking News Chat team alerted the SPAC news and premarket spike about an hour before the market open.

Never Underestimate a Pump’s Potential

Everyone thought DWAC was junk. So many people are saying that Trump’s a failed businessman with a ton of haters.

Value investors and big hedge funds probably thought shorting this was a sure thing…

Sound familiar?

That’s what they all thought about GameStop Corp. (NYSE: GME). Now, it’s still trading near $200 per share.

NEVER underestimate the power of hype, backed by retail traders, and a celebrity name.

Why Short Selling Is Dangerous

DWAC’s a perfect example of the dangers of short selling. Or being too biased and stubborn in a position.

Shorting’s such an overcrowded niche right now. Then they all get stuck and have to buy to cover to get out. Add in retail day traders chasing the action and you get a perfect storm.

It almost tempts me to get back in the short-selling game…

But I won’t. It’s way too risky. Trading the big mover isn’t the only way to play these massive movers…

Look For Sympathy Plays

There’s no way I was touching DWAC when it was up over 350%. So I did the next best thing and looked for sympathy plays.

I took a speculative trade in another media stock, Salem Media Group, Inc. (NASDAQ: SALM). When DWAC was trading near its highs, I took 5,000 shares of SALM at $4.08. I sold at $4.20 when I didn’t get the big bounce I was hoping for. And I made $585 in profits.**

There’s always a way to trade safely.

That’s what I teach students in my Trading Challenge. Apply for the Challenge today!

What do you think about the Trump pump and DWAC’s insane run? Leave a comment and tell me if you prefer to trade safe like me or if you got in on this crazy squeeze!

Disclaimer

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Tim Sykes has a minority ownership stake in StocksToTrade.com.

Never attempt to copy or mirror the trades discussed on this website or in StocksToTrade’s Breaking News Chat alerts.  Attempting to do so may result in substantial financial losses.  StocksToTrade’s Breaking News Chat alerts are not provided in real-time.  For that reason, it is highly unlikely you will be able to buy the stocks at the same entry price, or sell the stocks at the same exit price, to achieve the same or similar profits obtained by the instructors.

Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. Most who receive free or paid content will make little or no money because they will not apply the skills being taught. Any results displayed are exceptional. We do not guarantee any outcome regarding your earnings or income as the factors that impact such results are numerous and uncontrollable.


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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”