The most important lesson from the past couple of weeks is how to deal with a slow market.
Patience is key in a slow market. In this edition of the update, I’ll explain that in more detail. I’ll also cover common financial misconceptions new traders face. Plus, what’s more important: personal development or being ready for the perfect play?
Table of Contents
- 1 Back in Europe
- 2 How to Deal With a Slow Market
- 3 Questions From Students
- 4 Millionaire Mentor Market Wrap
Back in Europe
I’m back in Europe eating great food and working on charity. I’ve been meeting with a few animal charities. Europe is a good time zone for trading the U.S. markets if there’s good Wi-Fi…
But the market has been slow.
How to Deal With a Slow Market
Aside from the BILZF trade, which was just an informational inefficiency, there hasn’t been much. But again, we don’t have a really hot sector. The markets are moving up and down based on President Trump’s tweets and the possibility of a China deal. (Or not.) Nothing is guess-worthy.
You need a lot of patience right now. And a lot of people can’t be patient. They’re freaking out.
Impatience Is the Enemy
For example, all these newbie short sellers who try to teach … well, now they’re losing all of their students. I know I shouldn’t laugh. (It’s difficult sometimes.) But if you teach a flawed strategy, you don’t realize how flawed it is until there are no good plays. Sadly, it’s leading to newbies blowing up their accounts…
I’m so happy & upset in the same time. Finally market getting back $SES was amagzing.But I got message from 2 friends they blow up their accounts. One more time KNOWLEDGE Is EVERYTHING. STUDY HARD & FOLLOW @timothysykes rule about shorting on #Friday to low float stock.@profitly
— ERIC INCE (@InceNY1) October 12, 2019
The Synthesis Energy Systems, Inc (NASDAQ: SES) short squeeze was awesome to watch. But as you can see from the tweet, it crushed a lot of shorts. I’m writing a dedicated SES short squeeze post as it’s such a good lesson. Get ready for that in the next few days.
For me … I’m OK with being patient. I’ve taught my students well. And, there are still a few good low-priced stocks that are moving. Like CLSI spiked a couple of times. A few people made money on that. But the last trade I took on CLSI was on October 1.
And since October 2, I’ve only taken two trades. Both were worth a shot in the slow market, but neither did what I wanted so I cut both for small gains. Review all my trades here.
It’s good to be experienced and patient. Impatient newbies lose money, get freaked out, and they don’t understand. This isn’t ego talking — this is experience. I’ve seen markets like this. You just gotta wait for some opportunity.
I don’t know if the China trade deal will go through. And I don’t care. I just react.
Let’s get on with some questions…
Questions From Students
The first question this week is … let’s say I gave a big blowout sigh…
“Tim, I’ve heard you say sometimes it’s easier to teach people with no previous financial knowledge. What are the most common financial misconceptions people come to you with?”
Where do I even begin?
Here are some of the biggest misconceptions. People come to me who…
- Want to make money trading ‘hot’ stocks. Hot picks don’t lead to long-term success.
- Think all they have to do is memorize patterns. (It’s not enough to learn the patterns. You gotta learn the entire process.)
- Don’t wanna cut losses quickly. (This one frustrates me so much. It’s rule #1 for a reason. If you wanna stay in the game, cut losses quickly!
- Believe in the companies. “This one’s going to the moon, and there’s nothing Sykes and his followers can do to stop it!” As if I have anything to do with it. Don’t believe the hype.
All the Rules I Teach Are Counter to What Newbies Think
Let’s go with what newbie short sellers think as an example…
Some of these short sellers successfully short for like one to three years. Then they get cocky. “Tim, you don’t need all this other stuff. You have too many videos, too much crap … I’m just gonna focus on this one pattern.”
And they’re literally getting destroyed on short squeezes. Or by brokers that charge a ton of money for borrows. (Before the question comes up, I use these brokers.) Or they’re getting impatient. Then they have breakdowns. Meltdowns. Complete blowups.
Sad part of the storie my friend txt to me last night & said I’m crazy its 2 am still studying. All the stocks bulshit so just short it and make money.I try to explain. He was almost cry because he work double shift so long to save that money.Pls Everyone this is not game. STUDY
— ERIC INCE (@InceNY1) October 12, 2019
You need to learn ALL MY RULES. (I trade with these rules.) Again, this is not about my ego. I won’t always be right. But I have rules that I’ve learned over 20+ years.
Here are a few cannot rules. You cannot…
- Hold and hope. Too many people hold and hope and they get crushed. (Lessons from hold and hopers blog post coming soon. Keep an eye out for it.)
- Expect hot stocks all the time. (Not to mention, you still need to use a trading plan and understand risk/reward. Just knowing a hot stock does NOT guarantee success.)
- Follow alerts. Don’t try to be somebody else.
Yeah, so what are the biggest misconceptions? The opposite of every single thing I teach. Follow my rules and learn the process or learn the hard way. Your choice.
“A lot of people find following a set of rules challenging. Would you say long-term success is more about personal development than the mechanics of trading?”
I think it’s a mix. Yeah, you need to learn rules. But a lot of it is waiting for the right stocks and the right sectors.
Think about Dom, Jack, and Kyle — they spoke at the conference. They’re all very well developed. But they also made the most money when there were tons of plays.
So many people get caught up … they think they have to grind in and out every day. Because, again, there are all these chat rooms where they trade 50 times a day. And frankly, there are all these fakes and liars. These liars say, “trade, trade, trade!” And quietly they have deals with brokers.
Be Grateful When There’s No Great Play
Really, I think you should focus on studying. Be grateful for the time when there’s no great play. It allows you to develop more personally. And, more importantly, it allows you to learn the patterns. It allows you to learn the rules. It gives you time to study the past.
Twitter user @BarryWixson gets it:
— Pump-N-DumpChump (@BarryWixson) October 11, 2019
So when there aren’t any great plays, study. Start with “The Complete Penny Stock Course.” (The Personal Requirements section on page 45 covers the personal traits necessary for trading.) Remember, patience is essential — especially in a slow market.
Here’s the reality: you can have all the personal development you want. But if you’re not ready for the perfect play because you haven’t studied enough history…
… if you’re going in and out of trades on the ABCD BS … and the VWAP BS … you’re focused on the wrong thing. So many people think trading is hard because they focus on the wrong stuff.
If they’d just study the past and wait for setups like that BILZF trade I did. It was so simple. You don’t need any personal development for a trade like that. But you do have to recognize the informational inefficiencies.
So study the past, but also develop your rules and get a sense of discipline. If you’re just getting started, study my FREE penny stock training guide here.
Millionaire Mentor Market Wrap
That’s another update in the books. If you haven’t seen it before, watch this crucial guide to see how I choose/plan my trades. I also use this stock scanning software. You can get a copy of my book here.
If you want to learn all the nuances and gain from my 20+ years of experience, apply for the Trading Challenge today.
Remember, the stock market is a battlefield. Preparation is key. Be patient, meticulous, and follow rule #1: cut losses quickly!
What Students Are Saying
@blacjjul had this to say:
Thank you for your inspiration! I am so grateful that I am able to learn from you! You are the BEST teacher I ever had by far!!!
— Yeonsil Yang (@blacjjul) October 13, 2019
Thank you, @blacjjul!
How about this from @2669Martin:
I’m following you for over 9 months but still studying-nothing impressive in profits but from my testing trades based on your overall strategy – “cut lost quality”; “morning panic dip buy” I made accidentally over 500$. I’m still studying basics but soon I’ll be in your challenge
— Martin_2669 (@2669Martin) October 13, 2019
This from @gjbailey:
— Gary Bailey (@gjbailey) October 12, 2019
Or this from @GraemeFrew4 — studying over the weekend:
— Graeme Frew (@GraemeFrew4) October 12, 2019
Study up. No days off. Check out these comments from…
The TimAlerts Chat Room…
Bobbemornee: “$LVCA in 0.057, sold 0.074 and 0.077, 4000 shares, small gain!”
And these comments from…
The Trading Challenge Chat Room
greenking49: “out $GLNG for $445. met my goal. What a Great start for the day!”
And another one from greenking49: “Got a scratch on $NAT -$35 and overall profit for today +$411. I am gonna go back to sleep now before I overtrade lol.”
Or this one from MoonShot: “quick bunt single on $NAT in 4.13 out 4.20 1500sh.”
Bloodhound: “had to chase $TTNP a little to get in but got in for 8K @.4452 out at .49. That plus the O/N/H on $GLNP for a small gain but not going anywhere, so out @ 14.75 for .75 gain on 200 sh.”
That’s a small sample from the dozens of positive tweets and comments students post daily. Wait until you see all the SES comments in tomorrow’s post…
[Note that these results aren’t typical. These students 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.]
What did you think of this post? Comment below, I love to hear from all my readers!