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Will You Be Ready For A Market Crash? 🚨

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Written by Timothy Sykes
Updated 10/25/2023 6 min read

Picture this: The market plunges as soon as the opening bell rings…

As most traders panic, I see this as an area of opportunity!

I’m not trying to profit from the sell-off by shorting stocks…

In fact, it’s quite the opposite.

As tensions rise in the Middle East, inflation looms large, and companies gear up for a critical earnings season, there’s an unsettling feeling that a market crash may be just around the corner…

But the question is, will you be prepared to seize the moment?

Here’s what you need to know!

Why You Should Hope For A Market Crash

Most newbies often raise eyebrows when I express my interest in a market crash.

Let me be crystal clear, I’m not rooting for ANYONE to lose money in this market…

I’m simply looking for the best opportunities for us as traders to capitalize on.

We’re not here to invest in these companies or hold onto them for the longer term.

Our strategy centers around monitoring price action and executing quick, precise trades to capture the meat of the move.

It may sound easier said than done, but with consistent practice and a deep understanding of how the market operates, that’s when everything starts to fall into place.

When the market sells off, that’s when you can really see the true panics I feel most comfortable with…

And even though we’re not seeing those true panics right now, there are still plenty of opportunities for us to capitalize on…

And it’s all due to these over-aggressive short sellers.

Let’s break down my two recent trades and how I’m preparing for when the market does panic.

One Step At A Time

Yesterday morning presented an array of trading opportunities, and it’s crucial to acknowledge that it’s nearly impossible to capitalize on every single one of them.

Don’t let yourself get frustrated if you can’t capitalize on every single opportunity out there; even after more than 20 years in this industry, I still miss out on some of the market’s best plays.

Yesterday I saw Nuvve Holding Corp. (NASDAQ: NVVE) surging higher based on this solid insider buying news all thanks to the StocksToTrade Breaking News alert.

Unfortunately, I missed the initial entry I wanted and I want you to know I didn’t immediately buy it out of FOMO when I realized it…

Instead, I took a step back and looked for where my next area of opportunity would be.

Before any trade, I like to look at the “big picture”, so let’s take a look at the chart.

Source: StocksToTrade

Earlier in the week, NVVE encountered resistance around the $0.34 mark after previously finding support near that level.

I was looking for my initial entry to be around $0.20, but after I looked at where the resistance was and the volume associated with this news, I decided to take a small position size with my trade.

Source: StocksToTrade

I bought NVVE at $0.252 and sold it at $0.279 for a 10.71% profit! (Risked $3,956.40).

As I mentioned earlier, we are just looking to take advantage of these quick moves, and that’s exactly what I did yesterday morning.

Knowing there was resistance around $0.34, I realized I had a decent price range between where I bought NVVE and sold it, which is always why I tell my students to make sure they’re selling into strength. 

Now, let’s take a dive into my other trade on BIO-key International, Inc. (NASDAQ: BKYI)

I observed BKYI’s quick surge higher yesterday morning thanks to this news.

Take a look at the chart…

Source: StocksToTrade

Once again, as the stock started spiking in the morning, I knew better not to chase it.

Instead, I patiently waited for a potential dip-buying opportunity that would allow me to make the most of the situation.

BKYI went from $0.20 to $0.39, that’s nearly a 100% move in just a few minutes!

Then you can see it immediately spiked right back down from $0.39 to $0.25, that’s nearly a 36% drop in just a few minutes.

This level of volatility is precisely what I look for when it comes to dip-buying, and you tend to see those first thing in the morning if the overall market panics.

When a stock has a substantial drop like BKYI, I’m closely looking at Level 2 for a wall of buyers to ride that bounce higher, and that’s what happened here.

I bought BKYI at $0.265 and sold it at $0.336 for a 26.79% profit! (Risked $2,252.50).

In the coming days, I want to make sure you understand the importance of spotting these early-morning runners…

And once you do, I want you to focus on one or two plays to get yourself more comfortable with the overall process.

As I’m rooting for a market crash, I’m simply looking for those stocks that were spiking the day before…

Or during the pre-market hour that can give me that same time of price movement as BYKI did.

I’ll be sure to alert you to anything I see in chat.

Stay safe and I’ll see you all here tomorrow.

-Tim

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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.
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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 (888) 878-3621 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”