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Trading Tips-Tim Sykes Penny Stock

Why You Should Specialize in This Framework

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Written by Timothy Sykes
Updated 1/6/2023 6 min read

We all want more trades because…

More Trades = More Money…right?

That’s true as long as you stick with quality setups.

However, things get complicated when you limit yourself to just one stock or index.

You end up forcing trades on setups that aren’t there without a clear edge.

At best, you’re getting a coin flip.

I prefer to wait for ideal setups to form on battle-tested patterns like my 7-Step Penny Stock Framework.

Not only does it make my trading simpler, but it’s more reliable.

That’s how I achieved a +75% Win Rate and helped more than 30 MILLIONAIRE CHALLENGE students become millionaire traders.

All my trades are posted HERE on Profitly for anyone to see.

Now, it’s not enough to know the 7-Step Penny Stock Framework.

To turn it into trades, you need to:

  • Determine where a stock sits in the framework
  • Select an appropriate setup
  • Execute the trade with proper risk management

That might sound complicated, but it’s much simpler than you might think.

Let me walk you through some examples of trades I took and how I applied this process.

AMTD Digital Inc. (NYSE: HKD)

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This little known stock blanketed trading blogs this summer with an epic post-IPO run that sent shares up almost 13,000% in a matter of days.

As I mentioned in Friday’s blog post, former runners are great stocks to find trades.

HKD is a perfect example.

After its summer sizzle, shares hung around $12 until the middle of last week.

That’s when shares caught fire in the premarket, though without any specific news behind it, just pure pump action.

This caused a lot of shorts to get squeezed, doubling shares in less than 24 hours.

Although there weren’t any headlines, our Breaking News Chat Room alerted traders, including me, to the price action.

Every penny stock that goes Supernova, following the 7-Step Penny Stock Framework, starts with the initial run.

The ‘pump’ is the first phase, followed by the ‘ramp.’

During this time, I look for breakout trades and morning panic dip buys.

Although my gains weren’t huge, I captured two morning dip buys and a breakout trade.

Here’s what they looked like on the chart:

Morning panic dip buys are the easiest for newer traders and those with small accounts to learn.

They take some practice, but are fairly easy to identify.

I like them because they work on both the front side of a stock going Supernova and the back side when they crash.

Let’s move on to another former runner that didn’t work out as well, but provides some great lessons.

Intelligent Living Application Group Inc. (NASDAQ: ILAG)

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Around the same time as HKD’s summer run, ILAG had its moment, burning a lot of short sellers in a quick and violent squeeze.

To start the New Year, this former runner caught a bid around mid-morning and began its 100% climb.

I went for two dip buys on the stock, neither of which really worked.

The first one didn’t move fast enough for me and the second wasn’t well-timed.

However, this is where the execution piece comes into play.

In both trades I wanted to see the bounce happen quickly. Otherwise, I would cut them loose, which is exactly what I did.

In the first instance, you can see the bounce was slow to materialize.

The second simply didn’t bounce and I ended up with a small loss.

ILAG’s run created the conditions for the setups to form.

Once I saw them, I only traded the ones I liked best.

You could argue that a breakout trade shortly after my first dip buy would have been better…

…or that I should have waited for better pullbacks.

Both are valid points.

As you’ll see in the notes below, I kept my positions very small, effectively testing the waters after coming off a great run at the end of last year.

Making The Frame-Work For You

I encourage newer traders and those with small accounts to stick with cleaner setups.

While both of these stocks provided the conditions for trades, morning panic dip buys are easier to do on the backside of a runner once a stock has fallen +10% or more – ideally as much as 50%.

The more obvious the setup, the greater the chance of success.

I teach my students the 7-Step Penny Stock Framework so they don’t have to force trades.

With enough practice and study, most can find several quality trades each week that are simple and straightforward.

In my opinion, that’s a lot easier than trying to forecast where the S&P 500 is headed.


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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

* 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”