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Trading Lessons

This Same Pattern Repeats Every Morning

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Written by Timothy Sykes
Updated 5/31/2022 5 min read

My #1 goal is to help my students make money in the market, and KEEP IT.

And it’s why I’m particularly excited for Mark Croock to introduce his new Shadow Trades this Thursday. He’s got a totally unique way to trade this market that could be a game changer.

Now, one thing I taught Mark back in the day was to work with the market you have, not the one you want.

That’s why I dialed down my aggression and honed in on stocks like Sysorex Inc. (OTC: SYSX).

Right now, promoters are pumping up SYSX. Each time this happens, it creates morning panic selling, which sets up perfectly for a morning dip buy.

I traded this for a profit 4 times last week!

In the past, I’ve talked about who these promoters are and what they do.

Today, I want to take that a step further and use SYSX to show how this plays out in price action and where you can find trade setups.

Recognizing a Promoter Push

Let me start by saying that I don’t hate promoters. They serve a legitimate function in the market.

There are plenty of great companies out there that need to get in front of investors.

But there are just as many who use promoters to dump shares on unsuspecting investors.

I’m not here to judge one way or the other, just to explain how the game is played.

Many of these promoters rely on social media pumps including Twitter, Discord, and a host of other means.

I rely heavily on the StocksToTrade Breaking News Team to help identify these stocks.

Our analysts know exactly what to look for and call out when they find these companies.

Now, we can also identify promoter pushes by looking at what the company does and what news is out there.

Here’s the quick profile of SYSX:

“Sysorx Inc. is a company focused on Ethereum mining and the Ethereum blockchain technology solutions primarily in the public sector segments including federal, state, and local governments.”

Unless you’ve been living under a rock, you know that the once hot crypto sector has taken a beating lately.

Now, here’s something interesting from our news feed.

If you look at one of the most recent filings, you’ll find a report buried in the SEC about someone at SYSX unloading shares between $.02-.09 per share somewhere between March 1, 2022 and May 25, 2022.

Check out the daily chart of SYSX, and when volume and price started to increase on the stock.

That volume has yet to dissipate.

Regardless of the ethics or legality, these types of moves create tradeable opportunities.

Morning Dip Buy

Assuming I’ve identified a stock as a promoter push, I want to start looking for a pattern of morning panic selling.

You see, every time the stock gets pushed up overnight or in premarket, it provides these promoters or their clients a chance to sell into strength.

That sends share prices plummeting until they’ve unloaded their stock for the day.

When that happens, it can create an imbalance of buyers that rapidly send the stock back in the other direction.

Take a look at Friday’s price action to see what I’m talking about.

There were two opportunities I saw and traded.

The first came right out of the gate when the stock dropped on somewhat tepid volume.

It swung back in the other direction, made a quick high, and then fell back. From there, it traded sideways, a sign that any further upside was done for the time being.

The second swing came out of a heavy selloff that landed into support right around the low of the day from Wednesday.

Now, I don’t advocate for buying as the price is falling.

In fact, I waited for it to bounce before stepping in a bit past 10:10 a.m. EST.

I was looking for shares to bounce and volume to ease as it retraced part of that heavy drop.

Now, the swift drop in volume at 10:13 a.m. got me a bit skittish and I exited the trade for a profit. While that turned out to generate a small pullback, it was short-lived. SYSX pushed even higher.

Final Thoughts

Promoter stocks take some practice to identify. I look for toxic companies bouncing on news that shouldn’t lift them out of the sewers like garbage earnings, ownership changes, etc.

I can also do a quick search of social media sites like StockTwits, Twitter, and Discord to see if folks are hyping up the names unnecessarily.

Keep in mind, morning panics aren’t limited to promoted stocks. However, promoted stocks often provide these types of setups for several days until the volume dries up.

Now, if you’re looking to add some tools to your trading belt, I suggest you check out Mark Croock’s Shadow Trader, this Thursday.

Seats are limited.

Reserve yours now.

—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. 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”