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Penny Stock Basics

Millionaire Mentor Update: Let’s Save the Reef

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Written by Timothy Sykes
Updated 2/21/2023 12 min read

I can’t help but be ambitious in every aspect of my life. Whether it’s trading, teaching, or traveling. And now … charity. Ambition and drive. If you have them and want to change not only your life, but the world, apply for the Trading Challenge. Financial freedom is empowering.

Let’s Save the Reef — and Our Oxygen Supply

Last week I was in Singapore for some meetings. Now I’m in Australia working on helping save the Great Barrier Reef.

Check this out — it’s HUGE …

The Great Barrier Reef accounts for roughly 10% of the world’s coral reefs. It’s also the largest living structure in the world. In case anyone doesn’t know why I’m doing this — after all, I can barely put my head underwater — I’m trying to save the reefs because scientists believe that 50% of the world’s oxygen comes from the oceans. And …

they believe coral reefs give off more oxygen than carbon dioxide during the process of respiration. Which means …

Coral reefs are GOOD. We need to save them.

So, the reefs are gonna die, roughly 90%, by the year 2050 at the current rates. 70% by the year 2030. Which is crazy. We have just over a decade before it really gets bad and three decades before it’s gonna be tough to breathe. So this is not a small problem.

 

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Coral reefs are so fascinating as while we usually only focus on when we can see above the water, just below are entire ecosystems filled with hundreds of species that are essential to our survival. In fact, despite occupying just one quarter of one percent of the marine environment, coral reefs are home to more then 25% of all known marine fish species that generate half of the Earth’s oxygen and absorb nearly one third of the carbon dioxide generated by burning fossil fuels…so we need them badly and unfortunately for us, at the current rate, 90% of these reefs will die in the next few decades and it’ll be much tougher for us just to breathe! Great photo @reef_express_missionbeach #underthesea #karmagawa #savethereef

A post shared by SaveTheReef (@savethereef) on

I hope now you understand the reason for my ambition. We’re trying to help. The post above is from SaveTheReef on Instagram. It’s part of a new Karmagawa project. Follow both and share everything so we can stop the madness. I encourage you to follow right now — SaveTheReef (@savethereef) and Kamagawa (@karmagawa).

Trading Transparency

This is usually the part of my weekly update where I tell you about my trade of the week. Yes, I’ve been trading and teaching, even while traveling. Which is cool, but …

… this week there weren’t any really big wins.

There haven’t been that many perfect plays since the SHMP play from my last update. But I’m still trying. I’m still making a few hundred here or there.** And I have a few losses — very small losses. The key is you’ve gotta wait for the best play.

So, instead of only telling you about my best trade (which I will), I’m gonna lay down a little reality check. I’d love to share a huge win with you. But it’s more important to share everything. The wins … the losses … everything.

Here’s a list of my trades last week. (I write these updates the weekend before I post them because my schedule is so crazy.) Ok, here they are, both wins and losses:

  • February 15: +$1450** CleanSpark Inc (OTCQB: CLSK) Long
  • February 15: +$217**  Nightfood Holdings Inc (OTCQB: NGTF) Long
  • February 19: +$440** Khiron Life Sciences Corp (OTCQB: KHRNF) Long
  • February 20: -$70** Kandi Technologies Group Inc (NASDAQ: KNDI) Long
  • February 21: -$12** FuelCell Energy Inc (NASDAQ: FCEL) Long
  • February 22: +$520** Zosana Pharma Corporation (NASDAQ: ZASN) Long

You can learn more about every trade I make over on Profit.ly — the social trading platform where I post every trade. To get alerts and more detail, get a subscription.

The Truth About Small Wins, Cutting Losses, and Lessons Learned

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I didn’t share all my trades to show off or try to prop myself up. I don’t need to do that. The reason I’ve shared them is to emphasize some ideas I hope you’ll use to your advantage.

Small Wins Add Up Over Time

There’s not one big winner on that list. The CLSK trade wasn’t bad, but in the larger scheme of things, it’s still a small win. Granted, I’m trading with a small account because I trade to teach. Yes, I could trade with a big account and make a lot more. The point is, small wins add up over time.

So long as you …

Cut Your Losses Quickly

Both losses in that list were small. Both trades I played conservatively. It’s always better to cut losses quickly than stick with an open position and get your ass handed to you. Avoiding potential disaster is the most important thing you can do as a trader. Of all my trades last week, I might just be most proud of the losses because they‘re small.

Losing Trades Are Part of the Process

One more observation about those two losses: Losing trades happen. If you think you’re going to jump into trading and not lose, you got another thing coming. Seriously. I win (at the time of writing) 74.95% of my trades.** Which means I lose 1 out of every 4.

My results are NOT typical. That doesn’t mean you can’t be as good (or better) a trader as me. It’s possible — if you work hard enough, study, practice, and learn to cut losses quickly. Becoming a successful penny stock day trader takes time, effort, and good risk management.

Note: I am NOT a financial professional. Most traders lose money. Do your due diligence. (Lawyerly love. They protect me from me. And — most importantly — they protect you from being misled. It’s unfortunate that so many so-called gurus aren’t more transparent.)

Back to the losses. Small losses are good because they lead to …

The Lesson In Every Trade

Win or lose, there’s a lesson to be learned from every trade. Keep a solid trading journal. If you keep track of every detail of your trades (even paper trades) you’ll gain powerful insight. You’ll learn about your own psychology. You’ll get a clearer idea of the mechanics of trading. You’ll start to see how fast things can go wrong and learn when to be less aggressive.

Notice I didn’t make a lot of trades last week. Sometimes the best trade is no trade. Don’t chase trades — wait for the pattern to come to you. It’s not a sure thing (ever) that a pattern is going to happen. And when it does, it might not go the right way. Get over it and learn the lesson, chalk it up for experience, and move on. Some lessons will be more painful than others.

Ok, here’s the chart from the CLSK trade:

CLSK stock chart morning panic
CLSK chart: 1-minute candlesticks; Classic morning panic dip buy.

I dip bought this recent multi-day runner into a big, low volume, morning panic. My goal was to make 5–10% on the bounce. This is another example of a classic morning panic, which is currently my favorite pattern. I exited the trade once my goal was achieved (trading discipline) instead of getting greedy.

All but one of last week’s trades were morning dip buys. My only overnight position was KHRNF and I’d already locked in profits near the market close by selling 60% of my position. I held the remaining shares overnight on this first green day runner. As it turns out, my instinct to sell into the failed afternoon breakout was correct.

Props to Trading Challenge Student Huddie

A lot of students are doing well. And I’ve gotta give serious props to Huddie. If you’re on Profitly, check out Huddie’s profile (and if you aren’t on Profitly yet, get started now). Pretty awesome, right?

This is Huddie’s third or fourth year as my student. He made almost NOTHING the first one or two years while he was studying, then things really started to click. I wish more students had that kind of patience!

Way to go, Huddie. He’s come a long way with his trading. He also recently graduated college. And he’s traveling the world, too. Proud of you, man.

Now, it’s time for the question of the week …

Question of the Week

When searching for stocks to put on your watchlist, what comes first: price action or the catalyst?

You look at both, you look at everything. But …

… the price action alerts me.

In Search of Stock Catalysts?

I don’t go looking for catalysts. I don’t go “Oh! This company just reported earnings … Oh! This company just had a press release.” There are tens of thousands of press releases every day …

… the vast majority of them are crap.

When Will the Market Figure This Out?

I don’t look at news if the stock is doing nothing. Some people say, “Oh, the news was sooooo good, the market is eventually gonna figure it out.” I don’t know if the market is going to figure it out in a day … in a week … in a year … or 10 years.

Maybe there’s something more behind the news. Maybe the news was already priced in. I don’t wanna play those games.

I suggest you look for price action first. I’m looking for big percent gainers — using StocksToTrade and the 40+ scanners that are built in. Then, when I see the percent gain, I want to know what was the catalyst. So the first thing I look for is price action.

Look for big percent gainers, then go and look at what the catalyst is that caused it and see if it has legs.

Millionaire Mentor Market Wrap

That’s another wrap. How’s your year going so far? It’s already the beginning of March! Don’t let this year pass you by. Make a powerful decision today and apply for the Trading Challenge. Get it.

I love writing these updates and hope you discover take away lessons — ideas you can apply to your life and trading today. I also love to hear from you, so comment below!


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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”