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3 Tips For Trading An Inverse Market

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Written by Timothy Sykes
Updated 10/4/2023 6 min read
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Even with the overall markets getting battered, there are still PLENTY of opportunities to take advantage of.

In fact, if you’ve been following me closely on social media or reading this blog, this latest sell-off shouldn’t come as a surprise.

And while most investors are worried about the upcoming job numbers and what the Fed will do next…I’m getting on the OFFENSIVE.

All thanks to this inverse market we find ourselves in.

Here are my three best tips for trading it.

What’s an Inverse Market?

timothy sykes in matera in 2022
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Imagine everything you knew about a particular strategy rendered itself nearly worthless overnight.

Believe it or not, it’s happening to short sellers.

The setups that were once ideal for shorting are NOT working right now.

And it’s driving them crazy…causing one massive short squeeze after another.

Here are my top three tips for thriving in an inverse market.

#1 Past Performance Is Not Indicative Of Future Results

I’m a big proponent of studying the past.

I do believe that patterns repeat themselves.

However, that is not the case right now if you’re a short-seller.

For example, you might look at a chart like FEMY from the other day and see that it has a history of crashing on day two after a massive spike…so you think that’s what will happen again this time.

WRONG!

Not in an inverse market…relying on the past to be your guide can end up costing you in this market…especially if you’re a short seller.

#2 Even Crappy Stocks Can Squeeze

In a normal market, you can expect crappy companies to do some sort of toxic financing to tank their stock.

But instead of waiting for that moment…short sellers are jumping the gun.

They see a BS press release, and they are convinced the stock is a short.

They’ll use tools like a dilution tracker and point out that the company must raise money in X amount of time or it will be bankrupt.

It’s funny because these short sellers are so full of logic, but they have no common sense when it comes to managing risk.

And that’s their downfall.

An oversupply of short sellers and shady brokers over-allocating shares is causing some epic short squeezes.

#3 Don’t Get Greedy

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It’s true…playing the short squeeze in an inverse market works like gangbusters.

However, let’s not forget, that the shoe can drop any moment.

That’s why you have to focus on your entires, managing risk, and taking profits when you have them.

The other day, I had a great trade in BNOX.

Earlier in the morning, it was announced that Wall Street Legend, Stevie Cohen invested in the company…but instead of jumping in right away…I waited for an entry that made sense based on risk vs. reward.

In fact, I waited for a dip buy opportunity…

Source: StocksToTrade Breaking News

I got in at $3.3267 and out at $3.65…for a quick 9.7% gain.

Shares traded significantly higher…

But my goal isn’t to hit tops…

If I can consistently make 5-10% on my trades, those small wins will add up.

I know, because that’s how I eclipsed $7.5 million in career trading profits. 

Mastering the Madness of Inverse Markets! 📉🔄📈

© Millionaire Media, LLC

Ever felt like the stock market has turned on its head?

If recent trends have thrown you off, you’re not alone.

This inverse market is causing ripples, flipping traditional trading strategies upside down. But where many see chaos, I see a goldmine of opportunities. 🌟

🔥 Stocks that once seemed doomed are now rocketing to incredible highs.

🔥 Strategies that once spelled “loss” are now key profit makers.

🔥 The unexpected is becoming the expected.

🚀 Dive into my exclusive live training sessions to crack the code of this inverse market.

🚀 Learn my time-tested strategies that thrive even when the market goes topsy-turvy.

🚀 Watch my team and I break down real-time scenarios and unveil the hidden signals.

🚀 Transform from merely surviving in this market to thriving and profiting!

Ready to turn these market flips to your advantage?

Want to find order in the chaos and profit from it? The secret to navigating this inverse market is just a click away.

👉 JOIN ME AND EMBRACE THE INVERSE! SECURE YOUR SPOT NOW!👈

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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”