This edition, let’s talk about a shortcut to trading success.
Success in anything is never a straight line. Ever. Trading is no different. It’s not an exact science, and we’re all different. Also, markets change, and you need to learn to adapt. The entire process is about learning to hit a moving target.
So it always blows my mind when people ask for shortcuts. Here’s the best shortcut I know: stop looking for shortcuts. You want success? Get busy. Study your ass off. Study the past to prepare for the future. Learn the patterns I teach Trading Challenge students.
Keep reading — in the student-questions section, there’s more about trying to cheat success…
Table of Contents
- 1 Pasta, Pitches, and Charity
- 2 Student Spotlight
- 3 Trade of the Week
- 4 Trading Questions from Students
- 5 Millionaire Mentor Market Wrap
Pasta, Pitches, and Charity
I spent a few days in Venice, Italy after spending a few weeks in Positano at one of my favorite hotels, Villa Franca. That’s one for your bucket list. And the pasta … I ate a lot of pasta. Pasta and carbs. When I say a lot … I mean a lot.
You Can Trade From Anywhere: More Whirlwind Travels
I just made another whirlwind trip back to the U.S. and Canada.
First, I made a special one-day stop in Los Angeles, which I’ll share with you in an upcoming edition. It was cool on so many levels. Very exciting. If you follow me on Twitter you might already have an idea. Pictures and videos coming soon…
Influencers Upping Their Game to Help Save the Reef
Next, I went up to Vancouver for another premiere of the “Save the Reef” documentary. This time it was an event for influencers who want to do good in the world and provide meaningful content. I’m really proud to help them achieve those goals.
Oh, and the documentary — “50 Minutes to Save the World” — has over 3 million views now. If you haven’t watched it yet, do me a favor and watch it now. It’s a real eye-opener. There’s still time to save the reefs, but it’s gonna take an effort by everyone. The first step is awareness. So please watch and then share the documentary with friends and family.
Karmagawa Sources Sustainable Clothing From Recycled Materials
After my brief trip to Vancouver, I was off to the East Coast on Karmagawa business. The new Karmagawa charity gear is gonna be more sustainable. So we met with a company that uses recycled cotton and plastic bottles to make clothes. It was pretty cool. I’ll share more about that in the near future.
As always, while traveling I trade and teach. Before I get to questions, I want to give a shout out to a student. Kyle just crossed a major profit milestone. Keep your eyes open for another Student Spotlight feature about Kyle’s journey in the coming weeks.
Trade of the Week
My favorite pattern right now is dip buys. This recent trade is a good example of why you need to respect former runners, big volume, and news. Pay particular attention to the fact that I know the history of this stock.
Vivus Inc. (NASDAQ: VVUS)
I dip bought this premarket spiker based on three main indicators:
- VVUS is a former runner. (An example of why studying stock market history is so important.)
- It had massive volume.
- There was a news catalyst.
Take a look at the VVUS chart, and then I’ll break it down.
I added the pink lines to the chart to show how the trading range narrowed after its initial premarket spike. As it narrowed, there was a pretty definitive range between $3.75 and $4.15. I didn’t know if it was going to break the highs or the lows.
The premarket spike showed me VVUS had spike potential. But I wasn’t going to chase. I didn’t want to buy near the top of the range, so I waited. There was a very small panic at the open — that drop was enough to get me in. It dropped to the bottom of the range but held.
I took a small, speculative position. Again, I felt confident because it’s a former runner — it had a lot of volume, and it had news. Also, dip buys have been working for me.
One more thing…
Knowing the History of a Stock Gives Me Confidence
I’ve traded this one before so I know it trades choppy. I don’t always like choppy stocks — but in this case, it gave me confidence. Why? Because I’m familiar with it. All in all, it was a good setup for me.
The result was a nice $810 profit on a 7.14% gain.** (Please note: my results are not typical. I’ve spent years developing exceptional skills and knowledge. Always remember trading is risky. Never risk more than you can afford.)
Now it’s time for some questions. Soak it up … these are high-level, mindset-oriented questions. Yes, they’re about trading. But they’re more about how you approach studying and learning. It’s all about the knowledge account. Build it. Start now.
Trading Questions from Students
“Tim, recently you said, ‘Short sellers are the new promoters. Naive and lazy traders don’t want to study the past.’ How far back should I study to understand today’s market?”
That depends. How far do you want to go in your trading career?
You could ignore old patterns and stock market history. You just won’t be as prepared.
I’m basically a glorified history teacher. If I’m gonna teach you stock market history, it’s no different than history teachers in high school. They teach you about the Egyptian, Roman, and Greek empires. They teach you about the British Empire.
How many empires should you study to know history? You might as well study them all.
I don’t know why people want to cheat their studies. That’s exactly what you’re doing when you try to figure out how little you can study. It only hurts you in the future.
I think most people are lazy. A lot of these short sellers like to think — and make other people think — that it’s easy.
“Tim has too many video lessons, DVDs, and webinars. You don’t need all that…”
At the risk of sounding like a hard-ass…
People should be bowing down for the instructional guides and content we create. My top students and I create so much content. No one has ever had all this information at their fingertips. It blows my mind that people want to make excuses.
If you don’t have money, life can be so much harder. You can’t spend money because you don’t have any. Why not study to help you make more money and build a better life.
I’m not saying money is everything. It’s not. But if you have more time than money, stop wasting it. Study enough so that you can earn money.
Money can give you freedom, but you gotta earn it.
“Early in your career you spent three or four weeks just watching and looking for patterns. Do you recommend the same for a newbie trader?”
What? Three or four weeks? Watch and study all the time.
This question confused me at first. Look, I read all my dad’s financial books in high school. I watched stock prices in the newspaper. Before I even started trading, I spent countless hours studying.
I think maybe the question comes from someone who read my book but misunderstood how much I studied. I used to skip classes and hang out in the library, hogging three computers at a time. Here’s a passage from the book — maybe this is what this question is about:
The other kids thought I was nuts, but my friend the librarian knew exactly what I was doing. I must’ve scanned thousands of articles each day. After a few weeks, my eyes were red and sore, but I thought I perceived a definite pattern of how certain press releases helped move stock prices higher. In those wild times, the truth was that almost any press release helped promote tiny companies.
Excerpt from “An American Hedge Fund” (page 38).
(If you haven’t read it, you can get a free copy of my book here.)
Some people seem to have a flawed perspective. These people seem to think that learning is just … “Oh, let me study for three weeks and I’ll know everything.”
It is harder in the beginning. Because you don’t know what to look for. Everything is weird and counterintuitive. Study everything. All the time. Have no life until you make a lot of money. Then you get to have a better life. Then you can do anything you want.
Now for the final question in this edition…
“Roughly speaking, how many times should I test a strategy to determine if it works for me?”
Try it 100 times, heck, 1,000 times.
Again, I feel like people who ask these questions want the minimum number.
Do more. Do double what you think. Do triple what you think.
You ever watch a baby learning to walk? You think they care how many times they fall over before they walk? Imagine a world where babies refused to learn to walk after one tumble…
I’d rather you overdo it when studying, preparing, and analyzing than do too little. Trading isn’t rocket science. You’ll learn something from trying a pattern 100 times. You might decide it’s pretty good. Or you might figure out it’s not the best pattern for you.
It’s not an exact science — I don’t want you to think that. Don’t be like the short-sellers who say, “just short anything that’s up.”
There’s always more to learn and more to test. Take warrants for example…
A lot of these short-sellers tell their followers lies about warrants. They might say, “Oh, the company has warrants — it should crash.” So everyone’s messaging me about warrants. The stock is spiking 50% in a day with opportunities to trade the breakout, and all I hear about is warrants.
Yes, warrants are a negative indicator. But it’s not the be-all and end-all like short-sellers think. And worse … they try to make others think that way.
Stop Wasting Time Searching for Stock Trading Shortcuts
Be very careful about anyone who says this is easy and that you don’t have to study. If you’re a member of Pennystocking Silver, you have all my DVDs and video lessons. Trading Challenge students also get all my archived webinars. Study everything you have access to.
Do 50,000 hours. Completely immerse yourself. If you get obsessed … if you make a decision that you’ll focus on nothing else until you’re a self-sufficient trader … it can change your life.
There it is. The shortcut to your trading success is to stop wasting time looking for shortcuts.
Now get to work…
Millionaire Mentor Market Wrap
That’s another one in the books. Thank you for reading. If you think the questions from the last few weeks are very basic … you’re right. But in an industry full of fakes, I’m trying to be real.
I’ll get back to more specific trading-related questions next time. It just seemed necessary to point out that it all starts with mindset and education. Sometimes you gotta get the high-level thinking right in order to take advantage of the details. I hope that makes sense.
Remember, it’s a marathon and not a sprint. If you can keep that in mind, then over time the nuances will make more sense.
If you’re ready to get serious about your trading education — the Trading Challenge includes everything I’ve learned in two decades of studying and trading. To my knowledge, there is no more comprehensive trading education available anywhere. Apply today.
Are you a trader? Has taking shortcuts affected your trading in a bad way? Share your experience so everyone can learn. New to trading? Comment below with “It’s a marathon, not a sprint — I will study every day.” Comment below, I love to hear from all my readers!