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Which Of These Two Setups Do You Prefer?

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Written by Timothy Sykes
Updated 6/27/2023 6 min read
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The right setup can make or break your trade…

But with thousands of stocks to choose from, how do you decide which to take?

Today, I’m going to pull back the curtain on two different trades I took yesterday…

And give you an in-depth look at the strategies that made them profitable.

This isn’t just about making better trades, it’s also about:

  •  Figuring out who you are as a trader
  •  Playing to your strengths
  •  Learning to take advantage of opportunities when you see them.

 

It’s A Hard Life For Short-Sellers

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It’s an endless summer packed with trading opportunities thanks to those stubborn, peanut-brained short-sellers.

It seems like every stock they touch now goes into Supernova mode. 

It’s all about spotting the setup.

I had two trades yesterday I want to talk to you about, one in the ticker symbol BDTX and the other in TIVC.

Let’s start it off with BDTX which soared by more than 200%.

Source: StocksToTrade

Shares of Black Diamond Therapeutics took off yesterday in the pre-market after the company released this headline:

Black Diamond Therapeutics Announces Initial Dose Escalation Data Demonstrating Anti-Tumor Activity of BDTX-1535 in Non-Small Cell Lung Cancer Patients Across Multiple EGFR Mutation Families

Source: StocksToTrade

It went as high as $4.50 and then later dipped into the $3s.

I saw it as an opportunity to buy the panic dip on this morning spiker.

A lot of newbie traders will see positive news like that and just buy regardless of the price. However, if there’s one thing I want you to take from today’s lesson is that price matters.

You can be in the same ticker symbol as someone else, but if you are in at different prices– IT’S NOT THE SAME TRADE.

So yes, I did like the catalyst in BDTX, but I wanted to wait for my price. And if it didn’t happen, I wouldn’t have traded it.

I don’t care if I miss trades. I only want to be in them if the price is right.

My plan was simple, play for a quick 5-10% move. And if it didn’t happen, get out fast for a quick loss.

I entered the trade at $3.20 and was able to peel out at $3.42 for a solid 6.9% winner.

Now, the stock did get past the $6.50s…but I couldn’t get upset at myself because I executed my plan perfectly.

Of course, if I continue to see biotech runners hold…then I will be open to holding onto winners longer…but I haven’t seen that trend yet.

Now, let me tell you about the second trade, a totally different type of setup, this one in the ticker symbol TIVC.

Be Careful With Scary Stocks

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BDTX wasn’t the only high-flying stock I traded yesterday.

I also got involved in the ticker symbol TIVC.

But instead of waiting for a panic dip buy, I decided to play the momentum breakout.

Source: StocksToTrade

Shares spiked off the news that it entered into a non-exclusive distribution with Cardinal Health.

This is what we call legitimizer type news. That’s when a small-cap company can associate itself with a large-cap, giving off the appearance that the small-cap company is legitimate because they are doing business with “real” companies.

I got in at around $0.16…

The stock was all over the place…getting up towards $0.18 and then down to $0.15.

I prefer trading the panic dip buy…but if I do play for a breakout…the trade has to be clean. And this one wasn’t.

More Breaking News

I decided to bail for a small win, getting out at $0.17.

What About You?

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Some traders prefer being patient and waiting for a dip before getting long. However, others see dip buying as “knife-catching.”

Do you prefer buying breakouts instead?

Let me know in the comments section below.

And yes, it’s true. I’m on the hunt for some new millionaire students.

If you think you’ve got what it takes then CLICK THIS LINK TO DISCOVER 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 (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”