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Trading Lessons

Two Winners in Less Than 30 Minutes – $TXTM & $KBLB

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Written by Timothy Sykes
Updated 6/21/2022 6 min read

I scooped up two profitable trades Tuesday morning — 30 minutes into the trading session.

You can see every trade I take here at profitly.com

While an extra $500+ in daily profits isn’t going to change my life…

…I know it can do a lot for people hurting in this economy.

That’s why I want to go in depth with you today. And explain to you what morning panic setups are all about.

If you’re wondering what strategies are working in this market, and how to apply them to make consistent profits like I have this year … then you’ll want to $tudy these two trades.

ProText Pharma Inc (OTC: TXTM)

Back on the 13th of June, news hit the wire that the Republic of South Africa Medical Marijuana Dispenseries Acquisitions LLC completed its acquisition of ProText Mobility (AKA ProText Pharma).

This was what’s known as a reverse merger, where a smaller company acquired a larger one.

Except this wasn’t anything new.

Back in August, there had been speculation about this reverse merger. It never materialized back then.

This time, the reverse merger actually went through, and promoters felt entirely validated, sending shares soaring over the next couple of weeks.

That led to heavy buying pressure, pushing shares up as much as 855% on ridiculous volume.

For me, this leads to some great opportunities for the morning panic dip buy.

Here’s the framework I used.

Out of the gate, shares sold off hard on volume that was nearly 2x what it was on Friday’s open.

That pushed the price lower, getting it close enough to the prior close support level that I felt ok stepping into the trade.

Now, if I wanted a bit more security, I could’ve waited for that green reversal candle which came with higher volume than the candle before.

Once the stock bounced back, I simply waited until the momentum died out and then took my profits.

This type of trade setup takes practice. I want to buy only when I expect price to be capitulating and making a bottom, not just taking a stab at where the lows might be.

And as I noted earlier, a safer way to do this is to wait for that reversal to show itself.

Where would my stop be on a trade like this?

Initially, I would set it at or below the low. However, if the stock simply stopped where it was and didn’t bother to bounce, I’d take the trade off quickly and keep my losses as small as possible.

Now, let’s look at KBLB.

Kraig Biocraft Lab Inc (OTC: KBLB)

Around 7:00 a.m. Eastern, news hit that KBLB subcontractor pilot production had achieved the required Spider Silk Production levels for the Spydasilk apparel launch.

While it certainly didn’t garner attention in premarket, I really felt like the market underappreciated how bullish this information was for this stock.

Now, this stock has a large float with 771 million shares that trade. However, the volume is typically only a few million per day.

What caught my interest with this stock was its daily candlestick on Friday.

This stock was a former Supernova, so I saw the dip as a potential panic play.

You can see in the chart below how that $0.05 level had been long-term support.

Taken together, these gave me the idea for a trade setup.

Here’s how I the executed the play.

First, I want to point out the lighter volume.

Notice how there are minutes that go by without any trades. This can and does happen with OTC and other thinly traded stocks.

However, that doesn’t mean I can’t use the same price action analysis to define the trade.

Now, this stock already hit a high out of the gate, so I was buying into the pullback.

Plus, I expected shares to garner more interest as folks picked up on the story.

For me, this was a simple buy the dip and sell into strength strategy.

I had already let the stock sell off and begin its rebound. With the low volume and an already wide range for the day, I wanted to see shares run back towards the high of the day, if not a bit past.

All it took was a few more minutes and I had my exit.

Now, I know stocks with low volume like these can scare away some traders.

When I first started learning how to trade these stocks, I kept my position sizes very small.

Instead of trying to make money on every trade, I focused on watching the price action and refining my setups.

That’s largely how I came up with my Supernova pattern.

It was the one setup that caught my attention and continued to repeat over and over.

And that’s all it takes is just one pattern.

That’s why I make it super easy to sign up and learn about Supernovas.

Traders from all over the world can spot this pattern in any market on any chart.

Click here to learn more about my Supernova Pattern.


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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”