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How To Wait For The Bounce …

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Written by Timothy Sykes
Updated 7/17/2024 5 min read

The framework that I use to trade reveals multiple potential-profit angles on a single stock spike.

It’s true, these volatile stocks will eventually crash. We can’t hold shares forever.

But a lot of people forget to look for trade setups ON THE WAY DOWN.

It’s rare that we find a volatile stock that lazily sinks lower. Usually they’re volatile on the way down like they were on the way up.

And we can use that volatility to build solid trade positions.

I did it yesterday on Koss Corporation (NASDAQ: KOSS). Twice …

The stock spiked 320%* on July 3 and then started to sink lower. Just another volatile stock running its course.

Some people would stop watching after the initial spike, not me. I’m always waiting for a follow-up bounce. The stock doesn’t have to make new highs, I just need some wiggle room to trade it.

Take a look at the chart of KOSS below. Every candle represents ten minutes.

Yesterday the stock bounced 25%. I traded it twice for 5% and 8% profits.

KOSS chart multi-month, 10-minute candles Source: StocksToTrade

Want to learn this process?

Opportunities On Both Sides

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The stocks that I trade – volatile runners – like to follow a specific framework.

Stocks can follow this framework because people are predictable during times of high stress. Like when they have a few thousand dollars in a volatile stock.

The key to my profits is recognizing WHERE the stock is in the framework and WHICH pattern to use.

This is the whole framework.

My two trades on KOSS yesterday took advantage of the #5 and #6 bounce.

The price was still fairly low, around $10, so I loaded up on shares and rode the bounce. Take a look at my trade notes below:

Source: Profitly

Always remember, this is a scalable process.

That’s why I shared my percent gain before my dollar gain.

A 5% and an 8% gain are perfect trades!

They’re only +$1k because I used a larger starting stake (compared to newer students with smaller accounts).

One of my most successful students, Jack Kellogg, uses the same trading process and his starting stakes are MUCH larger.

Take a look at a recent trade that he made below:

Source: Profitly

But in 2018 he was trading with a few thousand dollars:

Source: Profitly

The same process … Different position sizes.

How To Follow This Framework

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When Jack started trading, my students were largely on their own …

I was holding live-trading webinars and filming video lessons, but there’s only one of me. My students didn’t have any one-on-one time to pick my brain.

This year, that changed.

Since AI burst on the scene, I was able to train an interactive AI bot to track my trading framework on the hottest stocks.

And the results are jaw dropping!

For the first time, my students have direct access to a real-time stock tracker. A tracker that follows the same process that I’ve used to pull $7.7 million from the stock market.

Enter a ticker into the AI bot and it will spit out an analysis as if you asked me directly.

You can use it to track KOSS for more follow-up bounces. Or use it to track fresh runners like Yoshitzu Co. Ltd. (NASDAQ: TKLF) from yesterday … The stock price spiked 160%*.

There’s always another opportunity to profit around the corner. Don’t miss out!

Cheers.

 

 

*Past performance does not indicate future results


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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”