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Trading Recap

Walking From Pattern to Profit in $NA

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Written by Timothy Sykes
Updated 8/4/2022 5 min read

Without a doubt, chart patterns are the single greatest discovery in my trading career.

In fact, it was a Supernova helped me earn my first $1 million back in 1999 and 2000.

Back then, I didn’t understand what I was looking at, only that I saw huge potential.

Intuitively, I bought breakouts and rode the wave higher and higher.

It wasn’t until years later I recognized that it was part of my 7-Step Penny Stocking Framework.

While markets have changed, the patterns remain the same.

As a trading mentor and teacher, I’ve taught thousands of students how to recognize these formations and use them to craft profitable trading strategies.

That’s why we’ll dive into my recent trade in Nano Labs Ltd. (NASDAQ: NA).

I post every trade I take RIGHT HERE for anyone to see.

It’s a perfect example of how I capitalized on one of the many HUGE opportunities.

So, let’s start with the pattern and then dig into the execution.

The Pattern

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Most traders are familiar with popular patterns like the ‘bull flag’ or ‘double top.’

The one I’m most proud of is my Supernova.

As I mentioned, this pattern helped me earn my first $1 million.

But what many don’t realize is that like a real Supernova in space, it never really dies, it just changes forms.

That’s why I always look for Supernova patterns, even if I miss them.

I keep them on a watchlist because they often build the foundation of future trades.

But why am I talking about Supernovas when NA wasn’t one?

Because the lessons I teach using Supernovas can be directly applied to this stock.

NA was a recent IPO that started t by trading a couple of weeks before I took the trade.

Sometimes, the market for IPOs is hot. Other times, it’s like a breezeless ocean.

Right now, we’re in one of those hot cycles.

And get this…NA had the same underwriter as HKD…you know that stock which ran ~20,000% from its opening IPO print!

There has also been a rash of IPO spikers such as MAIA Biotechnology Inc. (NASDAQ: AMEX) and Virax Biolabs Group Limited (NASDAQ: VRAX).

Taken together, these puzzle pieces implanted the idea in my head NA might follow suit and spike.

Now, because the stock was so new, there’s extra risk involved. I wanted to make sure it wasn’t a dud.

I followed it after the first spike on the 25th and then got very interested when it spiked again on the 29th.

You’ll notice that after a massive spike on Friday, the stock pulled back significantly on light volume.

Given the run other stocks had the last few days, I expected there would be an opportunity to buy shares on a pullback.

In a nutshell, I concluded that Monday should be bullish for the stock, at least off any pullbacks.

That’s what led to the dip buying framework.

The Execution

With this framework, I planned for a trade that should spike off a dip.

From there, the trade is pretty straightforward.

I simply look for a spike and pullback from which to enter the trade.

As you can see, shares spiked early, pulled back, and then held just above the open for the better part of an hour.

I entered the trade knowing that if the stock continued to float sideways or break down, I could just exit the trade.

Sure enough, right after I jumped in price jumped 10%, giving me a fantastic opportunity to sell into strength.

There’s something else to keep in mind here.

The entire range for this day fell inside Friday’s range.

Stocks are less likely to completely fall apart when they sit inside another day’s trading range.

However, as the following day demonstrated, once the stock spiked above Friday’s high and made a new all-time high, that’s when sellers really hit hard, sending shares plummeting.

I want to take the trades that offer consistent results rather than the ones with big payouts.

That’s how I’ve made my trading career with the pattern that’s allowed me to keep at it for more than two decades.

Final Thoughts

Every trade needs a pattern to develop a thesis.

From there, you can create the trade setup inside of that framework.

If you try to create a setup without the pattern, it lowers the odds of success.


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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”