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Trading Tips-Tim Sykes Penny Stock

Wake N’ Trade? Here’s When to Trade Premarket

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Written by Timothy Sykes
Updated 1/9/2023 12 min read

It’s an intoxicating prospect … Learn when to trade premarket, make bank before the stock market even opens, go back to bed. I wanna make bank, bro! 

There are plenty of so-called gurus out there who will tell you this is the way to get rich quick. All you have to do is follow their alerts…

Not so fast. The truth is, premarket trading can be volatile and risky. Newbies who don’t have enough understanding or knowledge to be able to take advantage of premarket movers can find themselves in nasty situations.

I’ve been trading for 20+ years … and even I don’t trade premarket that often.

I try to approach trades with a ‘retired trader’ mindsetThe play has to be so good that it takes me out of retirement.

In the case of premarket trading, the trade has to be truly incredible — it’s gotta be worth the bigger risk, and worth making me wake up early. Like this one…

It’s not so much a question of if you should trade premarket. It’s more about knowing when to trade premarket. It’s not gonna be every single day.

It seems to be my life’s journey to set the record straight in an industry full of fakes … so I’ve gotta talk about this. I want to show you an example of a recent premarket trade, including how I found it and how I knew it was worthwhile.

This is one of the most important lessons I’ve had in a while, so read carefully and learn!

Penny Stock Myths

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Before we dig into my example of when to trade premarket, let’s clear up some penny stock myths. It’s important that you understand these things because they’ll help you understand my approach to premarket trading.

Myth 1: You Can’t Make Money With Penny Stocks

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I kind of get why there are so many penny stock haters out there. The niche is full of fakes and misinformation. But as I see it, the big reason why people lose money trading penny stocks is because they have the wrong mindset.

People make two primary mistakes with penny stocks:

  1. They don’t understand the difference between trading and investing. They think that they should buy and hold these companies … then get burned when they inevitably fail.
  2. People think that they can get rich if they just latch on to someone’s alerts or some guru’s gimmick like only trading premarket.

This is why I teach — to prove that there’s another way to approach penny stocks. Namely, becoming a self-sufficient trader.

It’s the method that’s worked for me. I’ve been doing this for 20+ years, and I’m up $6 million over the course of my career.*

It’s worked for my students, too. I’ve got several confirmed millionaire students — my student Jack Kellogg is the latest to join the club.*

(*These results are not typical. Individual results will vary. Most traders lose money. My top students have the benefit of many years of hard work and dedication. Trading is inherently risky. Always do your due diligence and never risk more than you can afford to lose.)

Myth 2: You Need to Be Glued to Your Monitor at All Times

It’s a common misconception that you have to be glued to your monitor at all times to trade penny stocks. Nope.

True, you’ll be alerted to more opportunities the more screen time you log. But honestly, one of the things I love about penny stocks is that they give me so much freedom.

I can trade every day — but I don’t have to. Sure, in 2020 the crazy market volatility has kept me in front of my monitor a lot, but that’s only because there are so many opportunities.

The point is, you can make trading work for your schedule. Don’t get FOMO — just focus on the plays that are happening when you’re prepared and able to trade. Don’t force trades, and be willing to cut losses quickly.

In the case of the trade I’ll discuss here, it was a case of being in the right place at the right time. And it just so happened to be premarket.

I’m not an early riser. I happened upon this trade because I was by my computer at the time and it was a setup I understood. But if I’d missed it, I would have just waited for the next one.

It’s not just about when to trade premarket. It’s about when to trade, period. The ideal time to trade is when the right opportunities present themselves.

When to Trade Premarket: A Prime Example

The premarket isn’t as busy as the regular market hours. There’s a lot more volatility and a lot less volume. Less volume means that it can be a lot harder to enter or exit a position.

Because of this, I generally don’t trade premarket … unless the play is really, really good.

If and when it is, I’m willing to make an exception.

Here’s the perfect example of when to trade premarket…

Greenpro Capital Corp. (NASDAQ: GRNQ)

On October 5, 2020, I saw a premarket opportunity that I couldn’t resist.

Thanks to a StocksToTrade Breaking News Chat alert, I found out that Greenpro Capital Corp. (NASDAQ: GRNQ) had issued a press release about satellite product news.

I knew this catalyst had the potential to move the stock price. Why? Because it was a sympathy play to Elon Musk’s Starlink company, which has plans to create an interconnected satellite network.

Musk knows how to get attention. It’s a hot private company that he’s teased could make an IPO. There’s interest, but his company hasn’t gone public (yet).

In the case of Greenpro, there was a similar product from a startup.

I saw a lot of potential. And I knew a lot of traders would be interested, so I jumped in — even though it was only 8:37 a.m. Eastern. These things can move fast, and I knew I needed to take advantage of it immediately.

I bought in the $1.30s. My goal was to get out in the $1.40s or $1.50s. It exceeded my expectations. I got out in the $1.60s — little did I know it would go all the way up to nearly $3!

In this case, I made the right call by knowing when to trade premarket … But I made the wrong call by getting out too early! I made $1,625, but I could’ve made a lot more.*

GRNQ penny stock chart
GRNQ chart: focus on premarket spike — courtesy of StocksToTrade.com

Be Prepared: When to Trade Premarket

If you missed GRNQ or any trade — premarket or not — don’t stress. Learn from it and prepare for the next one. 

What most people want to know is … ‘Tim, how do you know when to trade premarket?’

When someone asked me that on Twitter, here’s how I replied:

Fine, not really. Here are the ‘secrets’ I use to know when to trade premarket. Take notes!

News, Tools, and Knowledge

If you want to know when to trade premarket, you need a combination of the right news, tools, and knowledge.

News + Tools

Everyone wanted to know how I found GRNQ. It wasn’t just about reading the news — I used the right tool to find the kind of news I was looking for.

The Breaking News Chat add-on tool on StocksToTrade is an incredible resource that’s specifically designed for traders. It’s curated news for low-priced stocks.

It makes me ill to think of all the traders out there who aren’t taking advantage of this tool.

But having access to news alone won’t make or break a trade for you.

I always say that trading is like a battlefield … you gotta have the right weapons.

I see traders doing things like using market orders or sub-par brokers. Don’t shoot yourself in the foot! Use the right tools … give yourself any and every edge possible.

Educate Yourself

How did I know that GRNQ was a great opportunity? Because I understand things like informational inefficiencies and how they can be a powder keg near the market open — especially on a Monday morning.

If all of that sounds like a mystery to you, stop worrying about premarket trading. Start focusing on your education.

There hasn’t been a scientific study on it, but I can tell you this from experience … There are traders who take the time to learn how the penny stock niche works and newbies who follow alerts. Traders who focus on their education are roughly a zillion times more likely to make smarter trading decisions.

Are you willing to put in the time and energy to educate yourself?

Here’s a good starting point: my 30-Day Bootcamp. It’s my best-reviewed product ever — I created it with my student Matthew Monaco, who just passed 375K in profits.*

It’s less than $100 — we made cheap so it would be widely accessible.

It’s a great beginner’s tool. It’s designed to give you an education on the niche and to help you get in the right mindset for trading. Many students use it as a stepping stone to applying for my Trading Challenge.

Are You Ready?

It may have been luck that I was at my computer when the news about GRNQ broke … But it’s not luck that I knew how to take advantage of the play.

I’ve taken 20+ years to learn what I’m doing as a penny stock trader. It’s not luck or manipulation. It’s strategy.

Before you dare trade in premarket, you must be able to honestly answer these questions:

  • Is it in play?
  • Is there news?
  • Do you know what you’re doing?

If you don’t understand these things yet, it doesn’t mean you can’t ever trade premarket. It just means you need to work on your mindset and build your knowledge.

The question of when to trade premarket isn’t so much about the time of day, but whether there’s a real opportunity.

If there’s an opportunity, be ready to capitalize on it! The more knowledge you have, the better perspective you’ll have on trades. The better perspective you have, the better decisions you’ll make about any trades — regardless of the time of day.

Do you get this? Leave a comment and say “I will capitalize!” or “I will capitalize BETTER!”

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Author card Timothy Sykes picture

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”