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Trading Tips-Tim Sykes Penny Stock

The Best Stocks To Trade For Small Accounts

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Written by Timothy Sykes
Updated 12/30/2022 5 min read
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Did you know that most of my millionaire students started with less than $10,000?

Small accounts are my specialty.

I love teaching MILLIONAIRE CHALLENGE students how to take just a few thousand dollars and turn it into REAL WEALTH.

My students learn specific patterns that offer repeatable setups year after year.

And the absolute BEST place to start is the multi-day runner.

Plus, they work great with my bread and butter setups, including the morning panic dip buy.

However, many traders struggle to identify and trade the right runners.

This YouTube video I made 2017 highlights key differences between two stocks that were popular at the time.

But I want to take this to the next level and give you a breakout blueprint that anyone can use…

And it involves three easy steps.

1. Find Multi-Day/Week Runners in Consolidation

Yesterday’s blog post contained the following chart for GlycoMimetics Inc. (NASDAQ:GLYC):

This is a perfect example of the multi-day/week runners we want.

Look for a stock that’s had a nice run on heavy volume that moved into a consolidation pattern.

Here’s another example in Veru Inc. (NASDAQ: VERU):

The idea is to find a stock that pushes higher off a clear news catalyst and maintains its gains.

Over time, short sellers build up on higher priced stocks, while breakout traders jump on when they see the stock move without them, especially when promoters are involved.

While there’s nuance to this pattern, keep it simple and stick with ones that hold near the highs and even test breakouts a few times.

2. Choose Your Setup

In this video, I explain what a first green day looks like.

This setup works especially well with OTC stocks and is great for traders who don’t have a lot of time.

Don’t give overnight trades like these tons of wiggle room.

You want to see them gap up the following day and keep going.

If that doesn’t happen, don’t be afraid to cut the trade quickly for a small loss.

The last thing you want to do is buy a fakeout and get pulled down with the stock.

Once you’ve got a first green day, then you can start to look for morning panic dip buy opportunities.

These typically occur in the first 15-30 minutes of the trading day.

Practice morning dip buys with a simulated account or very small amounts of capital until you get comfortable reading level 2 data and price action.

Most traders do better when they wait for a stock to show a bottom before stepping in.

That way, they have a low to trade against.

Here’s an example with Vision Energy Corp. (OTC: VENG):

VENG took two tries to make a low.

Typically, I prefer a second low to the first.

Nonetheless, a new trader could wait until you saw confirmation of a bottom through a volume spike and bounce that happened off the round $15.00 level.

From there, you can go long at, say, $15.50-$15.75 with a stop at the $15.00 low.

More Breaking News

The more you practice the better your entries and overall performance.

3. Know Thy Framework

Be aware that this type of price action is typically moving from phase 2 to phase 3 in the 7-Step Penny Stock Framework.

That means the stock is likely closing in on its peak sooner rather than later.

So, keep these trades short and sweet.

Don’t push too hard or you risk getting sucked into the inevitable downdraft.

Using the example from the YouTube video, Tautachrome Inc. (OTC: TTCM) used that breakout to drive up another 200%.

However, it doesn’t always work out that way.

Sometimes, we see fakeouts or complete collapses within days.

That’s why it’s so important to trade cautiously.

Making money is hard. But keeping it is even harder.

—Tim

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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”