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Trading Lessons

Breaking Down $SYSX

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Written by Timothy Sykes
Updated 5/26/2022 5 min read
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Hey trader. Tim here.

Despite the free-fall in stocks…

There are still monster plays to be made if you’re patient and know where to look.

Today I want to cover one of my favorite setups I used to snap up some nice profits in Sysorex Inc. (OTC: SYSX).

I managed to get in and out within the first 15-minutes of the trading day!

Sure, $429 in trading profits might not sound like a lot of money, but the trade lasted a quick 15 minutes.

And I’m not bringing it up to brag. I truly believe this setup is super simple to learn and easy to execute.

That’s why I want to share the ins and outs of this trade with you. Because if you’re able to spot it, you can start applying this strategy to make money in the market.

A Watchlist Wonder

Most of my trade ideas come from three sources…

First, the news. And there’s no better place for this than the Breaking News Chat feature in our StocksToTrade Platform.

Our analysts sift through the news to curate timely, actionable content.

This past Monday, for example, they alerted members to Catalyst Biosciences Inc. (NASDAQ: CBIO) at 8:30 a.m.

Breaking News Members saw the post well before the stock took another leg higher.

The second place I look for trade setups is my trusty stock screener.

I have one set up in StocksToTrade that looks for the type of low-float equities I like to play with.

Plus, I can line this up with the Oracle feature in the platform that calculates support and resistance levels.

Get a 14-Day trial of StocksToTrade platform for as little as $7.

The last place I look for trading opportunities is my trusty watchlist.

It just so happens that I’ve had my eye on SYSX for a few weeks now. In fact, I picked up a couple of trades before Tuesday.

The Setup

Let’s dig into the details, shall we?

This is a 1-minute chart of SYSX.

One of the key concepts I teach my students is the ‘morning panic.’

In the morning panic, a typically bullish stock takes a quick dive on lighter volume.

What I look for here is a break of an important level followed by a quick reversal in the other direction on volume.

Here, the stock rallied for a few minutes out of the gate.

Then, as volume slowed, it made a top in one candle where the price went nowhere (yet saw heavy volume).

From there, shares slid past the open.

The next two candles were red, where the close was lower than the open.

However, it was in the next 1-minute candle that I entered the trade, looking to see follow-through that moved above the opening print.

Shares didn’t disappoint as they pushed higher before trading sideways.

It was at that point I decided to cut the trade loose.

Why did I do that?

For starters, the volume essentially died out. That left me at the mercy of whichever side decided to hit the stock next, longs or shorts.

That’s a coin flip … Not something I want to leave to chance when I’m already at a decent profit.

Second, and more importantly, if the stock was going to head higher, it would have already done so on heavy volume.

The fact that it hit a certain price and just died told me that the run, at least for the time, was over.

But there was also a much bigger reason I wanted out.

You see, at the same time as SYSX stalled, the broader stock market was making new lows on the day.

While penny stocks can and do trade independently of the major indexes, they’re still susceptible to general market pressure.

And when I’ve already made a profit, there’s no reason to let the trade reverse on me.

This market isn’t the same as it was in 2020 or 2021. We aren’t seeing the massive gains with huge follow-through that would send meme stocks into the stratosphere.

More Breaking News

Right now, risk is coming out of the market, creating downward pressure on small caps and penny stocks.

Key Takeaways

So, let’s review the components of this trade:

  1. Identify a stock from the watchlist, screener, or news
  2. Look for breaks of important price levels during the morning panic
  3. Wait for a reversal candle
  4. Use that as a catalyst for a long trade back towards if not above the break level
  5. Take profits when the stock starts to trade sideways

Now, this is just one example of the setups I like to work with.

But my favorite? Well, you’ll just have to see … Click here.

—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”