15 Lessons From an Amazing Tim Grittani Webinar

How did I celebrate my big win trading CytoDyn (OTCQB: CYDY) on June 30? By watching an amazing Tim Grittani webinar.

LOL damnnnnnnnn @kroyrunner89 just revealed in his https://t.co/EcfUM63rtt webinar that he got one more short in on $CYDY in the afternoon to finish +$272,000 today, if that doesn't inspire you to study hard you're lost. Funny people say you can't short these promoted stocks LOL

— Timothy Sykes (@timothysykes) June 30, 2020

The crazy thing? Grittani had just had his biggest win ever — $272,000* — on CYDY! How did he celebrate? By offering to give a webinar for Trading Challenge students to discuss the trade. All I could think was, “Are you SERIOUS? YES!”  

(Please note: My results, along with the results of my top students are far from typical. Individual results will vary. Most traders lose money. My top students and I have the benefit of many years of hard work and dedication under our belts. Trading is inherently risky. Do your due diligence and never risk more than you can afford to lose.)

By the way…

Trading Challenge students get two to four live webinars per week. Tim Grittani, Michael Goode, Tim Lento, Mark Croock, and I share knowledge and experience. Keep reading — at the end of this post, I’ll include a link to apply.

So when Grittani started his webinar, I did what any good trading student would do…

I took notes. And I’m sharing them with you. You’re welcome. Bookmark this page and refer to it often.

Here we go…

15 Lessons From an Amazing Tim Grittani Webinar

Lesson 1: Don’t Break Your Own Rules

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Grittani talked about how he tried to go long on June 19 in anticipation of the breakout. The problem? He has a rule against buying in anticipation of a breakout. He wanted to trade the breakout and the stock had consolidated for months…

By breaking his own rule he ended up taking a small loss. Have rules and stick to them. I trade with these rules.

Lesson 2: Watch, Wait, and Prepare

Grittani said he was watching CYDY back in April and May. It didn’t do what he wanted. Rather than get frustrated, he set an alert and took it off of his watchlist. Then he waited for the price alert. Once CYDY hit a certain price, it was back on his watchlist.

This is super important. You can spend a lot of time watching a stock at the expense of missing plays the market gives you. That can wear you down. Grittani would rather wait until the stock meets his criteria. Like I always say, wait for the pattern to come to you.

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Lesson 3: Don’t Chase

When the breakout happened, Grittani didn’t chase. He didn’t believe in the stock. Here’s what he thought when CYDY finally broke out…

“Hopefully it gets vertical so I can short it. It can run without me.”

Then, on the second day of the breakout, there was very low volatility. Again, Grittani waited patiently. On day three, it still wasn’t that extended. He said in his webinar that the move from the breakout level of $3.80 to $5 still wasn’t enough.

So even though it was five green days in a row, there was no big overextension. He didn’t see a huge downside … yet.

Lesson 4: Be Willing to Test and Tweak

Finally, on Friday, June 26, things picked up. CYDY had a big parabolic move on June 25 and 26. So Grittani took a few stabs at the short late in the day.

His reasoning was that when CYDY tanked in April, it was a late-day ‘pull the plug’ situation. So to avoid missing the opportunity, he was willing to test. He lost a few thousand dollars in the process.

Then came more testing on Monday, June 29. For me, this is interesting. This is arguably the best penny stock trader in the world. How did he prepare for the coming opportunity? By testing and tweaking.

Newbies and veteran traders alike, heed this lesson well.

What did he test?

• A different broker for OTCs. He’d heard a specific route was available on Cobra. He already had an account with Cobra, but he had to enable OTC trading on his account for this trade. (For the record, I use these brokers.)
• New routes. Not just the specific route he’d heard about — he methodically tested every route. That’s how meticulous he was. His goal was to find the best route so he could take full advantage of the opportunity.
• How the stock played. Grittani wanted to get a feel for it and was willing to take small losses to do so.
• Executions. How fast do orders get filled?

Lesson 5: Establish the Right Mindset

There are a few lessons here — pay attention.

Avoid FOMO

Your trading mindset is crucial. Grittani said several times that he experienced FOMO with CYDY. He also overtraded the stock, especially on June 29. He was OK with some losses that day, but he could’ve avoided others.

Stubbornness Can Lead to Crisis Management

Even though Grittani was wrong several times, he didn’t get stubborn. When the stock kept going up, he cut losses quickly and waited. As he says in the webinar…

“Stubbornness can lead to crisis management.”

The Catastrophic Implications of Hold and Hope

I say it all the time: hold and hope is NOT a strategy. If you watch the Tim Grittani webinar, you’ll see he takes it further. He discusses why he cut losses on June 26 and 29. He brought up big losses from the past and how he learned from them.

What if you’re wrong and hold and hope? Catastrophe could strike. Since Grittani was waiting for the opportunity to short CYDY, he kept testing. But he didn’t stay in a losing position. What if it turned into a big short squeeze and went to $12 or $15? That would be a massive loss considering the size Grittani intended to trade. Keep reading…

Lesson 6: Even Veteran Traders Make Mistakes

Grittani talked about taking a lot of “paper cuts” (making conscious decisions to test) as he overtraded the front side. He said he made the rookie mistake of chasing weakness for shorts and covering into strength.

At the same time, he was testing and tweaking. He was trying to find the best route and probing the stock. So he was OK with the losses. If anything, the losses helped with the big win.* But he didn’t trade it perfectly.

If you’re in the Trading Challenge, this Tim Grittani webinar is a must-watch. It’s amazing to hear him explain his thought process.

What other mistakes did Grittani mention? After the big panic, the stock bounced. That’s where I played it. Grittani also went long on the bounce. But he got spooked and cut early. It’s not that he lost, he just didn’t get as much out of it as he’d hoped.

Grittani’s other mistake — according to him — is that he wanted perfection. As if making $272,000 on one stock in one day isn’t perfect enough.*

Lesson 7: From the Tim Grittani Webinar: Small Losses Are Acceptable

Especially when your trading plan includes a willingness to take paper cuts. That way, Grittani could continue taking big position sizes.

“Cut losses quickly so you can come back and crush it,” he said in the webinar.

He also covered position size and the proportion of losses versus the win. What do I mean? Check it out…

He took roughly $40,000 in losses on June 29 while testing CYDY. He admitted he overtraded and could’ve avoided the afternoon losses. But he was OK with the losses … He was preparing for the win. His heart was set on it. He saw the potential.

Let’s put it into perspective. Would you be happy losing $40 testing and tweaking a stock one day knowing the next day you could make $272?

How about losing $400 one day to make $2,720 the next day? Or losing $4,000 to make $27,200 the following day?

Grittani was fine with taking what many would consider a huge loss to prepare. Why? Because it was appropriate for his account and position size. 

Remember, he made nothing in his first nine months of trading. Then over time, he had small wins and kept his losses smaller. Over the years, he’s scaled up.

This is a key concept.

Lesson 8: Avoid the Unavoidable

Grittani said his losses in the afternoon on June 29 — the day before his big win — were probably avoidable. In hindsight, he wishes he hadn’t taken them. But he showed amazing poise in getting out of the stock realizing he was wrong. It wasn’t time.

So while he says he could’ve avoided some of the paper cuts, he also did a very good job avoiding a catastrophe. If he’d held and the stock gapped up the next day he might’ve lost the confidence to stay on it for the big win.

Lesson 9: Study History

I say this one over and over, so it’s awesome to hear about Grittani studying past plays to prepare for CYDY. He specifically mentioned CVSI from 2018. But he also talked about other OTC morning panics like FNMA, when he made $215,000 in one day.*

Why should you study charts and trades from the past? And when I say “past,” I’m not just talking about last month or last year, but even 10 years ago — or even longer. How is this still relevant?

Because even the best penny stock trader in the world does it the night before a big win! Here are three simple reasons you MUST study the past.

• It will help you recognize opportunities.
• You learn from your mistakes. If you’re in the Trading Challenge you can learn from the mistakes of others, too.
• It helps you keep your losses small. That might sound counterintuitive but think about it. If you study charts and trades from the past with the same pattern, you can learn how the pattern should play out. That means you can recognize when it’s not working and get out.

Lesson 10: Stick to Your Trading Plan

Grittani did a brief Q&A after his CYDY trade recap. It was amazing to hear him lay down his rules and also explain when he broke them and when he stuck to them.

Two rules about his trading plan that I love….

First, don’t add to losers. Grittani doesn’t get into the average-up mentality of many short sellers. One Trading Challenge student asked about his re-short after the bounce, which went against him at first. And while he scaled into the position when the trade finally went his way, he didn’t add to the loser.

He also talked about not adding to his position outside his plan. He had a clear trading plan. So even though he could’ve potentially made more money, he stuck to his plan. That kind of trading discipline is part of what makes Tim Grittani so successful.

Which leads to…

Lesson 11: You Don’t Have to Be Perfect to Make Big Money

Tim Grittani’s win rate is roughly 67%. That means he loses one-third of the time. And he’s made more than double what I’ve made from trading in half the time.

Grittani said this in the Trading Challenge chat room on April 20, 2020:

“Trading is about having two things: strong conviction that the move will go in your favor, and a clear risk level to use in case you’re wrong. It’s not about calling it right every time. Have a plan and stick to it and if you’re wrong more often than not then you need to examine the edge you think you have and reassess.” 

Considering the number of paper cuts Tim took before his big win, you should heed his advice. It’s so cool to hear him talk about it so openly. Transparency rocks.

Lesson 12: OTCs Trade Different Than Listed Stocks

This is another thing I teach about trading penny stocks. So it was good to hear all the Q&A about that in the recent Tim Grittani webinar. Access my FREE penny stock guide here.

Level 2 Is Easier to Read

For the morning panic pattern, OTCs are easier. While the chart isn’t as helpful, it’s easier to read level 2 action. So it’s easier to see the turns. It takes experience, but that’s why you study. Get my “Learn Level 2” DVD here.

Volume and Liquidity Are Important

Another thing about OTCs and this pattern — there needs to be enough volume. Trading big positions like Grittani does is ONLY possible with enough volume. Don’t get stuck in an illiquid stock.

The Nature of the Panic Is Different

If a listed stock starts to move that fast, it gets halted. But OTCs don’t have volatility halts. When the stop losses get taken out and the big sell-off happens, it’s a thing of beauty.

Volatility is crucial to my trading strategies. Access my no-cost “Volatility Survival Guide” here.

Here’s another beautiful thing…

Lesson 13: Long OR Short — You Get to Choose

One reason this is my favorite pattern is that it’s so predictable. It’s possible to trade long, short, or both. Grittani took the big short, then went long on the bounce, then re-shorted the fade.

He was able to take profits in different ways. I recommend you learn to dip-buy the panic first. But I love hearing about students who profit trading both the panic and the bounce.

Lesson 14: Don’t Trade Random Stocks — Look for Specific Criteria

Trading Challenge students, watch the Tim Grittani webinar again. Notice how he looks for specific criteria to take a big position. And when he’s wrong, he gets out fast.

What he doesn’t do is throw size at something to see what sticks. That kind of trading is for degenerate gamblers. Know what you’re trading and why. If you don’t know or don’t have a trading plan, you have no business being in the trade. Period. Be meticulous!

Lesson 15: Build Your Knowledge Account

I was happy to hear Grittani say this at the end of the webinar. Don’t worry if you missed the CYDY panic and bounce. And don’t worry if you took a loss. Learn from it. Add it to your knowledge account.

Grittani said he needed to see this pattern play out a few times before he got it. Even more amazing, this was his best trade. It took him nearly 10 years to do this well on this kind of play.

The Tim Grittani Webinar Wrap

What an amazing webinar. I’m grateful for Tim Grittani. How many people would give a webinar after their single biggest trade making $272,000 in one day? Yet another reason I think we have the best trading community anywhere.

Will you dedicate yourself to trading for 10 years like Tim Grittani has? One thing I’ve noticed with all my top students is their level of dedication. The amount of time they put into learning shows.

Resources and Further Education

For a basic but solid foundation on my strategies, read “The Complete Penny Stock Course.” My student Jamil organized everything into an easy-to-read book. Every penny stock trader should read it.

Check out Tim Grittani’s DVD “Trading Tickers” here.

Learn more about my favorite pattern, the morning panic:

• For more about the CYDY panic read this post.
• Here’s how I called the best morning panic (until CYDY…)
• Try this every morning to improve your mindset for trading.

And if you want to become a self-sufficient trader…

The Trading Challenge

The Trading Challenge is the most comprehensive and in-depth trading education I offer. But fair warning, not everyone gets accepted. Only apply if you’re serious and ready to put in the work. Apply for the Trading Challenge here.

What do you think of the lessons from this Tim Grittani webinar? Want more posts like this? Comment below, I love to hear from all my readers!