A trading edge is anything that gives you an advantage over other traders. It could be a specific pattern, strategy, or technique. It could be how you manage risk or understanding which news catalysts have legs.
Some traders spend months backtesting ideas to find an edge. Others test and tweak, trying to squeeze that extra 1% out of every trade. For the most successful traders, it’s a combination of many things.
The problem is, when too many people use the same strategy, pattern, or idea, it’s no longer an edge. But that’s EXACTLY why I love penny stocks so much. (If you’re brand new to penny stocks, start with my FREE penny stock guide.)
Wall Street looks down on penny stocks. Big time traders ignore penny stocks because they can’t make enough money. We live in the gutter compared to what they make. And that gives anyone who’s willing to be meticulous and focus on the process an edge.
Looking for an edge? Join me on Friday, October 30 for the next Market Mastery all day live trading webinar. Discover how I think while trading. Learn how my trading edge allows me to consistently profit from market volatility. Get more information and register here.
Keep reading for tips on how to find a trading edge. First…
Feeding People in Need
The pandemic continues to disrupt normal life. It’s making an already shocking hunger problem worse in many countries. So Karmagawa is stepping up our mission to make the world a better place. Last week I spent a lot of time on the phone with charities helping to feed people in need.
We continue to feed families with our partners in Yemen and Lebanon. In Bali, where we normally build schools, there’s not much construction allowed right now. So we’re doing food programs with our partner, Bali Children’s Project.
And we’re helping here at home, too. We’ve partnered in the past with the Houston Food Bank. We’re working with them again.
I’m donating 100% of my October trading profits to food banks. Here’s why…
Sobering Statistics About World Hunger
The world produces more than enough food to feed everyone. Sadly, it’s estimated that 690 million people don’t get enough to eat. That’s a staggering number.
To make matters worse, the pandemic is impacting production and distribution. Which means as many as 132 million more people are going hungry now compared to pre-pandemic.
It’s happening everywhere. Be part of the solution. If you’re in a position to donate to food banks, do it.
To support Karmagawa in our global mission, buy our charity merch here.
Let’s get to trading…
Trading Mentor: Questions From Students
This week’s question hones in on an important lesson about trading edge.
Here’s the question…
“Was your $IMUN trade purely a breaking news play?”
Yes. I’ve been doing a lot of breaking news plays and a lot of these one-cent to five-cent stocks have been skyrocketing 100%, 200% … even 400%. Check it out…
Immune Therapeutics, Inc. (OTCPK: IMUN)
IMUN was already spiking fast on news of a merger when I bought it. Thanks to StocksToTrade Breaking News I was able to take a good piece of the move. My buy and sell alert show that you don’t have to be first to have a trading edge. But you need to know if the news catalyst has legs.
(Quick disclaimer: I helped design and develop StocksToTrade. I’m also a major investor in it.)
The green icon on the chart shows when StocksToTrade alerted the news. This goes back to our focus this week…
How This One Tool Has Changed My Trading Edge
I really think there’s a huge edge with StocksToTrade Breaking News. I think every single person out there can use it — and you should use it. Having a trading edge is the best way to grow a small account. Not by trading random stocks and random patterns.
I’m far from a perfect trader, but with all the opportunity/volatilty you have to be a fucken moron not to be profiting in 2020 if you utilize the proper rules/strategies & use revolutionary tools like @StocksToTrade & @sttbreakingnews that give you a HUGE edge over Robinhooders!
— Timothy Sykes (@timothysykes) October 5, 2020
If you can make a quick $1K — or even $100 or $200 if you’re trading a small account — it adds up over time.
Again, I don’t just buy any news. It has to be the right news catalyst. StocksToTrade Breaking News can give you a definitive trading edge with plays like this. How? No other service specifically highlights, and curates, low-priced news plays. The beautiful thing is, you have an edge over less prepared people in the penny stock space.
Trade Review
One part of finding — and keeping — a trading edge is to know what you’re good at. But at the same time, you have to recognize that stocks have characteristics. It’s almost like they have personalities.
With that in mind, let’s review several recent trades from one ticker. It turned into one of the better panic dip buy opportunities of the year. But I didn’t trade it very well…
Northwest Biotherapeutics, Inc. (OTCQB: NWBO)
NWBO has been on a solid run since September. I traded the stock once in September for a $1,675 win* and again in early October for a small $328 loss.
(*Please note: My results, along with the results of my top students, are far from typical. Individual results will vary. Most traders lose money. I have the benefit of years of hard work, dedication, and experience. Trading is inherently risky. Do your due diligence and never risk more than you can afford to lose.)
Here’s the NWBO three-month chart with my previous trade commentary…
As you can see, I traded the NWBO breakouts on the way up. As I so often do, I underestimated it. When it continued to run and get overextended, it made my watchlist as a potential panic dip buy. (Get my no-cost weekly watchlist here.)
NWBO has always been a choppy stock. I didn’t profit much buying it under $1 a share, so it stands to reason I didn’t profit much when it was panicking, either.
Check out the NWBO chart from October 21–22…
As you can see … NWBO was a little frustrating for me. The first two trades, I got impatient and didn’t let it panic enough. I still had wins, but it could have been a $15,000 win instead of a combined $1,903. Still, from my five trades, I’m up $5,230 so I won’t complain.*
My trading edge with NWBO comes from seeing this pattern over and over again. When stop losses get taken out, OTCs can panic big and bounce big. But for whatever reason, NWBO and I don’t get along because…
Stocks Have Characteristics
That happens sometimes with stocks you trade. It could be based on price action or pattern … or whatever. Sometimes you just don’t do as well with certain stocks. My morning panic dip buy on October 22 was a little better for a $1,980 win.*
I remember Kraig Biocraft Laboratories, Inc. (OTCQB: KBLB) from April and May of 2019. KBLB is the spider silk stock. I screwed up on the breakout on that one. Then when it was panicking I screwed up the panic, too.
It was a lot like NWBO. I find that if you don’t do well on the front side of a big run-up, you’re probably not gonna do that well on the backside.
That’s why it’s so important to remember to…
Be Meticulous Even When Trading With an Edge
The more meticulous you are in your preparation, studying & actual execution, the greater your edge over all the lazy, ignorant, degenerate gamblers in this industry who rely on their gut, alerts, “hot picks” & even subconsciously prefer action to consistent risk-adjusted profits
— Timothy Sykes (@timothysykes) April 26, 2020
Remember, a trading edge is something that gives you an advantage over other traders. StocksToTrade Breaking News Chat can potentially give you an edge.
Being able to recognize the patterns in real time can give you a trading edge. Experience gives me an edge. So even when I misjudge like I did on NWBO, I often walk away with a win. And if not, I follow rule #1 and cut losses quickly.
You need to understand that just because you have an edge doesn’t mean you’ll win every trade. Be willing to take small losses. But know that the more meticulous you are, the more trading edge you have over lazy people.
Top Students Traded NWBO Better
I’m most proud of how students traded NWBO. Jack Kellogg made $18K on NWBO going short on the panic and long on the bounce. He’s approaching $1 million and will probably be my next millionaire student. Kyle Williams made roughly $9K trading NWBO.*
Woooohoooo, another https://t.co/EcfUM6l2S3 student with a HUGE day thanks to the awesome $NWBO FRD, please congratulate/retweet @traderkylec on his awesome trading today: kylecw2: all covered $NWBO here, locked in another +$1500ish or so just putting me above +$9k for the day
— Timothy Sykes (@timothysykes) October 21, 2020
NWBO suited them better than me. They profited on the way up and the way down.
Let’s finish this update off with the…
Trading Lesson of the Week
There are SO many plays right now. But it’s a little frustrating because it’s been choppy.
People want there to be one hot sector like coronavirus earlier this year. Recently it was electric vehicles. But now it’s a mish-mash of coronavirus, electric vehicles, clean energy, lithium plays…
There’s a bunch of different opportunities with no clear direction.
The lesson is…
Don’t feel like you have to trade everything. Don’t feel bad if you miss a play or have choppy results. Sometimes the market has to digest its gains. We’ve had a huge run-up so you have to keep everything in perspective.
A lot of newbies lose their perspective. They only think about “What’s going on today? What’s happening this week?” They don’t have a multi-year or multi-decade perspective. I do.
Which is why I can be helpful to newbies and experienced traders alike. I can take a step back and say … “Relax, it’s OK. Some days are harder than others.”
That’s the market we’re in now, so learn from it. To work on your edge in this market, size down or paper trade using StocksToTrade. But keep learning and keep trying to find a definitive trading edge. It will get easier — probably after the election.
Millionaire Mentor Market Wrap
It’s important for you to start developing your trading edge. The first step is to actually learn to trade rather than take random trades. A great place to start is with the 30-Day Bootcamp.
You need to know which patterns give you the best odds. You have to learn how to cut losses quickly. And then you’ll have to test — either with small positions or by paper trading. If you focus on the process, eventually you’ll find your edge.
But fair warning: the market shifts and changes. One of my greatest advantages as a trader is my ability to adapt. So make adapting one of your trading edge goals.
Trading Challenge
All my top students have developed a trading edge and the ability to adapt. And they’re all part of the Trading Challenge.
There’s a reason why the Trading Challenge creates the best traders. It has everything I’ve learned in the past 20+ years of trading. It’s a fully immersive program. You get video lessons, DVD guides, live and archived webinars, and an incredible chat room.
If you’re ready to find your trading edge, apply for the Trading Challenge today.
Reminder: join me on Friday October 30 for the next Market Mastery all-day webinar. Ask questions and watch me trade live. One of the best ways I know to help you develop a trading edge is to let you watch over my shoulder. Register for Market Mastery now.
What are you doing to find your trading edge? Comment below, I love to hear from all my readers!
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