So I stumbled across this guy Timothy Sykes videos about how he turned $1.5k to $4mil in 2 years or so, and he now has students he teaches and 4 of them have already turned small investments to $1mil+. From what I always heard is penny stocks are dangerous and mostly scam filled.

Is this Timothy guy a pump and dumper? He has a really big following and has a site that tracks all his trades which tells people when to buy/sell. Anyone got any experience in him?

If you could turn $1.5K into $4 million in two years, would you go to the huge trouble of selling products that actually work, or simply put more of your own money in and take the (huge) profit yourself?

Says it all really. Guy is probably a decent entrepreneur.

Dear god do not sign up with him. He is a horrible trader, though he runs a profitable business for himself. He focuses purely on pump and dumps. You will become a bad or worse trader if you try to listen to him, and it may take a while to correct the mistakes you'll learn to make.

I think I can fade you guys and say Sykes has some good qualities. I wouldn't pay much attention to when he's talking about trading long but his short strategies are valid. Shorting pump and dumps is an extremely logical strategy that works and applies to NYSE NSDQ as well

You might think that except that almost all of the people he's selling to cannot short any of the names he is shorting. The best thing that ever came from his web site is doing the exact opposite of his alerts a few minutes after he issues the alert. If you watch any of his trading he basically just enters and exits in seconds or a couple minutes because of how fearful he is.

i agree on most of the comments so far....

i am curious about the world of microcap stocks i.e. who is actually buying and selling them? i used to get so many "hot tips", now i get none but the small cap world still seems to carry on.

Although he did popularize the strategy of shorting pumps and it is largely transferable to a lot of shortable NSDQ and NYSE symbols

Rubs a lot of people the wrong way and certainly making a lot more from selling videos/teaching, but his trading style has some merits and I believe he has real edge. The toxic penny crap he trades is probably the best remaining playground for discretionary daytraders. Lack of scalability and coverage and difficulty to model keep institutions and bots away. And like jb said, his style is fairly applicable to other nano and microcap spec names.

I didn't mean the fact that he trades pink sheets and etc. When I said that people cannot short the names he looks to short, it is because shares are almost always unavailable for shorting. He gets them through his high net worth broker, but basically all of his customers don't have access to anything even close to that, and thus the strategy is essentially useless.

own the entire universe in a few short years...


That is one way of describing him...

Shorting penny stock pump and dumps is a HORRIBLE idea.

1) It's usually impossible - there's no borrow available. That's how a P&D works - the pumpers control the majority of the (worthless) shares, while the idiots their email blast and social media campaign or whatever stirred up trade with each other in a small float. Those perpetrating the P&D don't offer their shares for borrow for obvious reasons - they want the float to be as tiny as possible.

2) The risk, and thus required capitalization, is insane. Remember, you're shorting something where there's an active effort to generate a short squeeze. That's likely a profitable position in the long run, but it's entirely possible the price might go up 10x. Following the typical short term trader guideline of not risking more than say 2% of your account on one bet, that means you position should be no more than 0.2% of account value. Even if the stock goes to zero, you're barely going to benefit.

3) If you do win, it may be hard to exit your short as there may be no trigger for bankruptcy (causing share cancellation) and no trading volume after the dump. Many P&D suckers just leave the devalued share in their accounts "hoping it will come back" rather than placing a sell limit order you could hit to close your short. You may very well end up paying a hefty fee to the very criminals who created the P&D to get out of your position.

Same strategy applies to NYSE and NSDQ where you can get borrows. JRJC DGLY USU LIVE PLUG were all shortable.

If you think you're risking 10x, learn to trade.

This comment shows you have NO appreciation for risk and are probably dangerous anywhere near a trading account.

Penny stocks are not liquid nor is any attempt made to insure orderly trading. If you do manage to short them, there is no way to protect yourself from an arbitrarily large price increase in a short squeeze situation. Stops don't work, because the market may very well have no reasonable offer when they're hit. Worse, it might have a very unreasonable offer, and there's no circuit breaker on pink sheet stocks. In theory it's possible you'd get filled at exchange max price and find yourself begging for a trade break you don't deserve. Your broker won't even let you place a broker-held stop most likely for that reason. Stop limits don't work because they frequently won't get filled. Buying OTM calls doesn't work because they aren't listed and if they were listed no one would write them because they can't go short the underlying to delta hedge.

If one of these trades goes south, you are likely ****ed. The only thing that will protect you is huge amounts of capital. You can VERY easily end up with a debit account balance messing with stuff like this if you're not VERY conservative, and will have no one to blame but yourself.

soo... go long?

You're missing the point.

Hard-to-short situations almost always develop on symbols all reasonable people know are overpriced where one or more irrational players hold the majority of the stock, don't lend, and float is limited. P&D schemes are a perfect example of a cause, but it can also happen in larger cap symbols where the insiders are irrationally optimistic for some reason.

On hard to short symbols, they almost always go way down eventually, albeit often with a squeeze or two in the middle. Going long during a pump/squeeze scenario is almost always a bad idea because of that. For example, consider VW and the 2008 squeeze. Even before the squeeze, the week of the squeeze was THE EXACT HIGH from all time in the past to today. Worst possible long! Great short - it lost 80% of it's pre-squeeze value over the next year and a half - but it's a short you can't have because your broker won't be able to get borrow and the squeeze is a bit of a bitch to fade. SAC, Highside, and Greelight all got burned trading short in VW even though they were exactly right economically.

P&Ds are easy to play on paper, but very hard to play in reality if you demand any sort of risk protection.

Everyone at penny stocks is solid. Move up to where they respect your trading.

But seriously, I take it you don't trade intraday. The price action in these names creates some of the best intraday opportunities for discretionary traders you will come across, period.

+1

I do trade intraday, but not individual equities and I don't claim to have any expertise at it although I'm sure I could learn. I trade the high volume CME group futures - ES, CL, ZN, sometimes the Eurodollar complex.

It doesn't seem like penny stocks would be much good for shorter term stuff though - I often times find myself wishing CL was a bit more liquid and that's a multi-billion dollar a day instrument.

Last I checked - which was a few years ago - he had a "follow-his-trades" system. You could automatically follow every trade he made almost instantly.

Everything was disclosed. And the results:

He made money. His followers lost money.

He didn't even try to hide it. With a few clicks, you could check his performance and performance of his "followers."

But I guess people are still too stupid to realize how front-running all trades impacts penny stock valuations. It's quite amazing just how many people are looking for a quick buck and buy into shills - again and again. From what I understand, it is the same small group of people who keep "trying" and buy all this crap and all the marketers/scammers share these lists of proven suckers to bleed again and again with new products and new "systems."

i am a former member of his services. its extremely basic but if your new to trading it can open your eyes. unfortunately theirs a ton of pollution in this industry and get rich scams. like poker most who cant make money trading live are now coaches. trading is the hardest way to make a easy living. if someone has a proven system, they are not teaching it. retail investor cant compete in this market with company's that have billion dollar money behind them moving the market.

Our public schools have failed you.

he admitted his strategy is not scalable. penny stocks are tiny market cap

LOL, not hardly. He rode the coattails of a lot of people that went before him.

He's not much of a trader either. I know a guy that's a member and he reports his trades late (if he even makes them at all), like if a stock moves to 43.20 he says he bought it at 43.05. Then if it drops to 43.10 he'll say he sold it at 43.15 for e ten cent profit.

If he was really such a great trader he wouldn't have blown up his hedge fund.

good one