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21-Year-Old, 6-Figure Trader Shares His Tips for OTC Patterns - YouTube
Channel: Timothy Sykes
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- The chart that I like
to look at for these
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is the 15 day 15 minute.
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So, after it goes on its
run then I like to look at
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how it's consolidating and
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(upbeat music)
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OTC versus listed, so
what does OTC even mean?
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OTC means over the counter
and these securities
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are traded via dealer
network as opposed to
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a centralized exchange.
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So, when you put in an
order to buy a NASDAQ stock,
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it goes through an electronic market maker
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and it automatically executes your trade.
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So, NASDAQ stocks can have
a lot more manipulation
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and a lot more moves that are uncalled for
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that don't really make sense.
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And with OTCs it's a lot of market makers
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manually entering the orders,
putting them on the bid,
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putting them on the ask.
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So, they're just a lot
more fluid in my opinion.
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So, why do OTC stocks
have a bad reputation?
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A lot of people on Wall
Street, they have way too big
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of accounts, way too much capital
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to even trade these stocks.
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These stocks are really
just meant for old people
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that want to put two, three
grand into a penny stock
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because they think it's
gonna be the next Amazon.
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And everyone says they're a
scam because they don't know
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how to take advantage of
the scam, or the promotion.
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Why do I believe that OTC
stocks are easier than NASDAQ?
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Well, like I was saying, OTC
stocks are a lot more slower
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and NASDAQ stocks, they
just, they do a lot more
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weird stuff and shorts
are a lot more involved.
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There's a lot more fundamental
importance in OTCs,
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or not OTCs, NASDAQ.
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And the daily chart for
me always tells the story.
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And with NASDAQ, the daily
charts are always crazy
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but with OTCs if you ever noticed
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the daily candles make a lot more sense
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when it comes to buying
breakouts, shorting first red days
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and first green days.
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The daily charts make sense and
they don't really make sense
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with listed stocks.
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So, why do I believe that
beginners should start
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with OTC market?
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I think that beginners should
start with the OTC market
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because for small
accounts they're probably
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the best thing to trade because
they're the lowest price
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usually and you can make really
fantastic percent returns.
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There's no after hours
or pre market trading
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so it's low odds that you get
caught in a massive gap down
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like you could potentially
get caught in an offering
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with a listed stock and if
you're all in on a small account
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you're down 50% and you
can't even cut your loss
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because the stock is just
gonna immediately gap down
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and that's really scary to me.
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What are the best times
to trade OTC stocks?
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So, the best time of
day for me is late day.
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That's usually where I
like to buy after the stock
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has proven itself.
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It has held up.
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It's doing good volume.
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It has all the criteria
to continue further.
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And then, I like to take
profits in the morning
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because that's when the
second wave of buyers come in.
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That's when you should be selling.
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And then, the best times
of year to trade OTC stocks
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from what I've seen so
far, the end of the year
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and the beginning of the year.
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During the summer it's been really slow
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and it's the same thing as midday.
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Midday is slow, the summer is slow.
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The start is good and the end is good.
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And then, what are the best OTC patterns?
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So, my favorite OTC patterns
I'm gonna go over right here
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on this next few slides.
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So, penny stock breakouts.
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This is specifically talking
about stocks that are priced
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between a cent and ten cents.
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Not dollar stocks, not
three dollar stocks.
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I want to specifically talk about
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the really low priced stocks.
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And what I'm basically
looking for is for the stock
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to go on a run and then
stay near its highs
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and go sideways.
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And what I'm looking to capitalize on
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is that secondary spike,
that multi day breakout
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is what I'm looking to take advantage of.
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And what will make the move more explosive
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is little to no overhead resistance,
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so there's less sellers on the
way up when it does breakout.
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There's a catalyst,
there's massive volume,
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and then ideally it's in a hot sector.
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And all these things that,
all these things would make
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the breakout way more explosive.
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And the chart that I
like to look at for these
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is the 15 day 15 minute.
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So, after it goes on its
run, then I like to look at
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how it's consolidating
and how the run was,
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the first run that it made.
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Was it clean?
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Was the stock faking green
to red every morning?
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Did it not hold its highs?
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Did it not hold the review opp all day?
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I want the cleanest possible stock.
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Ideally it spikes, it goes sideways,
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it spikes, it goes sideways, it spikes.
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The stair stepper pattern
that Tim always talks about.
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So, you can stay long during it
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and you're not gonna get faked out.
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VYST, so, this stock was awesome.
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As you can see it made an awesome run up
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from basically nothing to five cents.
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And then for five days
the stock went sideways.
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As you can see on the 15 day 15 minute
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the stock went sideways
especially these last few days.
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You can see that the range got tighter
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and every single day
that the stock got more
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and more and more tight.
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And then on Monday the stock
released a press release.
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And then as you can see in the morning
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volume started to come in.
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That's when I took a
fourth of my position.
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I bought 50 thousand shares
right out of the gate
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and I was risking green to red.
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And then as the stock
breaks out I add another
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50 thousand shares and I'm
still risking green to red
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but now the win percent is higher
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because now it's a confirmed breakout.
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And then when the stock comes down
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and then as you can see those
three red candles right there,
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the stock held the breakout perfectly.
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And then when it started
to perk off the breakout
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that's where I'm adding my full size
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and I get up to 200 thousand shares
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from about a 636 average
and I change my risk
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to that level looking consolidation.
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Because if the stock
breaks down below that
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I don't want to be long
anymore because it's proven
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that I can't hold the breakout level.
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And then from there the stock
had a really nice slow grind
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all the way up to about ten cents that day
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before the first harsh pull.
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And I sold this stock out
into pieces into the strength
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and I got out for about a two cent gain.
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And the stock went all the way to 16.
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So, I left a ton on the
table but I can't be mad
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because I made 4,400 and I was
risking a very small amount.
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As I slowly sized in I'm
pretty sure my final risk
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on the stock, I had 200
thousand from a 636 average
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and I was risking 61
or a very small amount.
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So I was still achieving great risk reward
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and that's really all that matters.
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ALYI, this was probably my favorite set up
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of the entire year.
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As you can see the stock had
three beautiful green days
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on the daily chart and if you notice, too,
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it was on increasing volume
which is really nice.
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I like to see the stock as it keeps going
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more and more volume
to get into the stock.
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And then something that
I use to tell myself
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if the stock has a good
potential of breaking out again
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is for the stock to
hold half of its spike.
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So, for instance, this
spiked exactly from a penny
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to three cents.
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And then the stock came
down and held two cents
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for two days perfectly.
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As you can see on the 15 day 15 minute
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there on Monday it came down to two cents
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and then perked off a little
bit and then closed sideways.
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And then the second day
it didn't break down,
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it held again and then went
sideways into the close.
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And then when the stock had
a morning spike on Wednesday
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that's when I get
interested because the stock
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has proven to me that it
can hold half its spike.
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The stock can go on a
three day green streak
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as you can see from the first run.
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So, that's when I start
nibbling a little bit
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and buying some shares.
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Near the late day when
it broke of a high day.
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I put a little bit on just to keep it
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on watch for tomorrow.
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And then the next day
it had a small gap up
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and they dropped a press release
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and as you can see there on Thursday
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massive, massive, massive volume came in.
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Absolutely astronomical
volume on the daily chart.
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As you can see the stock
traded 75 million plus shares.
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And that's just amazing to me.
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So then, as it started
spiking I add into my position
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and I got up to 500 thousand shares
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from a three cent average which
is about the breakout level.
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And I was basically just
risking break even on it.
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If it failed to hold the
breakout I was just gonna cut.
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And the stock kept going and I sold that
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for almost four and a half cents.
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And as you can see it
went all the way to seven.
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So, once again, I left a lot on the table
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but I was still happy
with my gain on this one.
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I made about 6,700.
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Hey, Tim Sykes, millionaire
mentor and trader.
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Thank you for watching my videos.
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I hope that they help you.
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I want to share everything that
I've learned over the years.
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You can check out more
videos right over there.
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And also click subscribe
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all of these videos, get that knowledge
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