What's up, Tim Sykes, millionaire mentor and trader here in Rio. Chilling, traveling, eating, doing charity projects. That's not what anything about this video is about. This is about my seven step framework. If you click the link below, there's a blog post about my seven step framework, but I've linked that a lot.
Most people don't even read it. Some of my students can't even read. I understand that.
So this video is for you. Hopefully you can hear me. I gotta get my message through to you some guy, sometimes, somehow. I'm not going to be perfect. I'm not editing this.
I just want you to understand that I created this seven step framework as a general guide. It's not an exact science. Sometimes you get like step two and three and no step four. Sometimes you get two, three, and then it goes to number five. Or sometimes you just have like a number four or five or number six.
It's not like always one through seven. But if you do learn my seven steps, it gives you a bit of like a mold to follow. Because what I find... and this is crazy to me, when I first came up with this several years ago and I was trying to tear my strategy apart in my head and put it back together for you, like deconstruct it and be like, blah, for you. I was surprised how well it works.
And this has worked for me and my top students. And now we also have seven key indicators in my trader checklist guide. I'll link that below.
It's crazy. Seven is my lucky number, so maybe I made it work. But my seven step framework, I think.
Is very useful for you to understand how a stock acts, when to trade it in the seven steps, and what works best for you. Because I now have 30 plus millionaire students, but every single one of them likes different steps in the seven step framework. Not all of them trade the same pattern.
Every single person watching this video is slightly different. It's okay to be different. You know, we have different personalities, different strengths and weaknesses. I just hope that this kind of seven step mold can help you learn what you want to focus on. And don't be afraid to change too.
I used to love shorting the number fours. Now I prefer dip buying the number fives. I used to love shorting the number sixes.
Now I really like buying like the one or the two ramp. Well, also like the three breakout. So I'll go over all this.
I know that it might be confusing. So the seven step framework is just because I've seen so many thousands of penny stocks and not even just penny stocks, but higher priced stocks run and run and run. But then they usually follow the same kind of format, especially when they're up on hype, you know, a hot sector, maybe a short squeeze, something that's not like, oh, this is a good company. It's giving the next Microsoft, let me invest in it. It's up due to like the madness of crowds.
And then it crashes very similarly. And I was like, wait a minute, there's a pattern here. Like you, if you watch my old video lessons, I'm like, I feel like I'm taking crazy pills. We've seen this happen before and it's still working. I've been teaching now for 15 years, training for nearly 25 years.
The pattern still works. Again, not an exact science, but just, you know, what was that movie? Pirates of the Caribbean, where Quinn's filming this.
Say hi, Quinn. Hello. What was it? Is it Geoffrey Rush's character? Where, like, Keira Knightley is trying to say, like, hey, you have to do this.
And, like, Geoffrey Rush is a pirate, and he's like, what is the term? Parlay? And she's like, you have to do this.
Parlay. And he's like, it's more of a guidelines really. That's what this is. It's more of a guidelines to stop trading really.
That's literally what the seven steps are. So step one and two, this is where a stock is building in momentum. Maybe the promoters are getting involved.
You see it kind of like ramping a little bit, like as opposed to some stocks, they're just, it's like, you know. A victim at the hospital who's just died and their heart rate is just flat. I'm not interested in trading any flat stock. I want to see a little uptrend. I want to see some interest.
When a promoter is hired or a consultant or a chat room starts pumping it. or there's like a trend that's beginning to emerge, you'll see usually a little bit of uptrending at first. You know, stage number one is very gradual, stage number two, it ramps up a little bit. You know, one of my eight figure students turned master is Jack Kellogg. loves building sizable positions during the one and two.
And then he's looking to sell into the three supernova. So this is how it starts. And I don't really have patience to be there for the number one. I'll tell you straight up, the number two and specifically the number three are when I personally like to buy.
Number two is like a speedier version of number one. And number three is when the stock goes full supernova. I find that if you understand that there's gonna be a little increase and then a faster increase, and then it can just get insane. That's like a good model to follow.
You want to ideally sell when it gets insane, when everyone's talking about it, when the press is writing about it, when the stock is up 5, 10, 20, 50 times. It's really difficult to buy a stock. Especially for me, even if it is going to go higher, when it's already up too much.
If a stock is already up 5, 10, 20 times in a few days, I'm always worried about the number 4, which is the potential big crash. When something rises too fast, usually it comes down to the number 4. because short sellers are betting on lower prices, because people who were in on the one, two, or three start selling because they're locking new profits, as they should, you really don't want to overstay. And again, this is from me understanding. I have patience problems.
Very often I'll buy a stock in like a one or two or maybe a two usually, right? Like when it's ramping up and I'll sell it still in the two before it gets to a three and really goes up. I lost track of how many stocks I've sold for 10, 20, 30% profits. And then it goes up a hundred, 200, 500%. I'm usually too early.
And that's, is my gift and my curse. You know, you've heard the saying like teachers are those who can't do, I can't have patience. I can't.
I can't overstay. I've just seen too many crashes. And I think that it's good for me to teach in a conservative way. Then you can get aggressive later on.
My top two eight-figure students turned masters, Tim Grittani and Jack Kellogg, both have a lot of patience. They're holding some of their biggest winners for days, weeks, sometimes even months. I have problems even holding a stock overnight. One of my best performing strategies is buying a stock on a Friday and selling on Monday.
The only reason why I'm holding it over the weekend is because the stock market is closed. Even if you're in my... you know weekend newsletter sometimes i buy a stock on a friday and i'm up like 10 20 30 percent and i'm like i sell i sell and you're like what what's going on this is like hold over the weekend i'm like i don't even have the patience sometimes i'm right but oftentimes i'm a little too early this is who i am you have to figure out what your own strengths and weaknesses are actually i'm curious leave a comment below at any time in this video you tell me do you like the one two three four five six seven um i explained basically the one two three the number four is like the crash.
This is when everything is just up too much. Like I said, the stock is up 10, 20, 30 times, not 10, 20, 30%, 10 times, like 10 cents to a dollar or 10 cents to $2 or 50 cents to like 20 bucks. Like this is the upside potential with these stocks. They can go up so much and it's your duty.
I think even if you want to start selling some, like I know some of my top students, they don't sell all their position into a stock that's running up. They're like sold half. half or sold a third or sold one eighth of their position. Amazing, amazing patients.
Now 30 plus millionaire students, almost all of them sell better than me. You know, I'm not angry. I'm proud of my students do better because the number four crash is so scary.
Sometimes the stock can drop 30, 40, 50, 60% in a few minutes or hours or days. Every play is slightly different. based on the timeframe, based on the news catalyst, based on the market. But understand what goes up can come down in a hurry.
And if you like short selling, for example, like you're like betting against stocks, when you're shorting a stock that keeps going higher and higher, it's called. called the short squeeze, you don't know how high it can go. There's a saying that, you know, madness in the stock market, like a play with momentum, the momentum can remain just ludicrous longer than you can remain solvent.
I'm taking some liberties with that quote, but the point is you don't want to short too early because even scams can keep going higher and higher. And if you're shorting, you can lose more money than you put in. So I'd be very careful about shorting.
I hardly ever short anymore. and if you are long a stock that keeps going higher and higher, don't give into the hype, don't give into promoters, by all means ride the hype, try to ride the momentum, but understand that almost every stock that's promoted, especially when it's up too much, will crash and burn and sometimes it's not even just like, oh Tim, I'll get out, you know, when it starts to drop five percent because I know it can crash, sometimes the stock gets halted, a stock might keep going higher and higher due to a short squeeze, due to promotion, due to a hot trend. and the stock might get halted.
And then you're hit with the ugly reality. You can't get out. Let's say a company might do a financing. They might try to raise money.
If a stock goes from like 20 cents to $10, right? It's up 50 times. And then the company does a financing raising, I don't know, $20 million at $6 a share.
And the stock is at $10 a share. The stock usually drops on news of that financing from 10 to six, like that. You can't necessarily get out. So understanding ahead of time, that stocks can drop, understanding ahead of time that stocks can get halted.
That's part of the reason why I sell so soon. And I like being conservative. I encourage you to be conservative like me in the beginning.
You can always get more aggressive when you have more experience later on. This is like what my top students do. Picture me as just training wheels. Picture me as like your kindergarten. T-shirt.
I'm not here to teach you, you know, high school astrophysics or trigonometry. Like, I can't even do that myself. I teach things very simple, very conservative.
And people laugh at me because I teach penny stock trading, I teach day trading, I teach short selling. I'm the Mookie Man! But I think that you can do it in a conservative way. I know there's a saying on Wall Street. scared money doesn't make money, and they're trying to encourage you to take bigger positions and many of my top students are much more aggressive than me.
I say trading scared makes trading not so scary. These stocks are more volatile than you can imagine, especially in the beginning of your journey. You don't need to be aggressive. I've still made millions of dollars and I trade like a freaking coward.
So use the volatility, ride the hype, but also understand what goes up can come down in a hurry. If you are a short seller and you see a stock up 10, 20, 50 times and you're like just licking your lips and you're like, oh, this stock is gonna crash. This promo is gonna end.
The short squeeze is gonna end. Fantastic. I've made millions of dollars short selling.
Understand that. Now, excuse me, I made money on the way up and on the way down. It's so much better if you just dissociate yourself from the promo, from the stock, from the trend, and just trade the price action.
This is math. I'm not even that good at math. But if you start to get away from all the BS, and there's a lot of it in chat rooms, on social media, in press releases, and you start just looking at the ugly, cold facts, like where 90% of traders lose, more than 90% of companies fail in the first few months, if not the first few months. the first few years.
It's like an industry of failure. And I'm a positive person, so I don't wanna like harp on that. But understand that these stocks, none of them last. When you see these stocks going supernova and you're talking three, five, 10 years later, they're almost all gone.
Out of business or like trading at like 99% discount. I'm sorry to be the bearer of bad news, but that's the reality. So if you are going long in a one, two or three, understand the number four is the big crash and it can come faster.
then you're prepared for, or it might get halted and you can't exit. So as a price increases, I would start selling either partial positions or your entire positions. Don't feel bad if you sell too soon. Number four, on the crash, if you're shorting, it's fantastic. If you're betting against the stock and it just starts crashing, taking out stop losses on the way down, it's like, I mean, when I used to do this, it was like surfing, right?
And you're just watching and you're like in a giant tsunami and I can't surf. I'm Jewish. I have no core, but if I was...
was surfing and you see these videos of like these giant waves and they're just like riding them that's what it feels like if you're short selling and the stock just keeps crashing and then you can cover on the way down you know a quarter of the time or half the position or a full position but you can lock in those 30 40 50 sometimes 60 percent gains inside of a few minutes but my number five pattern this has become my favorite pattern because you can see it all so like in the moment it's tough to to look outside yourself and the hype and then see where it's a one, two, three, or four. But because you know the seven-step framework, and again, click the link below. You can read my blog post about this. Because you know that the one, two, three, four has already happened, now you know that the next most logical opportunity to trade is a number five.
This is a dip buy pattern after the stock has dropped 30, 40, 50, 60%. And this is why I love it, because some of these- stocks have been rising for days, if not weeks, if not months. And very few people are understanding of the seven-step framework.
Very few people are prepared ahead of time. So they just see the stock crashing and they're just like, oh my God, there's no limit. It's going to drop 99%.
Very rarely do these stocks drop 99%. Even, this is a crazy thing, even when I've seen penny stocks that are up too much, they get shut down if they're not halted. But if like the FBI raids them, if the CEO is like accused of fraud, the stocks will still bounce. Like this is what's crazy. If you're a short seller, to take your profits on the way down, you're selling short, you're selling shares that you don't own at first.
When it comes down, in order to lock in your profit, you have to buy to cover those shares. But. buying shares or buying to cover those shares are the same thing. So in order for short sellers to get out, to lock in their profits, some short sellers never lock in their profits.
They're like, this company's a scam, it's going to zero. GTZ is what they call it. But some short sellers are just like, screw it.
I don't know what's gonna happen. Let me take my 50, 60, 70% profits. They buy to cover.
When they buy to cover and you have dip buyers like me who love the number five pattern, the stock goes up. So you might have a 40, 50, 60% drop in a few minutes or a few hours or a few days. And then the bounce is 50, 100, 200%.
So in the beginning of the seven step framework, the one, two, three pattern, it might take days if not weeks to go up 100 or 200 or 300%. If a stock is dropped fast enough and there's dip buyers and there's short sellers who wanna cover a stock. You can double or triple same day, even same hour, because of the massive panic.
And this is what I love about the number five pattern. You can see it all. If you're one of my students, you might see me talking about a stock on my watch list for days, saying, I'm waiting for a number five, I'm waiting for a number five, I'm waiting for a number five, because I'm waiting for the big crash, and then I want to buy the dip.
Some people are like, why do you want a crash, Tim? You're evil. panic.
I just want a panic that I can get by. Okay. I'm preparing ahead of time. This is my value to you as a teacher.
This is my value to the world where I'm always on my laptop or smartphone. It doesn't matter if I have a view like this. It doesn't matter where I am.
I'm always looking for opportunities. So when I'm rooting for a big number four crash, it's not that I want people to lose money. I just want an opportunity to dip by the big crash. People are going to lose money either way.
Most people aren't going to study. Most people in penny stocks are not prepared. They don't know the seven step framework. They're falling for the promotion of the BS promoters. If you look at my Twitter, I'm closing in on 200,000 tweets.
I would say about a fifth or a six of those tweets is me trying to de-brainwash people who have fallen in love with the stock or a trend. or a promotion. They never listen to me, but I do try to help them. I try to warn them because then when they lose enough, they usually come back and they say, you were right, I should have listened to you.
But then they're broke and they can't even be my student anymore. It's actually kind of sad. Hopefully I can get to you before you lose most or all your money believing in a promoter.
This is my use for you just because I've seen so many thousands, if not tens of thousands of these examples. So for me, I love the number five. especially a morning panic pattern. I'll post a second link below here because you have the whole seven step framework, but I have one blog post where I say try this every single morning.
So anytime a stock is up a ton, I'm looking for the crash. When the crash starts happening, I'm looking for the bottom. The bigger the crash, the better. The sharper the panic, the better because that can lead to a 50 or 100 or 200% bounce in a few minutes, hours, or days. The better for me too because I have the patience of an ant.
If a play bottoms over two or three days and it bounces like 50 or 100%, I'm usually out inside of two or three hours and I make my 10, 20%. So I sell too early on the way up into the one, two, three. I used to, even when I was short sold, I used to cover my number four too quickly.
And now number five, I almost always sell too soon. But I've still made over $7 million. This is what I'm saying. You can trade scared. And if you trade scared, you can still make millions and it doesn't have to be as risky and it doesn't have to be as stressful.
Anyways, that's why I love the number five. Then there's the number six pattern. The number six pattern.
is when the bounce has already gone up too much, 100, 200, 300% on the bounce, and then it's coming down again. I guess a similar visual that you can think of is, you know, when a stock is going up one, two, three, the crash is the four, the five is the dip buy. the bounce. And then the number six, it usually comes down again. Go watch Titanic.
Watch that three hour movie or learn about how the actual Titanic sank or how any boat sinks. Usually it sinks at first, but then it bobs there for a little bit. Or I guess you can compare it to a heartbeat, right? Like if your heartbeat and someone's like dying and they're like, heartbeat is getting less and less.
It's like a bouncing ball. So if you do like short selling, for me, I actually used to like short selling the number four crashes. Now, if I do short sell, I'm almost always just short selling.
in the number six, which is the attempted bounce, which is usually, because again, we know that these companies are gonna fail or go out of business or their stocks is gonna drop 99% in the long run, because you know the ending. This is like going to see a movie, you already know the ending. Because we know that the end is like zero or close to it, anytime a stock bounces 100, 200, 300%, it's probably gonna come down again, like the Titanic does bobbing, okay?
Remember, what are the characters in Titanic? Jack and... what's her name Kate Winslow Kate Jack and Kate pretty sure that's her real name Kate Winslow hold up how long are we into this video all right Titanic characters this might be a 30 minute video I gotta go over this Titanic It's Rose.
It's not Kate. Her actress, the actress name is Kate. Anyways, when Jack and Rose are on the mast and it's like bobbing there after the Titanic has already split in two and they're like on the mast and they're like trying to hold on and they're like trying all their might to hold on.
And then when the ship goes under, like they just lose each other like in one second. This is reality, right? Like the power of the wave, the power of the sinking of the ship, it's so, so much like you, you can't hold on. It doesn't matter. like one guy like handcuffs himself to like the mask he probably got his wrist like taken off like there's so much power and this is very similar to this number six pattern where a lot of people have dip bought it and they're like no the promotion isn't over The promoters try to stabilize the stock because they don't want to be investigated.
They don't want to go to jail. They're trying to balance the stock so that there's not so many complaints and people don't realize that it's a whole pump and dump. For you, for me, because we're prepared, because we don't believe in any of the BS that promoters spew, the number six is a great time to short because you don't have the absolute madness that was involved in shorting the number four.
Like if you're shorting into pure hysteria, it might be better risk reward. but it's also scary. Number six, the stock has already crashed.
And then if you're shorting it, it's bounced a lot. So the hysteria is over. The bounce has begun. Promoters are basically just trying to save themselves, but even when promoters are trying to save themselves, understand that they're selling, okay?
Promoters, anytime they say the stock is going up, anytime they say, like sometimes the promoters lie and they say, I'm shorting their pumps when, in fact, I've only shorted like three stocks in the past two years. I've never shorted any of these two, three, five, 10 cent stocks that the promoters claim. The reason why promoters lie is because they're looking for somebody else to blame while they and whoever paid them to promote, either a in dollars or shares, they're liquidating their positions. Why are they liquidating their positions? I thought they believed in the company.
They don't. Their whole idea of promotion is to get the stock up, to lure in as many suckers and financially naive people as possible. I'm sorry to be the bearer of bad news.
This is how these penny stock pump and dumps work. And I've been trading this now for a quarter of a freaking century. I've been teaching now for 15 plus years. The sooner you begin to realize that all of these companies will fail, then the... the promotions will end up at zero or close to zero, the better.
So if you wanna short the number six, for me, that's better risk reward than shorting the number four. You don't get as fast of a crash usually, but at the same time, it's much less risky, which I like. It's less scary, which I like.
And frankly, like you can have a stop loss. By the way, you can be wrong in any play. Like if you're dip buying, it doesn't mean that the stock has to bounce at the number five. You should put a stop or a mental stop. Very rarely will I average down.
to a bigger position. If it doesn't bounce, I just get out. Sometimes I will, like I don't wanna say every time. Sometimes like if it's a perfect, perfect play where the stock has been spiking for let's say two months, crashes all in like 10 minutes, that might be a good dip buying opportunity because it's sometimes tough to try to catch the exact bottom.
It's like, you know, trying to catch like a falling knife. You're gonna end up with bloody hands. Sometimes I'll average down, but very rarely. Most of the time I'm doing like speculative dip buys and if the stock doesn't bounce, I just get out.
Small losses and small gains are negligible. They don't really move the needle on your account in the long run. And it's good to have risk management. Same thing with the number six.
You might think that the bounce is over. If a stock is up 100, 200, 300%, but if the bounce keeps going, cut your losses, okay? Sometimes these scams can just keep going and you're shocked.
Like I said, there's the saying, like a stock can remain, what is it? What is the exact saying? A stock, do you know this saying, Quinn?
I should know this. I'm sorry. Stock can remain, what is it?
I want to say it's basically like a stock can remain silly longer than you can remain solvent. But there's another word for it. Stock can remain more than you can remain solvent.
That's the thing. Markets can remain irrational longer than you can remain soft. That's the truth.
So if you're shorting a stock, you know it's a scam, you know it's a promo, like monkey pox. Not even a scam or a promo, just like a ridiculous thing. Like everyone was so afraid of monkey pox for like a week.
It can go longer than you might think. Even though monkeypox turned out to be nothing in the long run, those thoughts like quadrupled, quintupled, octupled in a few days. I missed out on that opportunity only because I was like, monkeypox is such a joke. That was my mistake. The markets gave me the opportunity.
Monkeypox might have been a joke, but it kept going higher and higher. So if you are shorting a number four or a number six, understand that these things can last longer and you don't want to like risk your whole account or sometimes short sellers risk losing more. than what they have.
This is part of the reason why I don't like shorting. Anyways, number six, let's say, just in this example, that the bounce fails after it's bounced 10, 50, 100, 200%, it comes down again. And it usually starts to come down to that same level where it was on the number five pattern.
And then the question is, will it double bottom? Because the number six is like a little bounce, but then it starts crashing. Will it hold at number five again? Will it be a double bottom? Because sometimes you can go.
So, you know, number four crash, dip buy at number five, number six, short sell into the bounce, and then it comes back to a number five. Sometimes you'll get a double bottom. So it can go five, six, five before getting to seven.
But oftentimes after the bounce, one bounce. bounces over it's like a bouncing ball every bounce is a little less like a bouncing ball on like a you know a wood floor you have one big bounce and then smaller bounces and then usually it peters out this is the number seven i call it the long kiss good night this is when When these companies go bankrupt, their stocks drop 80, 90, 95%. They do financings at massive discounts because they're just trying to raise money to stay in business so they can pay their executives excessive salaries and just, you know, keep like taking money. out of the company, even while the company has no real future or potential.
So the stock is the sacrifice. I'm sorry, again, to be negative, but I got to be real with you. I have legit seen tens of thousands of penny stocks do this seven step framework.
It almost always ends terribly. And a lot of people who don't study this, they hold on to the very end. They say, but this is going to change.
This is the one, the four most expensive words in the English language. This time is it's different. Always expect the worst out of every company, out of every promoter, out of every trend. Stay positive in life, but understand the ugly realities of these penny stock pumps. Whether it's illegal, whether the promoter actually goes to jail, I'm not a lawyer.
I'm just saying that what these promoters do, when especially they lie about me short selling their play, when I haven't even traded their play, and I actually want their place to go higher, I profit off the upside much more than the downside on these plays. You. You have to understand how the game works.
It's not enough just to know technical analysis or to read the SEC filings or to know if there's an offering coming. Understand how this works as a whole. You'll make better trades every time. I would rather you study all of this before you risk your hard-earned money. I'll post another link to the complete penny stock course.
This is by one of my students, Jamil. He was tired of all my disorganized video lessons, DVDs and webinars everywhere. And he's like, enough.
And he put it all in one book for you. And the seven- I have multiple blog posts below. Like I said, I love the number five these days, but I've also profited off all of them.
I usually just don't have the patience. Tim Lento, give you one last little tip. Tim Lento, one of my newest millionaire students, loves the four and the six, and he doesn't even dip by the number five. He shorts a lot of these pump and dumps, a lot of these Chinese scams, and he just holds for days, weeks, sometimes even months. And he's made now, you know, seven figures, hodling on the.
the way down. Obviously, if you're short selling, you have to be able to borrow the shares to short. I think he uses interactive brokers. This is one of the brokers that I use too. And he also has to pay fees.
Like you pay for locate fees every day that you're short of stock. So again, if you're new, I wouldn't short sell. Get inspired by my top students, many of them who do short sell, but understand where you are in your journey. And it doesn't matter if you have a small account, doesn't matter if you have no experience, just start learning and you'll see this seven step framework repeated over and over.
and over again, and then try to take trades. Try to take trades when the stock is at two or three. Or, you know, again, I'd be very careful trying to short the number four and the number six. For me, I even have a blog post like the best pattern for people with small accounts is the number five.
Waiting for the big crash. Don't feel bad if you miss a play that's running up, because again, most of the time, the vast majority of the time, it's gonna crash 30, 40, 50, 60% in a few minutes, hours, or days. The question is not if. It's when and will you be there to capitalize? So I hope this has helped.
Leave a comment below. Let me know which is your favorite pattern from the seven step framework. It could be multiple numbers.
It could change over time. You have to adapt to the market and adapt to what works best for you. But these are my guidelines. I hope they help.