Challenge Webinar Top Penny Stock Trading Lessons: Why Random Setups Lead to Random Results

During last week’s Trading Challenge webinar, my students and I created a watchlist together.

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Trading Challenge students called out tickers for consideration.

Then I looked at the charts and explained why I would or wouldn’t add them to the list.

Whenever I do this exercise, there’s a common theme…

Again and again, students throw out random tickers with random-looking charts.

I can’t stress this enough…

Random setups lead to random results.

3 Ways to Avoid Random Results from Random Trade Setups

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It’s a matter of focus. For example, we created a 16-stock watchlist in about 15 minutes. Yes, that’s fast. After 22 years, it doesn’t take me long to decide if I want to watch something.

How do I do it?

It starts with weeding out the riffraff…

Penny Stock Trading Lesson #1: Recognize the Difference Between Subpar and Solid Setups

I always say to wait for the best setups. But how do you know the difference?

AppHarvest Inc. (NASDAQ: APPH) was one of the tickers suggested during the webinar…

But I said “No, no, no” to APPH.

Why? It has a terrible long-term chart. And it was only up 15% on the day of the webinar. I don’t expect much from terrible long-term charts up 15% on the day.

Even in a tough market, there are better plays…

For example, Clean Vision Corp. (OTCQB: CLNV) was worth coming out of retirement for. Twice…

CLNV was a clean multi-month breakout. Better yet, it was running on company tweets and sketchy press releases. It was so good it compelled me to add to a losing position on a first green day setup.

It was also a perfect example of my weekend strategy for another $1,530 win.

Here’s another way to avoid random setups…

Penny Stock Trading Lesson #2: Avoid ‘Hot’ Picks

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New traders face a dilemma. You could follow so-called hot picks … Or you can put in the time and effort to become a self-sufficient trader.

My recommendation: NEVER follow anyone’s alerts to take a trade. EVER!

Sadly, most choose what they believe to be the easy route. They follow alerts. Or worse, they follow unethical promoters with Discord chat rooms.

When you take random trades based on random setups — even someone else’s hot picks — it leads to frustration.

When you get frustrated enough, you’ll either start studying or quit trading.

Don’t get me wrong. It’s key to test new strategies. But be sure you understand the strategy first. Refer to lesson #1 above.


Penny Stock Trading Lesson #3: Remember Your Watchlist Is a Guide

high frequency trading
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To seasoned traders, this probably seems obvious. But for new students, it’s a revelation. A watchlist is just that — a watch list. It’s not a buy list.

Just because a stock is on my watchlist does NOT mean I’m going to trade it. I don’t trade most of the stocks on my daily watchlist.

At the same time…

If something’s on my list, it often stays there until it plays out. You might see something on my weekly top penny stocks list that I don’t trade until the following week.

Also, understand that my watchlist changes in real time. 


I look for breaking news before the market opens. I watch StocksToTrade’s Breaking News Chat alerts during the day. That means new stocks come into play throughout the day. Breaking news means I often trade stocks that weren’t on my watchlist.

Last week’s Q&A webinar wasn’t only about avoiding random setups…

More Top Penny Stock Trading Lessons

Tim Sykes checking his top penny stocks list in Italy
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Every week I give a Trading Challenge webinar. They alternate between Q&A sessions and live-trading webinars.

Over time, lessons from webinars compound to grow your knowledge account. Come with questions and work to get better at trading penny stocks under $1.

5 More Penny Stock Trading Lessons

Miss the webinar? Trading Challenge students can watch the replay here. Here’s a taste of what you’ll learn when you watch the replay…

  • Why three-letter tickers are more difficult to trade. (It’s not what you think.) 
  • How to NOT chase … The answer’s so simple that most people miss it.
  • My top two time zones for trading. Hint: One is convenient, and the other leads to my best results.    
  • How big is too big? Discover the numbers with my market cap rule of thumb.
  • What’s the best time to trade a first red day setup? (Pay close attention — the answer isn’t the same for everyone. It depends on ONE key thing.)

I answered a ton of questions. There are at least 22 more trading lessons I didn’t mention here. I can’t encourage you enough to show up every week with solid questions.

Ready to take your trading to the next level? To access the live webinars and hundreds of archived webinars…

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Live webinars separate the Trading Challenge from our stand-alone products and newsletters. Every week there are two to four live webinars from mentors like Tim Lento, Mark Croock, Matt Monaco, and me.

Want more penny stock lessons from Trading Challenge webinars? Comment below. I love to hear from all my readers!

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