The Great Coronavirus Lockdown
Dear Penny Stock Millionaire,
The U.S. is going into coronavirus lockdown. And now the EU announced a 30-day ban on all but essential travel.
Market volatility is still very high. The entire market got halted after one second yesterday when the level 1 circuit breaker (7%) got triggered.
The Dow opened roughly 8.5% down. The S&P 500 and the Nasdaq both dropped more than 7% at the open.
On Friday I didn’t take any trades — I’ll talk more about that in the trading lesson of the week. There was a nice bounce at the end of the week. President Trump paraded the CEOs of many big companies at his press conference. And the markets loved it.
But then the Fed decided to cut rates again on Sunday. The markets didn’t like the signal that move sent.
Trading Lesson of the Week
Last week I finished up $4,759 on the week even though I took an unfortunate loss on Cocrystal Pharma, Inc. (NASDAQ: COCP). On that trade, I bought the exact minute the company announced an offering. I cut losses quickly, but still lost $2,250 on the trade.
Here’s the thing…
I’d take that trade again. Why? Because coronavirus stocks are hot. COCP was spiking on big volume and looked like it would close strong. When it dropped, I followed rule #1: cut losses quickly. Overall, it was a good week of trading. That was my only loss.
But I want to focus on Friday. Some newbie students asked why I didn’t take a trade. Which is why I want to reiterate one of my most important personal rules
Sometimes the Best Trade Is No Trade
I didn’t see a setup good enough for me to come out of retirement for the day. When that happens, I choose discipline and patience over trying to force a trade. Too many people force trades instead of being meticulous.
You don’t have to trade every day. If you feel like you need to trade — take a step back. Frankly, I have a problem with overtrading if it’s too easy or if I have an open schedule.
So I limit myself to the best setups at the best times. For me, the best times to trade are the first and last hours of the day. That’s not to say I don’t trade other times, but the setup has to be so good I’d feel guilty not trading.
Let’s move on to some questions from my students.
“Tim, a lot of people are worried about their retirement portfolios. What should we learn from this crazy market and the coronavirus lockdown?”
You have to understand that the economy and stocks move in waves. You can only have an up wave for so long. What follows the up wave? An inevitable down wave. That involves overall economies on a global scale and individual companies, too.
That brings up the question of…
Timing the Market
I do think that you can time the market. Not every day and it’s not a perfect science. I’ve been too conservative the past two or three years, thinking the bull market was done. But even though I underestimated everything, I didn’t get more aggressive. The more wrong I was about how far the market could go, the safer I got.
It’s not an exact science… You can’t predict how high something will go or how low it will go. But if you understand that things move in waves and it’s good to take profits into strength…
…you can learn to do well in the markets. And in life.
“Tim, what steps should we take now with the coronavirus lockdown and a bear market?”
With the virus out there you gotta stay safe and stay indoors.
But there’s a silver lining to this: it gives you more time.
Over the next couple of weeks, you’ll be spending more time at home. So when you get tired of playing board games and watching Netflix… study.
As you study what I teach, you’ll start to see my mindset. Some people say, “I don’t need a good mindset, I only need hot picks.”
Wrong. You need the right mindset and you need to follow rules. If you don’t — even if you make a lot of money at first — you’ll lose in the long run.
What’s the Right Mindset?
Be meticulous. Study stock market history. Learn to cut losses fast and learn from every trade. Again, this isn’t rocket science. But you have to become a student of trading and the stock market.
The learning and improving never ends for all my top students. Kyle Williams posts a trading recap on his Profit.ly page every month. He goes over each week and talks about what he learned from his trades.
Now Jack Kellogg has started doing the same thing. Tim Grittani is the best penny stock trader in the world, and he still talks about what he’s doing to improve.
Study. Learn from history and then set the intention to learn from every trade — good and bad. Not from profit or loss — but from how well you trade.
The Bottom Line
Stay safe during the coronavirus lockdown. This isn’t going away any time soon. There are too many stubborn people who won’t follow the advice to stay home. All you can do is try.
Use the time to study. It’s a perfect time to set yourself up for when this blows over in a few weeks or months.
Finally, my thoughts and prayers go out to anyone infected or with family members who’ve been infected.
Editor, Penny Stock Millionaires