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I’ve always admired Kyle for his sharp eye and disciplined approach to trading penny stock promotions. He doesn’t rely on luck or hype — instead, he uses research, pattern recognition, and deep conviction to expose and profit from pump-and-dump schemes. His ability to stay patient, verify every detail, and execute with precision makes him one of the most methodical short traders I’ve studied.
Kyle’s trading strategy is centered around shorting pump-and-dump penny stocks—mainly over-the-counter (OTC) tickers that are being artificially promoted to attract retail buyers before collapsing.
His approach is built on pattern recognition, confirmation signals, and conviction sizing once the ideal setup forms. Here’s a detailed breakdown of how he trades and what he watches for:
1. Core Strategy – Shorting Pump & Dumps
Kyle specializes in identifying penny stock promotions that have been artificially inflated by email campaigns, newsletters, or paid promotions. His goal is to short these stocks at or near the top of the pump and cover as they inevitably dump back down toward $1 or lower.
He doesn’t trade every setup equally — instead, he ranks setups (A, B, C) depending on quality:
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A setups: Pump-and-dumps — his favorite and most profitable.
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B setups: Overextended gap-downs.
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C setups: Breakouts or IPOs, which he trades less often since they don’t fit his style.
2. What He Watches to Identify a Pump-and-Dump
Kyle systematically checks several confirming factors before entering a short position:
a. Price Action Confirmation
He looks for specific price behavior typical of past pumps:
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Low-volume period followed by a sudden surge in volume.
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Series of small green candles grinding upward slowly, rather than explosive breakouts.
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Historical patterns resembling prior promotions (e.g., “BSBK” and “OWEL” showed similar slow-grind action).
When he sees that the chart mimics known pump behavior, he marks it as confirmed price action — a major plus for the setup.
b. Confirmed Paid Promotion
Next, he searches for proof that the stock is being promoted:
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He looks for landing pages or newsletters promoting the stock with exaggerated promises.
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He checks the disclaimer section at the bottom of those pages — that’s where the real information lies.
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Example: For ticker FRLI, he found a disclaimer revealing $2,183,616 spent on promotion.
This confirmed it was a paid campaign, not organic hype — strengthening his conviction.
c. OTC “Caveat Emptor” (Buyer Beware) Warning
One of Kyle’s biggest signals is the “Skull and Crossbones” icon on the OTCMarkets.com website:
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When a ticker receives this mark, it means the OTC has flagged it for public interest concerns (often fraud or manipulation).
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Once that symbol appears, Kyle calls the stock “toast” — almost guaranteed to collapse.
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He monitors OTCMarkets daily for the “Caveat Emptor” label.
Once added, he increases his position (“adds size”) because it signals the dump phase is near.
d. Email Promotions and Newsletters
He also tracks promotional emails that encourage buying these tickers.
Receiving multiple promotional emails serves as confirmation that the pump cycle is actively being pushed.
The OTC “Caveat Emptor” designation — Latin for “let the buyer beware” — is one of the most critical warnings traders can observe when dealing with OTC Markets-listed penny stocks. It is represented by a skull-and-crossbones icon on the company’s page on OTCMarkets.com. This label signals that the OTC Markets Group has identified the stock as a public interest concern, meaning there is credible evidence or suspicion of fraudulent, manipulative, or misleading activity.
When a company receives this mark, it’s effectively blacklisted from normal trading activity. It tells investors that:
- The company may be misleading investors with false press releases or promotional campaigns.
- There are regulatory or criminal investigations in progress, or the company is failing to provide reliable disclosures.
- Liquidity often dries up quickly, and market makers may withdraw — causing the stock to collapse in price, often 70–90% within days.
For traders like Kyle, this warning serves as the final confirmation that a stock’s pump phase is nearing its end and a major dump is imminent. It’s the signal he uses to add size to his short position and hold until the price collapses.
You can view Caveat Emptor warnings and verify the current status of any OTC-listed ticker directly on:
👉 https://www.otcmarkets.com
To check, type the stock’s ticker symbol in the search bar — if the skull-and-crossbones icon appears at the top of the profile, the stock has been officially marked “Caveat Emptor.”
3. Trade Execution and Management
a. Entry Plan
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He starts with a small short position once he confirms the pump pattern.
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He uses a guide price (e.g., $3 for FRLI) to estimate how high it could go.
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When he gets proof of promotion or the “Caveat Emptor” flag, he adds more size — fully loading the position.
b. Conviction-Based Sizing
Kyle sizes heavily when all three confirmations are in place:
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Confirmed pump pattern
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Confirmed paid promotion
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Caveat Emptor / Skull and Crossbones
At this point, he calls it an “A+++ setup” — his best possible trade.
c. Holding Period
He’s patient — often holding for 2–3 weeks as the dump unfolds.
He doesn’t get shaken out by small intraday spikes because he trusts his setup.
d. Target
His final goal is a collapse below $1 — that’s where he covers his short.
4. Example: FRLI Case Study
Kyle used FRLI as a teaching example:
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He noticed suspicious volume with no real news.
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Chart resembled previous pumps like BSBK and OWEL.
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Found a landing page with $2.18M paid promotion disclaimer.
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Later, Caveat Emptor appeared on OTCMarkets → confirmed the scam.
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He increased his short and held until it dumped below $1, covering in the $0.80–$0.90 range.
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Result: $5,400 total profit between two brokerage accounts (Interactive Brokers and Cobra).
5. Lessons and Trading Philosophy
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Experience matters: The more pumps you’ve seen, the faster you can recognize them.
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Details define conviction: The difference between a small gain and a big win is knowing those extra confirmations.
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Slow markets favor patience: Even if only one or two A+ setups appear monthly, one good trade can make the entire month.
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Promotion research is key: He spends more time verifying the paid nature of the campaign than on charts.
Summary Table: What Kyle Watches Before Shorting
| Indicator | Why It Matters | Effect on Trade Decision |
|---|---|---|
| Chart pattern (slow grind, big volume) | Identifies pump structure | Confirms pattern setup |
| Promotion website / email | Proves artificial hype | Increases conviction |
| OTC “Caveat Emptor” | Confirms fraudulent behavior | Triggers heavy shorting |
| Historical analogs (past pumps) | Compares similar dumps | Confirms expectation |
| Volume surge without news | Indicates manipulation | Entry signal |
| Patience to hold | Wait for dump phase | Ensures full profit capture |
In essence, Kyle trades by detecting manipulation, proving it’s paid, and timing the collapse — turning market scams into opportunities.
He is an expert in financial niche, long-term trading, and weekly technical levels.
The primary field of Igor's research is the application of machine learning in algorithmic trading.
Education: Computer Engineering and Ph.D. in machine learning.
Igor regularly publishes trading-related videos on the Fxigor Youtube channel.
To contact Igor write on:
igor@forex.in.rs
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