January 7, 2016 at 12:26 pm #385AnonymousPennies: 0
In the land of the most volatile stocks in the world, Penny stocks, stock promoters, pump and dumps, stock scams are a few of the key words that most people don’t know about when it comes to the penny stock market. Instead they talk about penny stock investing and investing in penny stocks. Investing in these type of stocks is a fools game. The reason for this is because most people do not realize that the OTC Markets (OTCBB and Pinksheets exchanges) list some of the worlds worst companies. Some of these companies are straight up scams like the ones from the movie Boiler Room which was modeled after the true story of Jordan Belfort who was called The Wolf Of Wall Street. This guy was involved in trading pump and dumps in the 1990’s and made $200 million dollars in the stock market. He later went to jail and lost everything, but the same scamsters and con artists that were involved in the penny stock market during Jordan Belforts reign, are still involved today on a different level. Never the less it is possible to earn a profit in this market legally today if you know about advanced technical analysis and chart reading and have a technical trading system for timing the market. You must learn who the key players behind the scenes are and how you can trade on the same side as these people or institutions such as hedge funds, market makers, and stock promoters.
The only way to make money in these stocks, unless you get incredibly lucky just like winning the lottery or winning $25k on a scratch ticket, is to learn to trade penny stocks. When I say trading what I mean is buying the type of stocks and then selling them with in a few hours or a couple days at most. The reason that this is so important is because the liquidity in the penny stock market is very low in general. If you hold a penny stock for too long, especially a position larger than a few hundred or a thousands dollars, you will have a hard time selling the penny stock when you want to. The reason for this is because the average volume in most penny stocks is less than $25k total per day. That means that if you want to sell $5000 worth of a penny stock your order would be selling 25% of the daily volume. Market makers that make a market in penny stocks will see your order and lower the best bid in order to screw you and take some of your money. They won’t execute your trade because they do not have to unlike in listed NASDAQ or NYSE stocks where the market makers have an obligation to market participants.
Starting in 2004 I started to learn how to trade penny stocks. At first I tried investing in penny stocks and soon realized how pointless this was. Then I tried buying stocks that I read about in penny stock newsletters and lost a crap load of money. Later I tried paying so called stock guru’s like Timothy Sykes and Investorslive.com for stock alerts. I found that there’s no way to make money off of others stock trades and stock alert services because you you can not get in at the same price as the guru. I lost thousands of dollars trying to follow these people and eventually realized there’s only one way to make money in the market.
To make money your have to either come up with your own penny stock trading strategy or purchase an eBook or a stock trading guide that has a statistical edge. Most people won’t give this sort of thing out since when you have it you can make a lot of money. The thing is strategies come in all shapes and sizes. Some strategies make a lot of money but require you to sit at the computer from (9:30 a.m. – 4:00 p.m. Monday to Friday) This is called day trading. Other trading strategies allow you to look at the market just around the open from 9:30-10:30 and some strategies allow you to analyze and place your trades only while the market is closed (swing trading)
Trading successfully requires not only have a profitable trading method, but the method must also suit your personality. If it does not you will not stick to the trade signals and the system will be useless. After hundreds of hours of trial and error I finally found that my personality was suited for day trading and short one day overnight swing trades. When I tried to hold longer I just got anxious and lost money or sold to early. I back tested tons of technical indicators that matched my time frame and finally found a group of indicators that when combined gave me profitable trading signals. I don’t sit at the computer all day. I don’t trade hundreds of times a month like a scalper (another style of short term day trading). Instead I take several high probability trades a month with a position size of 3000-50000 shares of stocks in the $.20 – 3.00 price range range. On average I usually earn $5000-10000 a month in the penny stock market Some months more and some a bit less but month after month the trading patterns and trade setups I stumbled upon, allow me to earn big money and trade for a living without having to work for the man.
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