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Re: DOLLARLAND post# 3069

Sunday, 07/24/2011 11:23:50 AM

Sunday, July 24, 2011 11:23:50 AM

Post# of 4602
Welcome SC. Good to have you here, and your thought process is what we do on this board.

However, in looking at your table, this theory is slightly flawed as it will be theoretically impossible to do this. Not to say you can't make consecutive profitable trade decisions like this...because that's easily possible if you have patience and discipline.

The only reason this will NOT work is liquidity. First off, there are very few, if any, penny stocks in which you can buy $10,000 blocks worth of stock, especially if you are trying to get the right price. This falls into one of my main rules....DON'T LOAD THE BOAT. God forbid you were able to buy $10k worth, you will never be able to sell it all at the same time.

You will easily be able to buy big board stocks all the way up to $100k most likely, but then there's no way there's a 25% swing month after month.

However, you're theory is on the right track, and you can make A TON of money safely if you look for consistent 20-30% gains, but one should be able to do this 3 times a week with ease if they are disciplined.

I would recommend the following instead as there's generally enough liquidity in a penny stock to support a $2000 buy/sell.

Week 1, trade 1: $2000 + 20% = 400 total profit
Week 1, trade 2: $2000 + 20% = 800
Week 1, trade 3: $2000 + 20% = 1200

Week 2, trade 4: $2000 + 20% = 1600
Week 2, trade 5: $2000 + 20% = 2000
Week 2, trade 6: $2000 + 20% = 2400

Week 3, trade 7: $2000 + 20% = 2800
Week 3, trade 8: $2000 + 20% = 3200
Week 3, trade 9: $2000 + 20% = 3600


and so on....as you can see, you're using the same $2000 over and over again, and building your cumulative cash reserves making $400 per trade (right hand column). This equals $62k after a year. It's not a million, but it's the right place to start building discipline.

From there, you can start reinvesting those larger chunks into stocks with more liquidity in which you will look for swings in the 5-10% range.

LET ME ADD - That using these dollar amount because it's realistic, and within reach for many of the traders on this board....many of which don't have $10,000 to plop down on a single trade like you suggested. As you use this system, some of which will start with $500, you will become more disciplined, and have the potential to do this method 5 days a week, not 3 days. Or...2 or 3 times a day once you reach the PDT limits. Then the account growth is exponential.

make sense??

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