99.9% of huge penny plays never happen. And that is because 95% of penny stocks are scams.
Here's what I do to avoid huge losses in pennyland:
THE #1 RULE TO REMEMBER ABOUT THE PENNY STOCK MARKET IS THIS: IT IS LIKE THE WILD WILD WEST. THERE IS RISK AROUND EVERY CORNER. THIS MARKET IS FILLED WITH LIARS, CHEATERS AND THIEVES ALL TRYING TO SEPARATE YOU FROM YOUR MONEY. YOU HAVE TO ASSUME EVERYTHING YOU READ OR HEAR ABOUT ANY PENNY STOCK IS A HALF TRUTH AT BEST. ALWAYS VERIFY EVERYTHING YOURSELF.
MOST OTC COMPANIES WILL HAVE LITTLE TO NO LONG TERM VALUE AND WILL GO OUT OF BUSINESS WITHIN A FEW YEARS AFTER START UP. PLEASE ONLY MAKE SMALL INVESTMENTS IN THESE STOCKS. NO MATTER HOW GOOD A STOCK SOUNDS YOU NEVER EVER INVEST MONEY YOU CAN NOT AFFORD TO LOSE. ASSUME YOU WILL LOSE EVERY PENNY IF YOU DO INVEST IN THESE STOCKS.
Having said that, there is no market that we know of offers traders an opportunity to book great profits.
You just need to be smart about it. Memorize these strategies and think about them when ever you trade. They have saved MANY from unnecessary losses and helped traders just like you to successfully navigate this market.
Ready?? Here we go !!
Do not fall in love with these companies. Trade them to make money. If they go up, sell them at a profit. If they go down sell them quickly for a small loss and get ready for the net one.
Your focus needs to become "do I think this stock has an exciting enough story that OTHERS will go out and buy it when they hear or read about it".
See, if OTHERS go out and buy it after you, and there is more buying than selling, the stock price heads higher allowing you to sell at a profit.
To you, these stocks should just be four letters (the symbol) and a number (the price). You should not get emotionally attached to them. Let the other guy fall in love with them. He is the guy who is going to keep buying it so you can sell it to him at a profit.
Book your profits EARLY when in a position to do so.
Here are some time tested strategies that when used will put you on the path to profits.
GETTING IN
Always use limit orders when getting into a stock. Pick an entry price and stick with it.
Don't chase stocks. There will always be another trade right around the corner. Don't beat yourself up if you miss one. The last thing you want to do is over pay because you see a stock moving and think you are missing the boat.
Never use market orders to enter into a trade. Using market orders allows the market maker to fill you at whatever price they like and leaves you vulnerable to getting poor fills.
IF A STOCK GAPS WAY UP DO NOT CHASE IT.
Most stocks that gap up will come down during the day. (usually starting between 9:45 EST and 10:15 EST) When a stock gaps up the market makers will usually push it lower starting at this time to try to get investors to panic and sell shares back to them so they can make a profit on any shares they are short from filling orders on the gap. If you like the stock and it gaps up you can usually pick up cheaper shares when the market settles back.
WATCH THE OPEN
Watching the open is very important. You can learn a lot about how a stock may act in the first 10-15 minutes after the market opens. The first thing to look for is lots of selling. If you are watching a stock that has an average daily volume of 50,000 shares and the stock trades 250,000 shares in the first ten minutes and it isn't moving this is not a good sign. This means there are lots of sellers and they are probably only going to get more aggressive as the day goes on.
You want to see a stock tick up on a regular basis as you see buys come in. If you are in a stock and you see lots of buying and it's not moving GET OUT. Don't wait.
KEEP YOUR LOSSES SMALL
THE SAFEST WAY TO DO THIS IS TO SELL A STOCK IF IT GOES BELOW THE PRICE IN THE ALERT. This price is always the prior days closing price.
When you enter a trade you need to determine how much you are willing to risk. Have a firm number and get out if the trade goes against you.
Every big loss started as a small loss where the investor lost control of their emotions and didn't close out the trade. All investors have trades that go against them. It happens to everyone. Successful traders know how to limit losses while unsuccessful ones do not. They begin to hope and pray that the stock will turn around so they don't lose money and next thing they know a small 10% loss is now a 40% loss. At this point they begin to think the stock cannot go any lower and they hang on. Now it's a 90% loss and they finally sell. Do not let this be you. Put a line in the sand in every trade you do. When it gets over that line, get out.
No excuse now for losing your shirt.
Don't say I never gave you anything! LOL
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