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xxartyxx
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ok lady'z and gents,s lets start a new topic here.

im sure that there are alot of people out there who would like to invest and become traders and make some kinda profit from that, but dont have the mulah to start of.

the question of the day is ( and this goes to all the newbies and the pro's), what do you all think about pinks and otc's, in terms of overal to the tidiest detail you can provide (liquidity, price wise, experince and all)

don't be shy or shady. share the knowledge, after all if you keep it all a secret and noone knows about it then you wont have anyone to sell to or buy from.


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Jeremy
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The biggest misconception in the world is that people with little money to start investing need to invest in "cheap" stocks such as OTCBB stocks because they can't afford to purchase a stock that is 5, 10, or even 20 dollars a share.

Remember, the only thing that matters is the % gained or lost. If a stock that is only trading at .05 a share goes up 20%, that is exactly the same as a stock that is 25 dollars a share and goes up 20%. So it doesn't matter.. say you invest 2,000 dollars into a stock trading at .05 cents. That gives you 40,000 shares. Impressive sounding right? Well, it's still only 2,000 dollars. Now say you invest that same 2k into a stock trading 20 dollars a share. That's only 100 shares! OH my you say.. I will never make money with only 100 shares!

Well, you're wrong. That 100 shares is worth exactly the same as the 40,000 shares of the other stock. If your .05 stock goes up 20%, great, you just made $400 bucks. Same thing if your 20 dollar stock goes up 20%, you still made 400 bucks.

So you don't need to be rich to invest in more expensive stocks, it's the same amount of money being put to work. But what is different is the potential rewards and losses. That is why people get so excited over these OTC stocks... because who's to say that 1 cent stock won't jump up to 50 cents in a month? That kind of return on 2,000 dollars is very large.. you're looking at a $98,000 profit. But at what risk? OTC stocks can see price fluctuations of 10-20% or more on a daily basis... and can do so for extended periods of time. That 2,000 could easily be cut in half in a matter of days. With a 5+ stock, the chances of that happening are MUCH less. That is the main difference.

I just get frustrated when new investors always say "I need some good penny stocks to invest in because I only have 1,000 dollars, I can't afford stocks like intel or microsoft", because that just isn't true, and actually more foolish for a new investor to do.

If I only had 1-2k to start with, I would find some solid companies that aren't penny stocks, and invest in a few of those. These stocks can see 10% gains a week or so if they are performing well. So is making 100-200 bucks a week a bad thing? Not when you realize that those small gains add up. Make an average of 150/week... that's 600 bucks a month. Well, turn around and re-invest that 600 bucks and if you get the same returns, you're looking at closer to 800 bucks a month.. reinvest that with the same returns, you're breaking 1,000/month in profit...

You do the math. Obviously that is an ideal scenario.. but I'll tell you, putting 1k-2k in a stock that is about 5 bucks a share can add up in a few months pretty quick even if all of your picks aren't winners. As long as you get out without taking much if any of a loss, you will continue to build money slowly, and when reinvested, just makes it grow faster.

Penny stocks are seen as a "quick buck" or just thinking you can double your money every few days... which is VERY unlikely. For every 100% gainer, you are likely to buy half a dozen or more that lose you 25% or more.. and keep your money tied up for months on end while you wait to break even...

Ok, I'm done ranting. And I am by no means against OTCBB stocks, most of my portfolio is full of them. But I speak from experience, and I did not get to this point by taking my initial brokerage account deposit and dump it into a penny stock and had it tripple in a week. It all started by building a few solid positions and making 5% here, 10% here, another 20% occasionally... and when I had enough to feel comfortable, part of that went into penny stocks hoping for some big gains, almost like a lotto ticket with better odds. A few of them have hit the jackpot... others, well, 8 months later I'm still holding on to them down thousands of dollars just waiting for it to break even again.


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Six Black Roses
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I like the way you think, Jeremy. To me, the stock market is nothing more than a video game where I'm trying to take a limited set of resources and manage them to have the portfolio equity grow.

Penny stocks are virtually exactly like lotto tickets. As a matter of fact, most penny stocks are down at the bottom because the company started to decline since its first days on the market.

The way I look at it? Start with a really modest amount of money. But don't do the dumb thing of investing the money you buy food or pay bills with, unless you're suicidal. Let's say you now have 120% of your initial captial... take that 20% and invest it in a risky stock. Hold it, but set a limit to not miss out on a peak. Rinse and repeat.

Speaking of suicide, if you're already determined to kill yourself, bet everything on some penny stock. You might become really rich, and then change your mind about suicide, or you might lose it all, making suicide even more easy.


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Jeremy
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Exactly

And sorry if my post wasn't all that coherent and seemed to run on forever.. a few gin and tonics were involved in the making of that post


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xxartyxx
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but heres the thing,

say if it's not 2k that your looking to invest, or 1k or so. if you guyz have time take a look at this OTCPK,(cybr) it's low for today was @ .015, meaning that if you were interested, you can jump in and take a realy short position with about 10k shares. that would bring you 100 buks for each penny rise. now, you can't buy @ market with those little *******s because the spread is like the niagra, so you place limmit @ 0.015 or so, you spend $150. now ive been watching this bad boy for the past almost month, its bottom range is .01 it's top i saw today break the .045.

You can place a market order and sell the shares you now own (10,000) but your gona get raped, so you place a limmit @, not to be gready, .04. in a days range youve made $350, not bad @ all. thats about what you would make a week @ minimum wage 9-5 slavery for some ass-hole boss.

but i understand this, it might be easy for you to buy the 10,000 shares @ .01, .02, .03, etc. but would it be so easy to sell them?

i think that alot of people also seem to missunderstand this important fact, that you need someone to buy from u on the other side in order to lockin profit. other wise, your stuck with 10,000 shares which are jumping around like a monkey with your cash in the bag. correct? or not?

also, say you actualy do end up in a situation like this, where you cant get rid of your shares, would you be abled to still sell, but, by trying to instead of selling 10,000 @ once, sell 5,000, or 3,500... that would maximize your broker comition, but would it work then? as far as i know, brokers like Ameritrade, do not charge you if your order doesnt get executed, giving you the benefit of an atempt..........

jeremy, i think i wrote too much.....

in overal, what do you guys think about liquidity in comparance..( otc's, nasdaq, nyse, etc.)


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Jeremy
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Well the simple solution is to only invest in stocks with enough volume that you know you can sell your shares when you wan to. Obviously if you are buying a stock that has 100k shares traded on an average day, and you own 100k shares of this stock, you are between a rock and a hard place.

One rule with OTC stocks.. NEVER use a market sell order. You will get f-ed in the butt 10 times over almost every time. That is why it is important to either invest in stocks kwith high enough volume that your limit orders will be filled, or if you buy stocks that have very low volume, that you sell only when there is a very high volume move...

Which all comes down to risk again. Why put all of your money at risk in a stock that you potentially can't sell at the time it makes a 50 or 100% gain? That's your call.

I still prefer to have most of my money in swing trades (ie. a week to 1-month long trades) with $1-$10 stocks, where I can almost guarntee 10% gaines every week or so rather than dumping it all into some micro-penny that it may go up 1000% in one day, or leave me holding on for 6 months just trying to break even or lose half of my money.

[This message has been edited by Jeremy (edited January 30, 2004).]


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Six Black Roses
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Hmmm...

What sort of analysis do you perform? I do tend to agree with you on that a probable steady 10% gain per week or even month is a lot more profitable in the long run than taking big risks with pennies.

In the mean time, I'm watching LU. It's developing some sort of consolidation, but the news squeezed the price up over 6% in the after-hours trading.


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Spork
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I have been converted!
I was thinking of buying some CTKH and holding on that thing for about a while until it jumps, but I think I'm gonna go with some UNH instead. CTKH type stocks will be when I make enough money to throw 500$ into stocks like that without it being 1/3 of what i have!
I think I'm gonna put 1500 on UNH. Anybody know what a good entry price would be? They just got out of a good period to enter, but it looks like they might just continue on up, so I'm thinking about buying right away for around 60.00-60.90. Does that sound right?

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Jeremy
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quote:
Originally posted by Six Black Roses:
Hmmm...

What sort of analysis do you perform? I do tend to agree with you on that a probable steady 10% gain per week or even month is a lot more profitable in the long run than taking big risks with pennies.

In the mean time, I'm watching LU. It's developing some sort of consolidation, but the news squeezed the price up over 6% in the after-hours trading.



My analysis for my "trading" account is almost purely technical. This is the account where my money is put to slightly higher risk. In my IRA account, my analysis is almost completely fundamental... locking it up for years at a time and not caring about charts or patterns, but the company itself.

That being said, I've read many books on trading. From swing trading to long-term investing, value trading, technical analysis, candlestick charting, elliot wave principle...

So for most of my trades, I'm going on technical analysis. Look for certain patterns, maybe a candlestick reversal, etc. But, I limit this type of analsys to stocks trading above the penny range. Stocks trading at 1 cent or below.. they don't always follow the rules. They are manipulated way too easily. For these types of stocks, like I mentioned, it's more of a lotto ticket with better odds.

But for stocks trading closer to 10 cents to a dollar or two, using TA will yield some spectacular results if you know what to look for


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Jeremy
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Oh, and UNH does not look like a good buy at this time. OBV is starting to retreat, MACD and RSI are off their recent highs even though the stock is going higher... a correction is imminent. This stock may still see a little bit of upward movement, but other indicators are starting to display a sign of weakening, so in my opinion the risk is greater than the reward at this time.
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Spork
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"OBV is starting to retreat, MACD and RSI "
All of those are invalid symbols on E*TRADE apparently

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Jeremy
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Those are not symbols, those are different technical indicators that can be found when viewing some charts.
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xxartyxx
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lol spork your funny....

hey any of you guyz ever read " the market makers edge"? i just went and got it the other day, so far, its good.


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xxartyxx
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spork, read this book its good for you
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austinb
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quote:
Originally posted by Jeremy:
The biggest misconception in the world is that people with little money to start investing need to invest in "cheap" stocks such as OTCBB stocks because they can't afford to purchase a stock that is 5, 10, or even 20 dollars a share.

Remember, the only thing that matters is the % gained or lost. If a stock that is only trading at .05 a share goes up 20%, that is exactly the same as a stock that is 25 dollars a share and goes up 20%. So it doesn't matter.. say you invest 2,000 dollars into a stock trading at .05 cents. That gives you 40,000 shares. Impressive sounding right? Well, it's still only 2,000 dollars. Now say you invest that same 2k into a stock trading 20 dollars a share. That's only 100 shares! OH my you say.. I will never make money with only 100 shares!

Well, you're wrong. That 100 shares is worth exactly the same as the 40,000 shares of the other stock. If your .05 stock goes up 20%, great, you just made $400 bucks. Same thing if your 20 dollar stock goes up 20%, you still made 400 bucks.

So you don't need to be rich to invest in more expensive stocks, it's the same amount of money being put to work. But what is different is the potential rewards and losses. That is why people get so excited over these OTC stocks... because who's to say that 1 cent stock won't jump up to 50 cents in a month? That kind of return on 2,000 dollars is very large.. you're looking at a $98,000 profit. But at what risk? OTC stocks can see price fluctuations of 10-20% or more on a daily basis... and can do so for extended periods of time. That 2,000 could easily be cut in half in a matter of days. With a 5+ stock, the chances of that happening are MUCH less. That is the main difference.

I just get frustrated when new investors always say "I need some good penny stocks to invest in because I only have 1,000 dollars, I can't afford stocks like intel or microsoft", because that just isn't true, and actually more foolish for a new investor to do.

If I only had 1-2k to start with, I would find some solid companies that aren't penny stocks, and invest in a few of those. These stocks can see 10% gains a week or so if they are performing well. So is making 100-200 bucks a week a bad thing? Not when you realize that those small gains add up. Make an average of 150/week... that's 600 bucks a month. Well, turn around and re-invest that 600 bucks and if you get the same returns, you're looking at closer to 800 bucks a month.. reinvest that with the same returns, you're breaking 1,000/month in profit...

You do the math. Obviously that is an ideal scenario.. but I'll tell you, putting 1k-2k in a stock that is about 5 bucks a share can add up in a few months pretty quick even if all of your picks aren't winners. As long as you get out without taking much if any of a loss, you will continue to build money slowly, and when reinvested, just makes it grow faster.

Penny stocks are seen as a "quick buck" or just thinking you can double your money every few days... which is VERY unlikely. For every 100% gainer, you are likely to buy half a dozen or more that lose you 25% or more.. and keep your money tied up for months on end while you wait to break even...

Ok, I'm done ranting. And I am by no means against OTCBB stocks, most of my portfolio is full of them. But I speak from experience, and I did not get to this point by taking my initial brokerage account deposit and dump it into a penny stock and had it tripple in a week. It all started by building a few solid positions and making 5% here, 10% here, another 20% occasionally... and when I had enough to feel comfortable, part of that went into penny stocks hoping for some big gains, almost like a lotto ticket with better odds. A few of them have hit the jackpot... others, well, 8 months later I'm still holding on to them down thousands of dollars just waiting for it to break even again.



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austinb
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newbie here
just starting to look into online trading
jeremy said it. all i am hoping to do is find some good % would it not be best to sell at 10% and still rising than to wait and see

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xxartyxx
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sell half of your position and place a stop-loss @ 1/8 less the curent days low, but make sure that goes up before you sell anything @ all lol

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