posted
I find it very hard to make picks on penny stocks because there so little info. SO how do you reccomend finding my own gems, and have you been doing well investing in penny stocks? Almost EVERYONE who knows their stocks has told me to stay away, but I feel the need to try it out.
Posts: 46 | Registered: Apr 2007
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posted
you need to learn more, study a lot and papertrade...for one thing, pennies aren't investments but mere trade vehicles...sure, sure the rare one comes along, but basically most in pennyworld are traders...
posted
Depends what you want to do. Microcaptrade is excellent for filtering certain stocks that you'd like to focus on, like stocks thta have traded unusually high volume, or have high % gains in a day, etc.
Paper trade means trading without real money. Keeping notes of what you "bought" and "sold" along the way, so you can figure out good and bad methods, without risking real money.
Everyone should do it, very few do. those that don't are almost guaranteed to lose most or all of their first round of cash.
Posts: 5508 | From: Southeastern PA | Registered: Jan 2006
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quote:Originally posted by metball4: paper trade? Where do you learn of these stocks, any good sources?
If you do not know what "papertrading" is you seriously need to read a trading book or two... and penny stocks are not for "investing" as tex already said there comes along one or maybe two stocks that are but for the most part penny stocks are for trading and not investing. Consider this there are around 9,000 stocks listed on various exchanges. All have penny stocks (technical definition is stocks under $5 per share). Everyone thinks they will find that one or two stocks that are for investing out of 9,000 stocks. Ask yourself can you really find those two stocks or would you rather trade pennies instead?
Anyways back to topic. You need to read trading books period!! From your posts I can already tell you do not know what you are doing. I am doing you a favor by telling you this for your own good so you won't go broke. Your friends have already told you to stay away from pennies and so will I. Stick to Big Board stocks (stocks $5 and over) for more consistent profits imo. But if you decide against our advice then only trade in pennystocks about 1/3 to 1/4 of whatever your bankroll is. Don't put all your money in pennystocks. Put most in trading Big Boards and the rest in pennystocks to protect your money more. Below are tips:
1. Read books on trading. For starters: a) A Beginner's Guide to Short Term Trading by Toni Turner www.toniturner.com b) How I made $2,000,000 in the Stock Market by Nicolas Darvas (perhaps this may convince you stay out of pennies)
2. Papertrade - But remember just because you do awesome on paper does not mean you will do great in real trading because papertrading takes away the emotion aspect of it because no real money is at risk. It takes away Fear and Greed.
3. Always have a stop/loss in place whether a actual one or a mental stop/loss.
4. Don't buy on tips, rumors etc. Find your own stocks and do your own DD (due diligence)
5. When your ready open a account with a penny stock friendly broker such as Choicetrade.com but definetly not Scottrade.com.
6. With pennystocks (or any stocks imo) don't bother with Fundamental Analysis. Try to concentrate on Technical Analysis only. Whatever information a pennystock gives about it's products, financial health, PR reports etc. should be taken with a grain of salt and some should be outright laughed at. Also Fundamental Analysis does not tell you when to enter or exit a stock but Technical Analysis does give you signals when to enter or exit a stock.
7. Don't use so many indicators/oscillators because it leads to paralysis of analysis. You will get mixed signals because they all don't say the same thing so you will be confused about what to do. Pick maybe two or three favorite ones and learn how to use them well.
8. Plan your trade, Trade your Plan. Don't constantly change your mind about what to do with a stock once your in a position. Stick to your plan and if you can't let your stop/losses make the decision for you to take out the emotional aspect of it. Fear and Greed are your worst enemies.
9. Consider being a swing/position trader and not a daytrader. Don't be a action junkie. It is ok to be in Cash then in stocks constantly. Be PATIENT and look for a opportunity to trade. The best Traders in the world do not trade everyday. They look for a opportunity even if it takes days or even weeks.
10. Practice money management. Limit your Losses and Ride your gains. You do not have to be right 80% or more on your trades. You will do fine with just being right 20% to 40% of your trades. If you limit your losses on the losing trades and ride your winning trades you'll come out ahead.
Anyways these are just some general tips to help you. There are others but today I am tired and can't think well lol Other peeps can add to my list of tips..... My favorite source for information when I do skim fundamentals or want to run a stock scan is www.smallcapcenter.com and/or www.bigcharts.com
-------------------- Let the world change you... And you can change the world.
Ernesto "Che" Guevara de la Serna Posts: 4669 | Registered: Mar 2004
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posted
imo there are some real salty dogs here that know what they are talking about. Those that step forward like machiavelli, Pcola and tex as well as some others on this board have shown me plenty - and i am VERY appreciative for their guidance. Good luck metball. you've come to the right board to ask questions.
-------------------- All post are my opinion. Do your own DD. Who's clicking your buy/sell button!? Posts: 7800 | From: Virginia | Registered: May 2006
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posted
Machiavelli, thanks a lot for all the info you've posted, as I am to a beginner in this. And my interest in penny stocks is due to not having enough money to get into anything else.
Quick question, is there a 2nd choice other then ChoiceTrade, there not catering to Massachusetts yet.
Posts: 23 | From: Worcester | Registered: Jun 2007
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posted
be easier to respond if you could say which ones you have access to...that is, if you know C0Trade is out, can you determine which *are* servicing your area?
posted
Not sure what you mean by not having money to get into anything else. $500 is $500, be it in penny stocks or big board stocks. People seem to want to own more shares, but it's an illogical argument in my opinion. Is it better to own 10 shares of Microsoft, or 1billion shares of some POS company in which you are almost guaranteed to lose all of your money. If you want to "gamble" to hit the big one, meaning big boards are too "boring", then just play the lottery instead. I would be willing to bet if you just try to find 1 penny stock to throw all of your money into to try to get rich, that money will never be seen again.
Keep that in mind.
quote:Originally posted by Verdict: Machiavelli, thanks a lot for all the info you've posted, as I am to a beginner in this. And my interest in penny stocks is due to not having enough money to get into anything else.
Quick question, is there a 2nd choice other then ChoiceTrade, there not catering to Massachusetts yet.
Posts: 5508 | From: Southeastern PA | Registered: Jan 2006
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quote:Originally posted by metball4: paper trade? Where do you learn of these stocks, any good sources?
Not trying to give you a headache...but here's some more info...
Some simple and Basic questions:
What do these letters mean? DD=due diligence (Research) MM=Market Maker (definition http://www.sec.gov/answers/mktmaker.htm ) EOD=End Of Day EOW=End Of Week HOD=High of Day PPS=Price Per Share O/S=Outstanding Shares A/S authorized shares POS=Piece of "Poo Poo" IMHO=In My Humble(Honest) Opinion LMAO=laugh My A** off L2's=Level 2's
#1 RULE...PROTECT YOUR CAPITAL! it is the most needed tool in this game...without your capital(funds)...you can't do anything! #2 RULE...NEVER FALL FOR THE HYPE ON THE BOARDS Lot's of people get overly involved in a stock...and "believe"...don't "follow the hype" blindly...do your own DD #3 RULE...TAKE PROFITS #4 RULE...HAVE FUN!
How is one "flagged" a daytrader? To avoid being flagged a daytrader, you can not sell and trade the same stock more than 3x's in a 5 day period. Buy "XYZ" and sell it the same day=not a day trader. Buy "XYZ" on Monday and sell it on Tuesday=not a daytrader. Buy AND sell "XYZ" more than 3x in a 5 day period= Day trader. You can buy and sell different stocks...just not the same one.
What are "free" shares? Many People will sell a stock once it has "reached" an increase where they can sell to "get back" their original investment and then continue to let the rest of the shares "ride", these are "free shares" (ones that the gain of the pps has "covered") All of these, once sold, would be complete profit.
What are settled funds? You open your account with cash, those are "settled funds", You buy stock XYZ , you sell XYZ to purchase a different stock, It will take 3 business days for those funds to become "settled". Some brokers will let you purchase stocks with unsettled funds but you can not sell that newly purchased stock for the 3 days, The sell of a stock is what needs to "settle" not the purchase of a stock. Think of it as a check clearing your bank after you have deposited it.
Example: I have $200 in a cash account...I buy 200 shares of XYZ on Monday...I can sell those shares ANYTIME after my purchase...in 5 minutes or 5 months...it doesn't matter...I dont have to wait for anything...However, this is where the "settlement time" comes in, although allot of brokers will let you buy with the unsettled funds from the sale of XYZ...I CAN NOT SELL..the new stock that I purchased...(here it is) UNTIL the settlement date...usually 3 business days...
The settlement date applies to the SELL of a stock...NOT the purchase of the stock...
Must have book to read is "a beginners guide to day trading on line" by Toni Turner www.toniturner.com
posted
Thanks to Machiavelli,Tex and the others, I read this one thread and learned more in a 1/2 hr thn I have in the few days I have been researching. I am currently paper trading a few micrcap stocks, I have read one book and have a few others on order. But a few more novice questions if you dont mind. 1.) How did you guys get started in trading( initial investment, which stocks etc) 2.) Why does it sound like being a day trader is a bad thing? If you have the time to research, watch the market and make quick sales on volatile markets, couldnt you also do well. I havent invested in anything but my 401K so far and am trying to get a decent education in the matter before I do. Again thanks for sharing your knowledge guys. Joe
Posts: 10 | From: California | Registered: Jun 2007
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posted
1. I started by learning on this board and from the books I recommend to others. Don't remember which stocks but i started with $1,500.
2. All trading (position,day,swing etc.)can be bad or good. But Daytrading in general if you have discipline and control can be quite profitable for the right individual but for the most part "traders" on this and many other boards are action junkies and thats why they daytrade. Much like a sportsbettor who needs to be in action all the time everyday in all games. It eventually becomes a grind and they will be grinded out of their bankroll. The true professional sportsbettors look for the right opportunities, whether there is one everyday or every few days. There is no need to be in a stock position everyday. Cash is also a position. Look for the right opportunity and you will come out ahead. Don't trade for the sake of having a stock position. That is why I always advocate swing/position trading. Because you are not always in a position. There are spaces sometimes between trades in terms of days as opposed to minutes in daytrading. Besides you can mix it up. Daytrade some days and other days swing/position trade. Give yourself some breathing room. Also do not, i repeat, not put all your money in penny stocks (under $5 per share)... you'll get more consistent profits trading Big Board stocks (stocks $20 and over per share) and even stocks in between sometimes (stocks between $5 and $19)... play around with pennies but TRADE with big board stocks...
-------------------- Let the world change you... And you can change the world.
Ernesto "Che" Guevara de la Serna Posts: 4669 | Registered: Mar 2004
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posted
Oddly enough, I was booking a band into a club and ran into a guy who used to be a regular here. He had just popped GTEL for 10k, and I got interested from talking briefly with him. I wound up here not even knowing he was a member...never made any dough on GTEL, but had "beginner's luck" on 5 or 6 plays...then got my nose bloodied...
Then I made plan and started researching and asking questions, which I will always do...
Before you start researching the penny stock market, it's important to know where to go for the most reliable information. There are very few trustworthy resources out there, but plenty of danger zones to watch out for. To help you make wise and informed choices, here's a few useful guidelines to follow.
Promotional Stocks: In Whose Best Interest? Some services receive compensation from the companies whose stocks they promote. This is an obvious conflict of interest. It usually works like this: the promoters tout the stock in exchange for shares from the company. The more they can get investors excited, the higher they can drive up the prices, and the more they personally profit. So whose best interest do they have in mind? Yours? Not likely!
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Protect Yourself It's important to read the fine print published by these services and to know what to look for when you do. Also, be sure there is somebody there you can turn to for answers to your questions. If you can't establish a two-way communication with the people offering the services, how can you possibly depend on their advice?
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What About Those Water Cooler Tips? We've all heard them. The hottest stock tip ever – and you're lucky enough to be getting in on the ground floor. The advice you get from somebody at work may be sincere and well intentioned, but everybody knows that old adage about anything that sounds too good to be true.
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Is this really the person I want to advise me?
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posted
Aside from saying "never believing anything on these boards without verifying it and understanding the ramification", this is the best advice that I think can be given.
quote:Originally posted by Machiavelli: There is no need to be in a stock position everyday. Cash is also a position. Look for the right opportunity and you will come out ahead. Don't trade for the sake of having a stock position.
This is obviously anecdotal, but I'll use myself as an example. I was looking at my 1099 forms this week, and I traded over $600,000 in stock last year and probably close to 500+ trades. I ended up making a few thousand dollars all year.
This year I have probably made 2 dozen trades, and my portfolio is up almost 50%. The biggest difference is I'm not saying "I'm bored, I'll just buy this one as a gamble" like I was doing last year, and I've only bought a stock when I feel REALLY confident in it. And I've all but eliminated the cases where I'd lose $100-$200 on each of like 10 trades before I'd find a good one. Those little gambles can add up and take a huge chunk of your money away.
I now go days and weeks without making a single trade, whereas last year I got itchy if I spent a few hours on the sidelines.
Posts: 5508 | From: Southeastern PA | Registered: Jan 2006
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posted
PCola, When you first started trading, what was your initial investment and what types of stocks did you start out in?
Posts: 10 | From: California | Registered: Jun 2007
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posted
I have to agree with Machiavelli and PCola. Earlier this year, Mach gave me some good advice to stop playing so many pennies and get into the big board stocks. (plus he helped me learn how to read charts more)
With the exception of FRPT(which was a penny stock at the time I bought it), this tactic has proved to be much more profitable then gambling on pennies. I did make some good plays with some pennies, however, I lost more on others and so I am way down in my "penny trading" account.
To answer GetPayed's question, when I started in April 2006 I put $5500 in TDAmeritrade to trade pennies. That account is now down to $2400! And I still have a good amount of penny stocks in there, that seem to go down daily.
Thankfully, my other "non-penny" positions are in Fidelity both in a regular account and a Roth IRA, and they are up about 40% and so they cover those penny losses.
I also have "cash" as a position right now. About 1/5 of my IRA is in cash currently. The good thing about that is that when a real winner comes along, I have the dry powder, and it's not tied up in loser stocks.
Jo
-------------------- "Great Day for Up!"....Dr. Seuss Posts: 3387 | Registered: Mar 2006
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posted
I had written a whole detailed story, but after re-reading it, didn't really think it was appropriate to give so much detail in this medium, so here's my updated, partly censored reply.
I started with $7,000 in Scottrade (a bonus check from work), and lost most of that. Then put $30,000 into Choicetrade last summer that I have been doing well with.
I hope this doesn't come out sounding arrogant, but I was/am probably in a better financial situation than many who try penny trading. I am 29, have a great job, and worked my ass off there for the last 8 years to get some pretty substantial bonuses that has put me ahead of many people my age. Therefore, I am highly risk tolerant, because I can trade without using "scared money", which I think is something that hurts a lot of people.
It took me barely a couple of months to lose almost all $7,000, but I decided to try again and learn from my mistakes, and could afford to do so. I think too many people put money in that they can't really afford to lose, then either lose it and give up, or worse, lose it and then try to "win it back" and lose even more. If you can trade without "worrying" about your money, you probably trade smarter.
So I guess the main point is don't trade with money that it would bother you to lose. And if you don't have any money that wouldn't bother you to lose, you're probably not ready to try this.
And as for the stocks I started with, i started with penny stocks, and still only trade them. I almost never trade a pinksheet stock. I am actually in the process of reading a book on technical analysis to try to slwoly move towards "safer" NYSE and NASDAQ stocks, but I'm a gambler at heart, and will probably never move entirely into that realm (or even mostly).
quote:Originally posted by GetPayed: PCola, When you first started trading, what was your initial investment and what types of stocks did you start out in?
Posts: 5508 | From: Southeastern PA | Registered: Jan 2006
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My first rule is to protect capital...period. As I've said before...it's *not* money, it's a tool.
Mach and I both believe in stop-losses...even if it's only a firm mental agreement with yourself. What made me think of this is somewhere earlier in a Mach post re "plan your trade and trade your plan."
Recent example: I entered a position strictly to use the profit to pay for a specific thing. I wanted about $2k... a little under was acceptable, and of course a little over would be gravy... at $1,875 I "knew" I could *probably* wait and eke out another $6-- to $700 BUT would probably take a coupla weeks. The downside was IF I was wrong, I could wind up with only $1,200 or so... Sure enough, I could've waited and "greeded" out more, but I had hit my target, so I happily cashed out and have no regrets.
Does that mean NEVER adjust "on-the-fly"? No.
But, over ALL trades, will be better if you have an exit strategy in mind--firmly in mind--BEFORE hitting the BUY button.
On a dayrunner? I have the sell order queued up before my buy even fills...
Of course, must re-emphasize: CASH is a position, too... as PCola mentions, is WAY too easy to trade out of "boredom."
posted
Again everyone thanks for sharing. Like I said, I havent invested anything, other than my 401K I have with T Rowe Price. I am currently paper trading a few pennies I have been looking at and reading. But the information on this board has been outstanding. I also realize that penny stocks are straight up gambling, but thats kind of what I like about them. I currently have about 1500 in an account that I will eventually invest, and if I lose it oh well. But I want to go into this with all of the tools to succeed. Thanks again everyone.
Posts: 10 | From: California | Registered: Jun 2007
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posted
There are definitely people here who are worth listening to, you will learn more than you could ever imagine from some of these guys.
On the flip side, there are tons more people who post with no intention of helping anyone but themselves. Some of them are jawdroppingly obvious, but some are very slick. Figure out who is who, and you can do very nicely. One thing to do is read post histories. If you see someone posting ridiculous price targets on every stock they trade, then never posting on that thread again when it tanks, you're probably better off ignoring their picks Posts: 5508 | From: Southeastern PA | Registered: Jan 2006
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