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View Full Version : My Education begins with Penny Stocks... Need Help



AvianeN
06-25-2015,
Hi,

I'm a 34 year old single father. I would like to start investing in Penny Stocks. I have been doing some preliminary research and before you tell me the pitfalls of doing this, i already know some of them e.g. pump & dump.
I'm a Poker Player (risk taker). I understand the general risk involved with these stocks especially for a beginner like me. I'm a beginner to investing period but i still want to begin with Penny stocks.
Please be advised that i am in the beginning stages of research and learning so as to mitigate my mistakes (just started reading Penny Stocks for Dummies). I'll never be perfect but im hungry enough to try and be plus I enjoy taking smart calculated risks for the benefit of teaching others. I want to be able to send the elevator back down so to speak with the right information.
3 Questions to start:

1. How much time should i spending doing research before opening up an account
2. I can only afford to start with $500 ( that i can only afford to lose also). Is this too little an amount?
3.What other starter books do you recommend?

Thank you for your response in advance.

Bootney

asonisgeyo
06-25-2015,
1. You can never do enough research or learning. Fortunately with small/mid cap stocks most research is useless. With them most fundamentals are irrelevant as most of it is BS anyway, all that matters is how people interpret them. Open an account with TDA, whether you plan on using them or not, and make use of their trading simulator....it is the best there is and will give you practice on just how to enter and exit trades with fewer mistakes. At first just learn how support/resistance levels work and look for movement. Learn how to read level 2 feed. Most movement is done by the time you find it so learn how to find it faster. Do not plan on trading penny stocks the same way you might trade the bigger ones, they are not predictable over the long term, they usually do not care what the rest of the market is doing, most of them will be bankrupt withing 6 mos to 2 years and most are built on lies and advertising.

2. 500$ isn't much but I've seen people trade with as little as that. Problem is you won't have much cushion. Spend a lot of time in simulator if you can't afford to lose that and chalk it up to tuition. Go over the trades I've made in the thread "small/mid cap stocks" in the strategies and picks section and get a feel for what I'm looking for (there is no one way, but you'll get the idea). Cut losses quickly...make your trade and if you're wrong just get out, decide how much you are willing to lose before you enter the trade ...there will be another.

3. There is so much to any given style. Just read whatever you can get your hands on. Most of it is probably useless but eventually you will be able to tell the difference.

Never for one minute believe that someone KNOWS what a stock is going to do. All you can do with these is learn price action, learn good execution (entry/exit) and keep your losses small.

If I only had 500 to trade with this is what I would do. I would stalk the live news feed on Thinkorswim like a cheetah....biding my time and watching for a breaking story, announcement, FDA approval, contract awarded something that makes a stock price (in the .50 to 5$ range) start to move and I would jump in if I could catch it before it's overextended and then back out as soon as it started to look weak. You will be able to do this 3 times per week without being flagged as pattern day trader....but it's enough because there aren't that many of these to really jump on. In this way I would look to build my account and skill up enough to take more speculative plays where you might be able to hold longer or risk more in losses.

But I would...and still do...do a lot of simulator trading to build the skills. Just like pro ball players or golfers or whatever practice 10x's or 50x's more than they actually play.

Oh ye...with penny stocks...you're not investing....you're trading...haha.

PS...always use limit orders and I've never used a stop/loss....ever. Manage risk through order entry and use mental stops that are executed manually. Keep the questions coming, happy to help and you tube and google are full of useful and useless info...learning which is which will help a lot.

aspmwjlo23
06-26-2015,
Acstudio said: ↑
1. You can never do enough research or learning. Fortunately with small/mid cap stocks most research is useless. With them most fundamentals are irrelevant as most of it is BS anyway, all that matters is how people interpret them. Open an account with TDA, whether you plan on using them or not, and make use of their trading simulator....it is the best there is and will give you practice on just how to enter and exit trades with fewer mistakes. At first just learn how support/resistance levels work and look for movement. Learn how to read level 2 feed. Most movement is done by the time you find it so learn how to find it faster. Do not plan on trading penny stocks the same way you might trade the bigger ones, they are not predictable over the long term, they usually do not care what the rest of the market is doing, most of them will be bankrupt withing 6 mos to 2 years and most are built on lies and advertising.

2. 500$ isn't much but I've seen people trade with as little as that. Problem is you won't have much cushion. Spend a lot of time in simulator if you can't afford to lose that and chalk it up to tuition. Go over the trades I've made in the thread "small/mid cap stocks" in the strategies and picks section and get a feel for what I'm looking for (there is no one way, but you'll get the idea). Cut losses quickly...make your trade and if you're wrong just get out, decide how much you are willing to lose before you enter the trade ...there will be another.

3. There is so much to any given style. Just read whatever you can get your hands on. Most of it is probably useless but eventually you will be able to tell the difference.

Never for one minute believe that someone KNOWS what a stock is going to do. All you can do with these is learn price action, learn good execution (entry/exit) and keep your losses small.

If I only had 500 to trade with this is what I would do. I would stalk the live news feed on Thinkorswim like a cheetah....biding my time and watching for a breaking story, announcement, FDA approval, contract awarded something that makes a stock price (in the .50 to 5$ range) start to move and I would jump in if I could catch it before it's overextended and then back out as soon as it started to look weak. You will be able to do this 3 times per week without being flagged as pattern day trader....but it's enough because there aren't that many of these to really jump on. In this way I would look to build my account and skill up enough to take more speculative plays where you might be able to hold longer or risk more in losses.

But I would...and still do...do a lot of simulator trading to build the skills. Just like pro ball players or golfers or whatever practice 10x's or 50x's more than they actually play.

Oh ye...with penny stocks...you're not investing....you're trading...haha.

PS...always use limit orders and I've never used a stop/loss....ever. Manage risk through order entry and use mental stops that are executed manually. Keep the questions coming, happy to help and you tube and google are full of useful and useless info...learning which is which will help a lot.
Click to expand...
Wow! someone who actually makes sense and keeps it real. Thank you. I will use the TDA similator while reading and get as much knowledge as possible. Can i contact you via email? Keep you a breast of my process?