Posted on 01/12/2014 2:03:05 PM PST by righttackle44
Folks, I am a poor boy who would like to be helped and educated by someone who knows what they're doing--what they're talking about.
I have been reading some, but there are a lot of basic things I don't yet understand. How much money would I need to start the whole shebang? Can you use online stock sites to purchase shares, or do you have to go through a broker? You get the picture. My friend said that me thinking about penny stock trading is like trusting Lou Costello or Jerry Lewis to assemble an H-bomb.
I'm looking for advice, but I'm also looking for advice about books, trustworthy websites, trustworthy teachers--like Jerry Lewis would need if he were to receive a pile of H-bomb components on his front steps--keeping in mind that I am a poor boy. I don't money for the study kits our courses or Miami Beach seminars. I know most of you understand this.
In advance, I would like to thank you for your help and assistance. You guys are the only ones I would think about asking for help about this.
Here’s an ideal investment strategy said (I’ve heard from reliable source) to work wonders: Nigerian penny stock shares.
There are ways of making money in the stock market but it takes STUDY and a willingness to learn from your mistakes! Don't put down money you need to live on, you WILL LOSE IT! Look for cheap stocks that are widely traded, they do exist! Many stocks trade cyclically, buy them at a low point, have a stop-loss set, know where you will take a profit and repeat. Start small, train yourself and let it build. RIDE OUT THE BAD TIMES, they will happen but if you bury your money you will forget where it is or someone else will dig it up!
Good luck!
I trade some penny stocks on my E*Trade account, online, with no issues.
I use a lot of stop loss and limit orders, too. They handle them quite well, IMO.
As far as starting capital? Whatever you are willing to lose.
If your trades cost $10, you need to capitalize high enough to take positions that will let you cover both ends of the transaction, plus your acceptable margin of gain or loss.
Keep in mind that most penny stock movements are a result of some sort of pump and dump activity, a press release to penny stock newsletters and trading groups, etc. Very few have been actually attributable to sound business practices, or business development activities, in my experience. Finding those good ones is as much art as science.
There are hundreds of penny stock and microcap newsletters out there, and every one of them is a success (if you believe their hype). Pick a few and follow them for a couple of weeks, using spreadsheets to track their recommendations, and your trading rules (it’s easier to lose money on a spreadsheet than on your trading account. You’ll find a few that offer some manner of good advice for your situation.
And, above all....CAVEAT EMPTOR!
Penny stocks mostly are pump and dump junk. Be careful: there be monsters here.
Go see The Wolf of Wall Street - frequently hard to stomach but informative about that business.
I’ve been in it a bit more than ten years. Still not making much money but losing a lot less than I used to.
Half the battle is gaining Knowledge, the other half is learning how to control the emotions. Im going to keep at it until I either kick the bucket or make money one or the other.
Was a licensed broker for Blindum and Robbum back in the ‘80s. You CAN make money, but you have be on the broker’s good side. When a company was taken public, it came out of the shut at 9am. The IPO was say, 5 cents. If your broker liked you, he would “allot” you so many shares at that price. BUT around 1PM, typically he would call back and tell you to sell at about 8 or 9 cents. If you were smart, you did what he told you. If you thought you were going to be clever and hang in and MAKE MILLIONS when it went to dollar, you would be called an idiot.
Typically the broker had other “bag holders” to whom he would sell out the stock.
In about 3 or 4 days the stock would slide back to either the IPO price or even lower.
By the end of the month, your certificates were fancy looking toilet paper.
Blinder Robinson and that guy Brennen or Brenner or something from First Jersey were the kings of that junk.
But certain people DID make money. And certain people ended up in the joint too.
1) Always do your own research.
2) Never buy or sell on a tip, no matter who it comes from.(See rule 1)
3) Buy only well run, financially sound companies you would be proud to own. 4) Buy at a discount from fair market value.
In my experience, if you follow those four rules, you will not buy penny stocks.
I know a lot about penny stocks. The key is to get in on the pump and get out by the dump.
Twitter has brought a whole new outlet for the game.
Weed stocks are in play but Timothy Sykes and his merry band of followers shorted them...and if you look last week..you can see when they dumped
If you want to learn the game watch Tweets on Pot stocks and watch the ebb and flow of price
Pay heed to this clip from Leo’s new movie.
http://www.youtube.com/watch?v=oEJza1-4zRk
If you get it..you will begin to learn how to trade the scams
Can I give you some great advice? If you don’t know what you are doing, don’t invest in them. It’s not a good idea. Or: put aside a small amount you can afford to lose and play with that. And draw the line at that.
You are in for a wild ride with the pennies. They are typically listed OTC (over-the-counter) and not traded on exchanges (such as NYSE, for example). SEC pattern day trading rules will still apply through your broker so you will need to have a minimum of $20K in your brokerage account (online brokers are fine) if you are planning on day trading or short-term swing trading and making more than 4 round trip trades within 5 business days.
The problem with pennies is that they are very thinly traded. In markets there must be a buyer for every seller and vice versa. You may not find a buyer for your shares at the price you wish to sell which means you could be stuck with a zillion shares that no one wants to buy. Market makers facilitate the process with exchange traded equities but the bid/ask spread on pennies could be more than the unrealized gain your account is showing. It is definitely an ever-present danger when trading illiquid securities.
If you are a trading novice you may wish to try your hand swing trading exchange-traded equities for a while through any of the discount online brokers (TD Ameritrade, for example) just to get your feet wet while you learn what you are doing. They are at least stable relative to pennies. I would say $50K is the minimum to actually day trade exchange-traded funds. Even that is very much on the low side.
If you have very limited capital you can trade the spot forex market to again, get a feel for how markets work (though trading currency pairs is a very different animal from stocks). Minimum deposits are usually 50 bucks with fx brokers. You will need $500 to actually make real trades and keep your stops realistic and still have enough to meet margin requirements.
Pennies are probably the riskiest of all securities to trade (followed by fx). They are simply unpredictable IMHO.
DON’T.
Winning the Loser's Game by Charles Ellis
and
Stocks for the Long Run by Jeremy J. Siegel
Do not buy penny stocks unless you are prepared to lose every penny of your investment! Your chances of ever making a dime are slim and you’ll most likely lose all of your investment.
To add to what you said, the market makers themselves are often on the make so the market, in addition to being illiquid, is rigged with the express purpose of fleecing hapless retail investors to enrich the insiders.
STAY FAR, FAR AWAY.
The penny stock market is made up of two kinds of players - crooks and suckers. Which are you?
I should point out that, when people say stay away from penny stocks, they are telling you to keep the money you can’t afford to lose out, not the money you can afford to play with and you should have some money that you can have fun with and not worry about whether you lose it or not. It’s all part of the fun of investing to be able to hit that one stock where you made ten or twenty times what you invested in it and when you have lost everything you put into it.
I played for a while. You better learn to read charts! You also better learn NOT to believe anything you read on the chat boards. People will brag about the potential of a stock and get chumps to buy in raising the price as interest gains. These same pumpers then dump into the rise and set up the fall...They (pumpers) are in all the penny stocks.
Your better off keeping your money in your sock drawer....
Two things I can tell you. First, whatever you put in, be sure it is an amount you can afford to totally lose. Second, don’t buy from brokers who are market makers for a particular stock. Their job is basically to push as many shares (or warrants or options) as they can for a particular issue on the public to bring in money for that company. Do you own research and buy from a broker who has no interest in the stock. If you get an unsolicited call from a dealer offering a hot deal in an “up and coming” company, don’t buy it, you’ll lose 99% of the time.
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