How to trade Penny Stocks and get rich? Trading penny stocks along with forex trading can be a good strategy. Penny stocks are those stocks that have their share price less than $5. Most of these stocks are usually listed on the Pink Sheets or on the OTCBB (Over The Counter Bulletin Boards). Some of these stocks are those that have fallen out of favor with the market.
Whatever, these stocks are also know as microcaps. Suppose, APPLE stock AAPL is right now trading for $234 per share. It’s price rises to $236. So, how much percentage gain you see in this rise? 0.854%! Not much.
Now, suppose you are trading a penny stock that is selling for $0.11 per share right now. Suddenly, it share price rises to $2.11. How much gain you get with this $2 rise in the stock price? 1818%! So, when an ordinary stock moves, you won’t get a high capital appreciation. But when a microcap moves, the potential of making a whopping gain is always there. The trick lies in finding those penny stocks that are on the verge of making a massive move in the market.
Finding those stocks can require a lot of research and market analysis. This is something that only professionals can do. What you can do is subscribe to a good penny stock newsletter and follow along the recommendations. Hopefully if you have subscribed to a good penny stock newsletter, chances are you will be getting good stock picks every week. This is how you can find good penny stock newsletters!
Paper Trading The Stock Recommendations
Search online and find a few penny stock trading newsletters. Subscribe to only 1. Paper trade the recommendations for one month and see the results. Most common problem while trading microcaps is that the liquidity in the market thins out all of a sudden. So, if you are holding a position, you get stuck up and can’t get out. When you do get out, the market has moved a lot and it may not be profitable anymore to get out.
Paper trading will give you good training as well. When you get a stock recommendation, research the company. See that the company enjoys good reputation and that this might not be another pump and dump scheme. There are many pump and dump scams perpetrated by these newsletters. So, paper trading will give you a fair idea of how good that newsletter is. Paper trading will also develop your confidence when it comes to trading live. You will learn how to analyze a company before you trade it’s stock, you will also learn how to enter and how to exit. This will be a very good training for you as well because when you get a recommendation make sure that there is some solid reason behind the stock prices moving like some new product announcement that is going to rock the market or the company posting good quarterly earnings that is going to please the market. Prices in the market move based on some solid fundamentals. Nothing moves on thin air. So, when you get a stock recommendation that is not being supported by some solid fundamentals behind it, get skeptical.
Pump And Dump Schemes
Pump and dump schemes are common in penny stocks. The problem is simple. Pink Sheets and OTCBBs are not as much regulated as the regular stock exchanges. The listing requirements are not as stringent on the Pink Sheets and OTCBBs as they are on let’s say NYSE or for that matter NASDAQ. Always keep these facts at the back of your mind when trading with penny stocks. A good practice is to research the company and see if it is well known and not some dubious company listed on the Pink Sheets before you trade it’s stocks. Paper trading will give you good practice how to do that.
Here are a few pennystock newsletters that you can try RISK FREE for 60 days:
The Penny Stock Egghead
Penny Stock Egghead Nathan Gold claims that he can change your $1,000 into a something like $5.7 million and help you retire rich. He will send you only one penny stock trade per week. If that stock recommendation gives you a gain like 500% or 1000%, you are sure on your way to a quick retirement. As said before, you can subscribe to this newsletter and paper trade the recommendations RISK FREE for 60 days. There is one time payment of $99 and you get the recommendations for life.If you find the recommendations good, continue the subscription but if you don’t simply get a refund.
The Stock Prophet
James Connelly calls himself The Stock Prophet. Take a look at his Penny Stock Trading System that he used to turn $1,000 into $1 million in just a month with only 38 trades averaging around 20% ROI per trade. James Connelly says that he is a drop out from MIT. He is a maths genius who stumbled upon a secret formula that let’s him know about those penny stocks that are on the verge of making a massive move in the market. Once again, you can subscribe to his newsletter and paper trade his stock picks for the period of two months. At the end of two months, figure out how much net return you made over that period. If you made a good return, continue the subscription otherwize simply go for a refund. You can subscribe to his newsletter by paying a onetime fee of $99.
Penny Stock Promo Strategy
Doug Graham has a unique strategy that he calls the Penny Stock Promo Strategy. Doug is able to make $82K each and every month with this promo strategy. It comprises of a unique twist that you can discover for yourself by visiting the above site. Once again, no need to hurry! Don’t rush! Just paper trade the stock recommendations for a period of one or two months and you will come to know the true worth of these recommendations. If you don’t feel satisfied with the results simply go for a refund.
The Penny Stocks Formula
Chris Palmer has his own Penny Stocks Formula that he says makes for him $363K per year. Again paper trade and see how these stock recommendations work for a period of two months.
This paper trading will give you a good training as well on how to trade penny stocks. You will learn how to check the company and see if it is a real company. You will also learn how to decide when to enter and when to exit. Always remember over trading is a dangerous thing. Never try to over trade. It can ruin you, so the idea of one penny stock trade per week is a good one. Do the research properly, plan the trade and then execute it well. Good Luck!