pennystocks101: class is in session

Stock Promoters

2010-01-19T21:53:00.000-08:00

Some stock promoters do an excellent job of pumping a stock, just research their track record and assess their quality of work. Read the disclaimer at the end of their email message to figure out how much they were compensated for pumping the stock. The law requires them to disclose how much they were compensated! Below are list of newsletters you should subscribe to if you want to stay on top of the stocks that are being pumped. The strategy in playing pump and dump's will be discussed in another post. Please be aware that playing pump and dump's are dangerous and should only play with money that you are willing to lose.

www.pennypic.com
www.pennystockchaser.com
www.HotOtc.com
www.awesomepennystocks.com
www.bestdamnpennystocks.com
www.lebed.biz
www.titanstocks.com
www.killerpennystocks.com
www.monsterstox.com

This blog has a terms of use and you can find all my disclaimers and disclosures there as well; my full terms of use is incorporated by reference into this post.

Cheapest Commission In Canada

2010-01-18T09:18:00.000-08:00

I did a lot of research on trading commissions because if you trade frequently, at the end of the year it can all add up! Trading is a business and commission are like your expenses. Number#1 rule is: Maximize profit and minimize expenses. Of course at the same time, you want to assess the quality of the broker as well. You can have the cheapest commission but if the platform goes down multiple times or execution is terrible you can possibly incur losses or miss opportunities. Please read the review of each broker to assess the quality. This post will only highlight the cheapest commission of each broker.

It all depends, how many trades you will execute in a month, quarter, year? how many share lots typically you buy? Will you be trading pennystocks(unlimited shares is attractive) , mid-cap(fast execution is important) etc.?

Frequent/active trader:

Consider CIBC Edge Advantage as they are the cheapest when it comes to flat rate(unlimited shares) and includes all ECN fee's.

$395 for 50 trades / year (unlimited shares). Works out to be $7.95/trade for the first 50 trades, and $6.95/trade after

Also their pricing structure allows you to purchase the same stock as MANY times as you like during the day, and you’ll only be charged for 1 trade. This is a dream come true for scalpers that will go in and out numerous times on the same stock to exploit the range, i.e. AAPL, SPY . I don't know any broker that does this.

Alternatively, you can go with TD Waterhouse under the active trader pricing structure.

150+ Trades/Quarter $6.99 flat (unlimited shares)
30-149 Trades/Quarter $9.99 flat (unlimited shares)

Keep in mind, you inure data fees if you do less than 150+ quarter.

Alternatively you can go with Interactive Brokers with their bundled commission ( includes ECN fee's) if you trade less than 1k shares buy/sell(they charge per share) it's cheap. 100 shares=$1 , 1000 shares=$5, 5000 shares=$25. As you can see, when you increase share lot, you start to pay more commission. IB also has one of the fastest executions out of any broker.

Infrequent trader:

Questrade is the cheapest and you under no obligation to do certain number of trades per quarter, year etc. No inactivity fee. they have pricing structure where 1cent=share however min. is $4.95 and max is 9.95 you will pay and unlimited shares. Keep in mind as well, if you trade US securities in a registered account ( i.e. RRSP, TFSA) you will pay additional 5$ max per day regardless how many times you trade.

ThinkOrSwim Canada can be the next best thing if you get them to lower the pricing to $7.99 flat (upto 5k shares) You just have to ask kindly Also you are under no obligation to do certain number of trades per quarter, year etc. No inactivity fee.

PSP Picks & Profits

2009-12-12T15:34:00.000-08:00

I have talked about PennyStock Prophet and his picks in my recap often. I finally was able to compile all the stock picks along with potential profit someone could have made if staked 5k shares, bought at open and sold near highs) Considering his picks are available free on twitter I say profit while the crazy ride lasts.

For those that are interested, I created the spreadsheet in Google Docs and used Google Finance function to automatically query open, high of the day prices. It took me less than 10 mins to do. Neat huh?

Trades Recap for 11/17/2009

2009-11-17T13:33:00.000-08:00

Excellent day today due to NASDAQ:NLST, it went up 700% in 4 days and stocks that go up supernova like this usually will be followed by days where it trends down. Today happened to be a nice downtrend and I shorted when it went went green to red ( dropped below the opening price of $5.65) The green to red or red to green are important psychological pivot points. I'm holding the current short of 5000 shares overnight and possibly selling into the market open tomorrow.

Trades Recap for 11/13/2009

2009-11-13T15:31:00.000-08:00

Well looks like pennystock prophet's run has possibly ended or is ineffective for the time being. The last few picks haven't been running up that much or at all to warrant any attention. I'll continue to monitor his picks which are free by the way, no need to sign up his 97$ subscritpion. He provides his picks on twitter here as soon as the market opens at 9:30AM. I recommend twitter streaming service like stocktwits

On with the recap, NASDAQ:NLST was uptrending since monday. Take a look at the 5 day chart. Volume really started to pour in since thursday. I scalped 10, 20 cent blocks thursday and friday.

OTCBB:IMGG had a huge sell off mid-afternoon losing 0.50 cents looking at the 1 day chart below. This is a great opportunity for bounce plays and I caught the bottom as soon as I got the green candle. It went up in choppy fashion and I wanted to sell into strength as you should always do with OTCBB stocks. Scalped easy 15 cents.

Trades Recap for 11/03/2009

2009-11-03T16:41:00.000-08:00

Pennystock Prophet announced that his picks will be released Mon, Wed and Fri only. I have played his past 15 picks and made money on all of them. I say that is a excellent streak. He claims he finds stocks that are greatly under-valued using his 'secret formula' but in reality he has built enough subscribers that when his alert gets out, the stock shoots up when all of them buy in at a massive scale. It's called the PSP alert effect, very similar to Tim Alert effect and Cramer Alert effect. If you have enough subscribers and the stock is low float, you would be surprised how fast they shoot up. Keep in mind, I trade these alerts for quick scalps only.

Speaking of Tim Alerts, he sent out a alert today:

NYSE:COT was alerted by Tim Sykes. Nice uptrending chart. As per Tim,

Reuters has a story that they sold $215 million worth of debt up from an expected $200 million at 1:30Pm ESt today...I expect a press release later today or tomorrow...stock is 10 cents off its 52-week highs, methinks the press release will spike it over $9 and then potentially momentum traders can push this up to $10 as it'll be a perfect breakout.

BUY +5,000 COT @8.72 LMT

SELL -5,000 COT @8.89 LMT

Trades Recap for 11/02/2009

2009-11-02T13:29:00.000-08:00

AMEX:NVD was today's Pennystock Prophet's pick. You have to be really quick to pull this trade off. I have auto-send triggered with active trader on ThinkorSwim platform and makes executing trades quick. As you can see, I got out of the trade right at top when It was getting toppy.

BUY +10,000 NVD @.26 LMT
SELL -10,000 NVD @.32 LMT

NASDAQ:YRCW was halted pending news at 9.30AM. As soon it opened at 10AM the stock fell hard from 3.50 to below 2. I tried to catch the bottom for bounce play. This is always a risky trade but results can be nice. Quick 0.22 cents scalp.

BUY +5,000 NVD @1.78 LMT

SELL -5,000 NVD @2.00 LMT

Trades Recap for 10/29/2009

2009-10-29T13:55:00.000-07:00

OTC:GETA had some bad news this morning and saw a whopping drop from 0.60 to 0.17 and started basing around 0.10ish. The drop is too big and without a doubt I knew it was going to rebound. Bought at 0.12 and held for a crazy ride. Sold at 0.25 at the first red candle. After that I was done for the day :)

OTC:TNUS saw unusal heavy volume and bought at the open to see what it does. No disappointment here. Bought 0.64 and sold 0.79 when I saw volume dying down.

Trading is simple right?

2009-10-28T14:03:00.000-07:00

Trading can be simple if you make it so. People traded long before there were computers and indicators. So why do you have so many computers and indicators? Read some excellent words of wisdom below:

“Unless you experience the unpleasant symptoms of being wrong, your brain will never revise its models. Before your neurons can succeed, they must repeatedly fail. There are no shortcuts for this painstaking process.”

Pg 54 - HOW WE DECIDE

“Look, for example, at this elegant little experiment. A rat was put in a T-shaped maze with a few morsels of food placed on either the far right or left side of the enclosure. The placement of the food is randomly determined, but the dice is rigged: over the long run, the food was placed on the left side sixty per cent of the time. How did the rat respond? It quickly realized that the left side was more rewarding. As a result, it always went to the left, which resulted in a sixty percent success rate. The rat didn't strive for perfection. It didn't search for a Unified Theory of the T-shaped maze, or try to decipher the disorder. Instead, it accepted the inherent uncertainty of the reward and learned to settle for the best possible alternative.

The experiment was then repeated with Yale undergraduates. Unlike the rat, their swollen brains stubbornly searched for the elusive pattern that determined the placement of the reward. They made predictions and then tried to learn from their prediction errors. The problem was that there was nothing to predict: the randomness was real. Because the students refused to settle for a 60 percent success rate, they ended up with a 52 percent success rate. Although most of the students were convinced they were making progress towards identifying the underlying algorithm, they were actually being outsmarted by a rat.”

Pg 64 - HOW WE DECIDE

“Think about the stock market, which is a classic example of a “random walk,” since the past movement of any particular stock cannot be used to predict its future movement. The inherent randomness of the market was first proposed by the economist Eugene Fama, in the early 1960's. Fama looked at decades of stock market data in order to prove that no amount of knowledge or rational analysis could help you figure out what would happen next. All of the esoteric tools used by investors to make sense of the market were pure nonsense. Wall Street was like a slot machine.”

Pg 67 - HOW WE DECIDE

TRADING IS SIMPLE:

* Price either goes up or down.
* No one knows what will happen next.
* Keep losses small and let winners run.
* POSITION SIZE = RISK / STOP LOSS
* The reason you entered has no bearing on the outcome of your trade.
* You can control the size of your loss (skill) but you can't control the size of your win (luck).
* You need to know when to pick up your chips and cash them in.

Don't let the rat beat you.

“Since your mind is your most valuable asset and your most valuable lever, you need to be careful what you put in it. Sometimes it is even more difficult to get rid of thoughts and ideas that are already in your mind than it is to learn something new” - Pg 119 WHY WE WANT YOU TO BE RICH

F - Follow
O - One
C - Course
U - Until
S - Successful

- Pg 110 WHY WE WANT YOU TO BE RICH

If the rat is beating you, you are the reason why.

Here are some reading material:

Fooled by Randomness: The Hidden Role of Chance in the Markets and in Life by Nassim Nicholas Taleb

The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb

How We Decide by Jonah Lehrer

Trading in the Zone: Master the Market with Confidence, Discipline and a Winning Attitude by Mark Douglas

The Disciplined Trader: Developing Winning Attitudes by Mark Douglas

Why Smart People Make Big Money Mistakes And How To Correct Them: Lessons From The New Science Of Behavioral Economics by Gary Belsky & Thomas Gilovich

Trades Recap for 10/28/2009

2009-10-28T13:30:00.000-07:00

Three successful trades all executed during the open. First up,

OTC:SUNV was alerted by investorsunderground chat. Saw lot of volume and bought at 0.1475 sold 0.16 because it looked like it was topping. I always sell quickly and it has faired well so far.

AMEX:TCX was alerted by pennystock prophet(PSP). Bought at 0.53 and sold at 0.61 as soon as I saw volume was dying down and getting toppy.

OTC:LFBG was tipped off from twitter of having possible news. Bought at 0.0223 and sold 0.03 20k shares. Lots of volume came in after I bought and pushed it higher. It looks like I sold at the top on this one.

Trades Recap for 10/26/2009

2009-10-26T18:25:00.000-07:00

Two trade alerts and both were pump and dumps. First one was alerted by stockpreacher, NASDAQ:OOIL. Caught it at the open and quick scalp of 6 cents, not much but with the stockpreacher trades I'm always trading like a scared castrated choir boy as Tim says HA!

Second play was NASDAQ:LBIX which was alerted by PSP ( Penny stock prophet), caught this early at 0.62 and sold 0.73 when it started to show weakness. Looking at the chart looks like I caught the top..phew, lucky!

Trades Recap for 10/23/2009

2009-10-23T21:13:00.000-07:00

Just two trades today:

NYSE:GBE was a pre-leader long and bought few to see what it does. The action didn't happen till noon when there was news (Grubb & Ellis Company Announces $90 Million Preferred Equity Transaction) I'm holding this position over the weekend.

NASDAQ:ICOP was a penny stock prophet pick. The alert came at 9:30 and grabbed shares at 0.72 and sold mid-morning at 0.85.

Great Profits Found AfterHours

2009-10-22T18:05:00.000-07:00

Instead of shutting off your computer after markets close, stick around as there is a lot of money to be made, especially the earnings play. Great profits found in after hours, plays such as $EBAY $LTM $UTA $SPWRA $YAHO. Check out the charts below that explain great bounce plays, courtesy of Stockguy22

Nice bounce off the fib levels:

Three Stock Brokerages I use and Why

2009-10-19T17:11:00.000-07:00

I have accounts with all three stock brokerages (Interactive Brokers, ThinkorSwim and Questrade) I highly recommend all three and feel free to contact me for a referral credit. I recommend having multiple brokerage accounts because some will have shares to short while others wouldn't.

Interactive Brokers Canada:

Ridiculously crazy low trading commissions(1$/100 Shares however anything under 1 dollar they use a different pricing structure) Not recommended for trading pennystocks
Minimum to open an account is 10k but you can also open one with 5k using my workaround
Direct Access platform which means the orders get executed in fraction of a second
Platform is awesome. I use Booktrader for scalping.
If you are looking to short, more likely Interactive Brokers will have the shares to short than others
Low Margin Rates
Super low exchange rates (1 basis point = 0.0001 (0.01%) with a min. commission of $2.50USD)
Min commissions are $10USD/mo. If you don’t trade at least this amount per month, they will take the difference from your account.
EFT deposits are FREE, along with the first monthly withdrawal. Fees apply after first withdrawal(Deposits take 5 days to get approved (through EFT)
Offer only non-registered accounts, that means no RRSP, TFSA, 401k etc.
Follows the SEC Pattern day trader rule ( 25k min to required to make more than 4 day trades in 5 business days)

ThinkorSwim (TOS)

Canada:

Fair trading commisions( $0.015/share ($5 min) or$9.95 / trade (5000 shares max), however if you trade frequently you can negotiate a better deal. Currently I pay 7$ flat for unlimited shares for all exchanges(OTCBB, Pinksheets) including pre-market and after-hours trading. Highly recommend for trading pennystocks.
Platform is one of the best I have ever used
Minimum to open account $2500 USD
Cannot hold Canadian currency within a Think or Swim Account.
Only offer margin accounts not registered accounts ( i.e. RRSP, TFSA)
They do not follow the SEC Pattern day trader rule ( 25k min to required to make more than 4 day trades in 5 business days)

Questrade:

$4.95 -9.95 per trade ( add 5$ on top if you are trading US Stocks in a registered account i.e. RRSP, TFSA etc.)
Basic free platform is terrible but if you are cheap you will work around it.
Direct Access platform which means the orders get executed in fraction of a second
Minimum to open account is $1000
EFT Deposits/Transfers are FREE!
Offer margin and registered accounts ( RRSP, TFSA etc. )
You need to remember three passwords - MyQuestrade (for adding, withdrawing, exchanging funds, requesting help etc.), WebTrader (the trading platform) and Penson Financial (for accessing account history etc.)
They do not follow the SEC Pattern day trader rule ( 25k min to required to make more than 4 day trades in 5 business days)

30 FREE Trades in 30 Days with Questrade

2009-06-24T17:24:00.001-07:00

In addition, you can receive a referral credit of $50 CAD. Contact me via twitter or leave a comment for details.

THE LOW DOWN ON 30/30

Questrade is offering new clients 30 free trades in 30 days. To be eligible, you must open a new Questrade account with a minimum of CAD $1,000 by 11:59 p.m. EST July 31st, 2009, and fully fund the account by August 14th, 2009. New accounts by existing or former clients do not qualify.

How to qualify: Open a new Questrade account with CAD $1,000 by 11:59 p.m. EST July 31st, 2009. The account must be fully funded (minimum $1000) by August 14th, 2009. You are also eligible if you transfer an account from another broker. The transfer must be initiated by July 31st, 2009 to be eligible.

When your account is fully funded, it is considered an active account. The 30 free trades must be used within 30 days of account activation. Any trades after 30 days do not qualify. Qualifying clients will be charged commissions for trades and rebated the full amount within 60 days of account activation. This offer applies to equity trades only and does not apply to option orders. Minimum account funding is CAD $1000.

General: Participants must be permanent residents of Canada, and must be the age of majority in their province of residence. This contest is subject to all applicable federal, provincial, and municipal laws and regulations and is not available for residents of Quebec or Questrade employees. Foreign currency trading accounts (forex) are not eligible. Other trade fees including exchange and ECN fees may apply. Amounts quoted are in CAD. This offer is not available in conjunction with any other Questrade offer – except FREE TO TRANSFER, please see below.

THE LOW DOWN ON ZERO

Questrade will pay your transfer-out fees up to CAD $150 when you move a minimum of CAD $25,000 to Questrade from another brokerage. Payment of the transfer-out fee is capped at $150 and is limited to one account per client. Accounts transferred must remain open with Questrade for a minimum of three months in order to be eligible for the account transfer rebate.

Source

How to play PennyStocks

2009-06-24T17:16:00.001-07:00

To make money on penny stock trading you first need to throw out everything you know or think you know about stock trading and come to the realization that

Pennystock trading is penny stock gambling.

Over the years I have honed a maverick trading style based on realistic view of what this “market” is actually all about. If you can get in the proper mind set, you can read the future movement of a penny stock and know when to get in and get out.

To snap you of the world of real stocks let me give you Penny Stock rules to live by:

1.) Penny Stocks do not represent real companies. They exist for one reason, to make people money on the increase of share prices. The transfer of wealth from the dumb to the smart. (Of course, a few Penny Stocks are real companies, but finding them is next to impossible and you will be wasting time that could be better spent on fake companies.)

2.) Great news can be a powerful mover of penny stocks but other than temporarily increasing the price of the stock’s shares it means nothing.

3.) Newsletter tips are just that – tips. Study the newsletters to see who gets the best bounce from their picks but never believe what they tell you.

This is how it generally works: Newsletter or newsletters decide to promote a stock. Many times they work for the Penny Stock “company” and get free shares or buy cheap shares for their services before the promotion starts.They release their newsletters promoting the stock, the penny stock company then will release some “great” news to coincide with the newsletter pump. The stock doubles or more, the newsletter folks and insiders involved with the companies sell shares into the buying spree. After an hour, day, or week the stock returns back to its original price or lower.

4.) Any good news about a penny stock should be considered a LIE.

5.) Never fall in love with a penny stock, it’s like falling in love with your blow up doll.

Ok, now I hope you realize the whole Penny Stock game is the dirty underbelly of stock trading. The thing is, if you understand and live buy rules 1 – 5 above you can make a lot of money.

Why? Stock goes up you get in for a short while and take a small percentage profit, get out. Why would you care if the stock goes back down and those that don’t understand rules 1-5 have lost money? You have made a profit and are already in your next play. Oh, one more rule but it isn’t mine – “pigs get slaughtered” – those that hang on hoping for more profits or to recover a loss aren’t in the penny trading business very long.