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Author Topic: Strategies  (Read 7165 times)

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March 19, 2008, 01:44:18 AM
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stbe2007


hey guys,

This question might have been answered on this forum before, but how do you guys invest in penny stocks? do you buy and hold...and if so, how long is your average holding time? Do you day trade penny stocks? and if so, how much are you limited to trade per company per one trading day?

At what percent can you guys increase your portfolio in a given day...month...quarter....year?

Thanks.

March 19, 2008, 08:33:45 AM
Reply #1

Chris_Ben

Guest
These are very difficult questions to give absolute answers to.  I will give it my best shot though. 

The doc and Tommy identify 2 different types of penny stocks for us here:  stocks who have significantly dropped in price due to some sort of economical factor and stocks that have all indicators pointing in the direction of gains in the future.

I will start with the stocks that have dropped.  These are referred to as having a dead cat bounce take place.  This means that it has lost a significant percentage of its pps within a day or two(ish).  Quite often these stocks will rebound quickly a fairly decent percentage and allows us to make a quick buck or two.  They are highly volatile stocks and dangerous to invest in because it is possible they can become worthless.  Quite often this will happen if a company investigates bankruptcy.  the rebound in price takes place due to an overreaction of the public to the news.

The second type - the stocks identified by positive indicators using technical analysis.  I wont get into describing TA, but the doc has been doing it for years.  When the stocks charts indicate a gain is in the future sometimes it happens in a day, a week or months.  It is impossible to predict.  Fortunately for us if the indicators reverse, the doc will let us know we need to bail out.  And it is comforting to know he has money investing in these also. 

About the amount to hold - that depends on if you want to be in it long term or short term.  Obviously long term you can accumulate more stock because you dont mind selling it off slowly.  For short term buys and sales, you need to take into account the amount of volume that the stock has in a typical day.  For instance, the volume for JUNI is usually between 20M and 50M a day.  That means people buy or sell 20-50M shares a day.  If you have 2-4M shares, you can sell them off at once easily.  If you have 50M shares, it may take you a while to sell them because there just arent enough traders purchasing them. 

One other factor to keep in mind, selling penny stocks you want to be able to sell them all at once.  When you make a sale, it has a negative affect on the stock (unless that sale is offset by many purchases).  If you are forced to make many seperate sales in a row, you will drive the price down, make your last sales less valuable than your first sales.  Sometimes this can be significant.

There are no specific guidelines to follow because it is different with every stock.  What I do is watch the ticker for a stock and see how big the sales and purchases are to get an understanding of how that particular stock works and how the price is affected.   Hope that helps

March 19, 2008, 09:56:49 AM
Reply #2
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montyguitar


Chris_Ben,
You have put up some very helpful info in the last few days.  I appreciate your time you take to post.  I haven't made any money yet but I have learned a ton.  I will make money eventually.  I have to learn to take emotion out of the equation.  I get excited at the drop of a hat and that makes me vulnerable to the predators out there.  Your post yesterday about the 50+ year olds getting taken by predators hit me right between the eyes.  It was as if you were writing about me.  Thanks again for your time and keep up the great work.

March 19, 2008, 10:00:59 AM
Reply #3

Tommy86

Guest
first: Chris_Ben, thank you very much for your helpful post!

hey guys,

This question might have been answered on this forum before, but how do you guys invest in penny stocks? do you buy and hold...and if so, how long is your average holding time? Do you day trade penny stocks? and if so, how much are you limited to trade per company per one trading day?

At what percent can you guys increase your portfolio in a given day...month...quarter....year?

Thanks.

stbe2007: there is no real answer to your questions ;)

it all depends on the situation. if a stock has a great run, you can stay in it for days/weeks and make more and more money. but if you are in a stock and you see it spike hard, you´ll know with TA that it will come down again, so you sell. there is no such thing like an avg holding time cause every stock is different.

March 19, 2008, 10:04:00 AM
Reply #4

Chris_Ben

Guest
Chris_Ben,
You have put up some very helpful info in the last few days.  I appreciate your time you take to post.  I haven't made any money yet but I have learned a ton.  I will make money eventually.  I have to learn to take emotion out of the equation.  I get excited at the drop of a hat and that makes me vulnerable to the predators out there.  Your post yesterday about the 50+ year olds getting taken by predators hit me right between the eyes.  It was as if you were writing about me.  Thanks again for your time and keep up the great work.

I am fairly new with the stock market and have yet to make any significant moeny from it also.  The most important thing that I have learned so far is that playing the penny market is an aweful lot like hunting or fishing.  There is nothing you can do other than put yourself into the best possible position to catch that fish, and it may take a little bit of homework.  You need to know the depth of the water, what kind of bait, temp, etc.  Once you find the ideal spot all you can do is cast and wait.  Sometimes you wait a while, sometimes you catch fish right away.  BUTTTTT you are always keeping your eye open about what people around you are doing.  IF someone on the other side of the lake is pulling in big fish, pull anchor and haul ass over there!

March 19, 2008, 10:19:02 AM
Reply #5
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scott


Quote
how much are you limited to trade per company per one trading day?

This depends on what type of account you have. If you have +$25,000 in your account and have a margin account there is no limit that I know of. However, if you do not have that much in your account then you are subject to the PDT rule and can not trade four or more times in any 5 consecutive business day period.


March 19, 2008, 09:02:22 PM
Reply #6
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stbe2007


Thanks Chris_Ben and Tommy86!

I appreciated your input in this!

I had a couple more questions(might be stupid)

What does "run" mean...when you say "its going to run"
And when you place an order with a broker, do you get the last traded price...right? and when you sell it, its usually lower than the last traded price.

Thanks!

March 20, 2008, 07:51:05 AM
Reply #7

Chris_Ben

Guest
A run means we expect the price to increase throughout a period of time.  When placing orders you will notice that there is a 'bid' and and an 'ask' price.  There are two different strategies when placing orders.  If the stock appears to be on a run and has momentum, the ask price is generally higher than the stock price.  In order to maintain momentum people have to continue to buy the stock at the ask price (generally paying a premium for the stock).  If the stock is trading at .80 and the ask is .81 and you put in an order for .81, the stock price will jump to .81 when you purchase.  Then you are hoping the next person buys it at .82 to keep the stock going up and so on.  Its important to do that when the stock is moving quickly.  If the price is at .80 and you put an order in at .79 that gets filled, that will drop the stock price and generally kill a run.  If you see a stock is going down in price, you may want to put in a bid that is lower than the asking price because it will not hurt the momentum of the stock.  Again it is all relative to the activity of the certain stock.

March 20, 2008, 01:11:33 PM
Reply #8
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Dr PennyStock

Administrator
Chris_Ben

First of all I need to thank you for taking the time to respond to stbe2007, second,  I need to say this, I am very surprised with your capacity to understand the market with just a few weeks or months of experience, the way you speak, looks like you have years of experience of the market, congrats, I admire you.

What I most admire in a human bean is the intelligence, women or men, for me an intelligent person has great value, you have great value, no doubt.

A special thank you for make part of this community.
Dr PennyStock

March 20, 2008, 06:14:02 PM
Reply #9

Chris_Ben

Guest
Thank you for the compliments.  I look at this 2 different ways - 1) you were nice enough to answer all of my questions when the forum was more like a living room than an auditorium and 2) the more I can help you out with things that I understand, the more you can locate stocks for me to invest  in profit from  ;D.

Please continue to look over my posts and make sure that I don't mislead anybody and if I do feel free to delete that portion of the post and add a post of your own.

March 20, 2008, 06:42:14 PM
Reply #10
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Greg


C/B

Son the work day is over, time to tip some umbrellas over... Kind of sounds like you've been doing that...

Good write ups...

Oh well, time for me to boil some shrimp....

I know not what I do.  So, I just do it....

March 20, 2008, 10:26:29 PM
Reply #11
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montyguitar


I think that we have the makings of a very good team here.  I have really enjoyed the input of Chris_Ben, Mkmny, Greg and others.  I started about three weeks ago and you were all speaking a foreign language.  Slowly but surely your "lingo" is starting to make sense to me.  I may ask dumb questions from time to time but they  are only an attempt to learn.  Once I learn my goal will be to share with others.  A special thanks to Doc for assembling an incredible site and team.  Also to Tommy.  I am impressed with your knowledge as well.  Good luck to all and I hope you all have a great Easter Weekend.  For the first time in my life I am upset about Good Friday.....the markets are closed and now I'll have to find something else to do for the whole weekend.  Can't wait until Monday. Take care everyone.


March 20, 2008, 10:31:01 PM
Reply #12

Tommy86

Guest
I think that we have the makings of a very good team here.  I have really enjoyed the input of Chris_Ben, Mkmny, Greg and others.  I started about three weeks ago and you were all speaking a foreign language.  Slowly but surely your "lingo" is starting to make sense to me.  I may ask dumb questions from time to time but they  are only an attempt to learn.  Once I learn my goal will be to share with others.  A special thanks to Doc for assembling an incredible site and team.  Also to Tommy.  I am impressed with your knowledge as well.  Good luck to all and I hope you all have a great Easter Weekend.  For the first time in my life I am upset about Good Friday.....the markets are closed and now I'll have to find something else to do for the whole weekend.  Can't wait until Monday. Take care everyone.

thank you very much and i agree, great team here!  :)

haha, now you got the same problem  ;D ;D ;D
i remember the first time i said "damn, tommorow is weekend!" i was so shocked i really said this... second part of that is "yeah, finally monday!"  ;D

March 21, 2008, 09:50:15 AM
Reply #13
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montyguitar


Just for the record....I do have some talents.  My expertise lies in Blues music and cooking great BBQ.  If I can ever help anyone with either of those just let me know.  The bbq pit will be fired up all weekend.

March 22, 2008, 02:36:22 AM
Reply #14
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stbe2007


Thank you everybody...espcially Chris_Ben and Tommy86 for dropping knowledge on me. Once Im up to par, I will be sure to help with others who are new to the forum!