Penny Stock Gambling
Know When to Hold Them Know When to Fold Them
Professional Penny Stock Gambling is dependent on knowing when to Buy and when to Sell Penny Stocks so that:
• trading risks may be limited or avoided
• optimal consistent profits may be realized
Extraordinary Investing can be viewed as successful Penny Stock Gambling for learning purposes. After all, successful investing involves the following basic gambling rule:
"You've Got to Know when to hold them, and know when to fold them!"
Knowing when to buy stocks, at what price, how long to hold the shares, and when to sell requires the following steps:
1. Solid research and study
2. Knowing what to study
3. How to use the information once gathered.
Let's see how professional penny stock gambling works. . .
Only buy and hold a stock that all research confirms is a solid sleeper stock trading at near historic lows with
• exciting novel high demand products in development,
• solid experienced management,
• powerful alliances,
• potential investors
• favorable financing options,
• early studies show its products are safe and more effective than the competition,
• product patents are good for at least 10 years
• debt is manageable
• relatively undiscovered by stock traders
• marketeer involvement is low or non-existent
• little history of reverse stock splits
among other things which were listed and will continue to be discussed.
Most investors rarely take the initiative to study penny stocks like this site shows you, not until media begins promoting them. This gives you the investor advantage over all these traders.
The second part of the all important penny stock gambling rule is: Know When to Fold Them. . .
Easy way to determine a Top and safely sell your shares
A top or climax is recognized when a rocket trend up is leveling off and unable to exceed the highest high of the climax. The price will start to drop slightly and waver up and down. That is usually your best indication to fold or sell when holding a winning hand as a professional penny stock gambler.
Because the most likely scenario is that the stock will begin the trend down and then plunge after a climax, as just explained, is reached.
Your emotions say, STAY IN! this baby is going through the roof!!! But don't do it! The proper response in penny stock gambling is to SELL instead, unless the developmental or exploration product is actually ready for production or the company is developing products that are totally novel or unique that reliable late stage studies shows work better and safer than anything in the world to solve major problems for huge populations.
Confirm that the fundamental and technical conditions are ripe to sell by recognizing these appropriate technical patterns that show a reversal in trend is imminent coupled with experience in gauging such trends you have encountered in past trades based on similar data.
While it may seem the price of shares should increase thousands of percent based on the groundbreaking news, in actuality, the shares will 97% of the time only spike 25% to 100% on average. But 200% to 500% moves are really not that uncommon especially on the shares trading for just pennies or fractions of a cent. In good economic times, such enormous explosive trends are far more common.
How to excel in penny stock gambling and avoid trading risks
You will learn how to realistically gauge how high a stock will trade by fundamental data coupled with experience trading in the sector of stocks that interests you within the economic conditions that exist at the time. All the investment strategies to make successful trades consistently are taught on this site.
Technical signals are especially helpful to gauge the potential top of an explosive move and can provide good signals on the best times to sell in any given situation. This will continue to be discussed and with more detail.
Avoid the Risks - an important Penny Stock Gambling goal!
If you decide to hold onto the shares thinking they will go much higher, you are no longer penny stock gambling professionally. You are instead trading like a greedy impatient investment pig taking uncalculated risks. You are opening yourself up to trading risks that will take your money.
Don't say I didn't tell you so when the price suddenly drops off a cliff to near previous lows before you even have a chance to create a sell order.
Or, more likely, you will actually watch the stock tank and do nothing about it. . .
Why would you do that?
Because you still think the trend will reverse and start shooting up again, as irrational as that may sound.
The investment pig only sees his stock trending higher...
Any dips are seen as breathers. As the share prices continue to plunge, the investment pig goes into shell shock and continues to watch his investment shrink lower and lower. Don't laugh, this is all too common.
My personal example of poor judgment of penny stock gambling - "knowing when to hold them, and no when to fold them!"
Do not hold shares for over three months on 95% of your trades! Not following this rule was my greatest error when investing this past year.
Sure, on a couple of my trades I do sometimes miss out on hundreds of percent extra profits by selling. That hurts!!! But when I think of all the losses I historically incurred by holding too long, I firmly believe that it's better to limit your trading risks. That is just a plain solid penny stock gambling principle you can bank on.
My recent example of holding onto shares too long:
I decided to hold onto shares of a couple biotech stocks that I loved so much that I wanted to remain invested in them - even though FDA studies for those drugs were still clinical or phase 1.
I now fully realize this was a slight miscalculation considering the dismal economy. Soooo much can happen in the next 3 to 10 years even if I think I will make millions of dollars off the shares 7 years from now.
The fact is, I was tying up precious investment capital that prevented me from making many very profitable trades. I estimate that in 2009 I could have easily quadrupled my investment monies by selling shares of the two companies when my common sense told me I should have, and then picked them up later after trending down to near lowest levels, or as the economy improved or as fundamentals became excitingly positive.
What adds to my humiliation is that those two stocks I was invested in jumped over 100% but I held onto them rather than take profits because I thought these were killer stocks, and they are.
I could have sold both of them for a good profit and picked them up later. I didn't do that, and the share values leveled off and then plummeted to below the levels I bought them for within a couple weeks of each other.
I knew for a certainty that the stocks had to go up again so I continued holding them for a couple months more. Both stocks exploded again a little more than a week apart before I sold both of them for approximately 90% profit on my total investment.
Unfortunately for me, a couple weeks later both stocks had trended slightly down and then exploded again to well over 300% of their values and still going up. I forgot to take into account the economic recovery and how that created optimism for traders.
So, my timing on buying and selling shares in this example was way off because I chose to unrealistically hold onto shares too long to begin with. I became emotional, so my judgement was impaired.
In summary, I became totally out of sink with both stocks and the market I missed huge trading opportunities by holding these two stocks too long to begin with, and then missed out on the next explosive move on those two stocks by selling too early rather than remaining invested as economic conditions and marketing campaigns strengthened for those extraordinary stocks.
What have I learned from this experience that would make me better at penny stock gambling?
I have now learned to gauge the market more accurately in that, even though the products being developed by a company have unprecedented potential with no competition in site, the realistic likely hood is that:
1. A hyped up early stage developmental stock will come down sooner than I think.
2. The stock is so good that it will rocket upward in price and fall again three or more times in a year providing many trading opportunities on the same stocks.
3. Most Investors will wait to invest heavily in such a company until the economy sees improvement and until marketeer media coverage increases.
It also helps if FDA studies are very near successful completion especially in this dismal economic environment or will wait for further positive updates. . . That was not the case though with the two stocks in this example.
In an economic boom, those shares would be trading far higher - as they now appear to be doing with the improved but temporary economic outlook.
Breakaway Gaps - how they work with penny stock gambling
For those who are commodity traders, breakaway gaps up or down usually mean that the price per contract will continue to escalate or de-escalate a good percentage of the time. NOT SO IN PENNY STOCKS. Treat breakaway gaps UP as if they were exhaustion gaps and sell after the share price tops out and begins to level off or start to trade lower.
One good exception to this rule exists when the company's high demand products are ready for production with retail outlets lining up to get a hold of your new product.
Obviously you will treat these gaps as breakaway gaps but only if the debt to asset ratio is fairly healthy and good financing is available. You will want to HOLD and BUY MORE shares on dips (if possible) of such stocks and wait for the cash to flow into your account.
Investment Pigs are Greedy and will lose out to professional penny stock gambling of the Extraordinary Investor
Investment Pigs habitually being suckered into the lure of easy money from the many trading risks.
More info on gauging a top - get ready to sell!
Not as commonly will a penny stock explode higher than 300% over the short term (within hours to a few days), but more likely around 20% to 75%. So, be ready to sell as soon as you see the trend up begin to top on the charts just as explained earlier.
Obviously exceptions occur - but that is only because the fundamentals may reveal even more exciting news that creates even more buying activity.
Reading Between the Lines is another key element of penny stock gambling that has been discussed before on this site. You will definitely develop this talent as you continue using the investment strategies taught on this site to make trades.
You must learn how to read the fundamentals so you are not in the dark when seemingly negative news comes out on the stock.
Negative updates can be very positive if the fundamental assets of the company historically reveal that such negative news will be easily overcome.
Once you allow yourself to be in the dark, you are in the uncharted waters of trading risks and you are trading like an investment pig.
This concludes the study on Penny Stock Gambling.
This also concludes this topic on Trading Risks.
When you are ready. . .
Hot Stocks List. Stock lists are Revisited and detailed because of their tremendous impact for good or bad.