Penny Stocks Trading Guide

The term “penny stocks” usually correlates to instruments that small companies issue and trade at less than 5 dollars per share. Many of these OTC stocks are small companies in growth stages. Most traders like to further classify them by separating shares that are under a dollar from those that are over.

Companies with shares that trade for less than a dollar are popular choices with new traders. And, while there are stories of incredibly successful penny stock traders, they are very risky purchases. Most of the time, they trade for under a dollar for a reason. Usually, that reason is that the company’s financial metrics are poor. Poor metrics lead to general uncertainty when it comes to the future of the stock.

Typically, penny stocks are traded OTC (Over the Counter). That means they are not on lists of formal exchanges such as NASDAQ; instead, you can find them on OTC Bulletin Boards or trade them as Pink Sheets. In fact, if a company drops under 1 dollar while trading on NASDAQ, NASDAQ will remove it from their lists after a certain period. That means the company will have to convert to Pink Sheet or OTCBB.

With that in mind, you should still know that not every company that trades Over the Counter is a penny stock company. A lot of them are just trying to grow their business and step up to a major exchange like the NYSE. So, if you manage to identify the stocks that will do that, you are golden. Of course, it is fairly challenging to avoid those that are extremely risky.

Choosing Your Broker

There are some things you should consider before selecting a broker for penny stock trading. First of all, make sure that there are no commission gimmicks. You want a broker with flat fees that charges per trade. Anything else might cost you a lot more money in the long run. Especially if you plan on trading with a lot of money eventually.

A lot of brokers will charge you additionally per share. And that is on top of the base fee. And, remember, these are penny stocks – you will be buying shares by the thousand. Even if the brokerage with this type of fees has a maximum cost limit, they will be far more expensive. Allow us to break it down for you with two examples.

The first example: You find a broker that will charge you a flat fee per trade. Let’s say they charge 5 dollars per trade (which is on the low end, but not uncommon). You enter the position with and buy stock worth 5,000 dollars. The fee remains 5 dollars. Now, let’s see the other situation.

The second example: You find a broker that charges half a cent per share and buy 5,000 shares of a company that trades for 80 cents. That means you just bought 6,250 shares and had to pay $31.25 in fees. As you can probably see, the difference is quite noticeable, especially if you plan on making hundreds of similar trades each year.

So, to help you out, here is the list of top five brokers for those who want to trade penny stocks:

  1. E*Trade
  2. Interactive Brokers
  3. Charles Schwab
  4. Fidelity
  5. TD Ameritrade

Beware of Frauds

In most of the cases, penny stocks are that inexpensive for a good reason. That usually leads to large institutions avoiding them, which further leads to little liquidity. Due to the liquidity issue, the difference between the ask and bid prices can be very noticeable. And that can make them perfect targets for various frauds.

The most famous method of manipulating penny stocks is the “pump and dump” strategy. The person performing this scheme will first acquire a huge number of shares. They will then use various paid services to promote the stock and flood the Internet with false reports and fake news to encourage people to buy the stock. They will send out millions of emails to people around the world and have fake accounts on social media networks promoting the stock. Once the stock reaches a sufficiently high value, they will sell everything they have to make a profit. But they won’t even stop there. Since the cost was artificially inflated, you can expect that stock to plummet. So they will start shorting shares of that stock to make even more profit.

Don’t Believe In Every Myth About Penny Stocks

For some reason, a lot of people believe that you are getting more for your money when buying inexpensive shares. However, that is not true at all. In fact, these stocks can be a lot riskier than stocks that trade for tens of dollars. After all, the stronger shares will have support from larger investors. And, not to mention the listing on major exchanges such as NASDAQ.

Of course, there are ways to make a lot of money through penny stocks. That is why they are still very popular, and people trade them every day, especially since the low cost of the share can mean an incredible increase in value. It is relatively easy for a stock to double its price if it initially went for 15 cents.

The Takeaway

To summarize this article, there are five essential tips you shouldn’t forget when trading penny stocks.

  1. Penny stocks are risky
  2. Don’t get caught up in a pump and dump scheme
  3. Ignore the promotional emails regarding shares
  4. Do your homework and always research the stock yourself
  5. Stick to flat-fee commissions


Follow these tips, and you will drastically improve your chances of turning a profit at the end of the year.

Posted by Judy Romero in Stock
Successful Stock Market Timing Depends On Trend

Successful Stock Market Timing Depends On Trend

Historically, the stock market is in general in Trends

Trend investors depend on the change to generate their work tactics. Simply put a stock market that simply can’t later be timed. However the market which trends up as well as down can be.

History indicates us the monetary stock market is generally trends. You will go back hundreds of years. You’ll look at the stock markets, commodity markets, Dutch Tulips, you name, & they’re most often in trends that do not trends.

History also shows us that trends might last much longer that anybody expects.

For example, after a huge upward trend during most of 1990s, U.S. stock markets have been in a downward trend (bear market) since 2000 to early 2003. Any chart will easily show you the trends.

For the next several years, in 2007, monetary stock market was in a strong uptrend. And then we suffered an additional declining trend, but members of the Swing Timing Alert make profits, instead of obtain fifty% losses that almost all traders have suffered.

Later a bull market in the 2009, the stock market has now taken sharp decline corrective remains near its low.

Over all, financial markets are in specified trends regarding 80% of time. This was the case for many years.

Sideways Stock market Are In fact excellent news

bitcoin stock

However what are these sideways occasions? The period that test our patience & our willpower?

The good news is that sideways stock market is always either the base or the top of the fresh trend. Which means the subsequent trend is across the corner when we are lasting sideways markets. We simply own to create certain we are on the board & profiting during it occurs.

This is where buying and sell investing arrives in. We generally determine the set of regulations which may determine when a trend has started. If trend won’t leave us. Even if this remains, we stay at the trend, regardless of how long it ends! Month or maybe years. Sticking on to the trend losses, as per our predefined rules, we quit.

Cut your losses short & let your winners run. Ever listen that saying?

Think about the ability of this type of trading approach is. You not at all fail to take a trend whether up or down. A high as well as less, you’ll get Whipsaw quick as market turns into unstable & lies trends take place in the stock market to merge and define how the subsequent trend can go.

If we discover a Whipsaw, the outcome will be a slight loss or benefit since our little regulations of money management, created in the system doesn’t allow fails to develop. But that is just the Whipsaw precursor to a upper trend. In actual fact, they may be regarded an interesting instance, because we know they are only planning our subsequent big trend & benefit.

80/20 Law

Have you ever hear of the 80/20 law, as well identified as Pareto Strategy? Dr. Joseph Juran invented the Pareto Principle, later learning the work of the Wilfredo Pareto, and financial expert of the 19th century.

The Pareto principle tells that a small amount of your work (usually approximately twenty percent) might develop a overwhelming bulk of consequences (in general about eighty percent).

Expanding Pareto to trading, it follows that just about eighty% of the gains should take place from only twenty% of the trades.

Which implies they likely might be numerous tiny trades that gain minute, however just twenty% of trades you will made about all the gains.

Consider how significant that generates every buy and sell!

After a little loss it is human to feel like giving up. It’s the sentimental battle that market traders have to succeed!

Markets are driven by emotions (concern and greed). But investors usually utilize the changes resulted by these emotions, to make their profits.

If you give into these feelings, you could lose!

Now at Swing Timing Alert, we always discover the latest trend with profits is close.

Members turn into nervous. Economic reports will become overly positive or negative. The number of reasons why the stock market can’t go higher (or lower) increase.

Soon after is when the big trade takes place, and we execute our large returns for the year.

It happened in the year 2008 when everybody was bearish, but our purchase signals in that month place us with fine more than eighty% returns.

At the end of the day

We are now in center of the corrective decline that lots of forecasters were calling the start of a latest bear market. One stock market letter is seeking the Dow at the sub 1000 level.

We have not still observed facts of such long term decline and have recently entered bullish positions in our aggressive approaches. Those bullish positions begin to unwind this week as stock market are strike ferocious selling, even after buying quite similar days last week.

The jury stays out. There is as yet no concluding answer. But understanding that you may be on proper side of every trend means you will be in the subsequent rally or bull market; or out of next steep decline or bear market.

These are a lot more than comforting thoughts. They’re important to beneficial strategies in difficult times.

You can’t expect to make profits on your investment without using a tried & tested system! Here’s the Stock Market Timing system which works effectively even in a crisis situation. Subscribe to Swing Timing Alert & learn the most effective stock market timing system for trading the Stocks.

Posted by Judy Romero in Investing, Investment, Stock, Stock Market
Swing Trading Software

Swing Trading Software

Swing trading is a trading methodology using technical investigation in order to establish the predictable trading trend of a particular stock.  Profit is earned by buying the stock at the low end and then selling it at the high end of expected trend.  It is termed by others as channel trading or channeling and is best described by its famous short period of trading policies.  Swing traders seldom hold on a position longer than five days.  Most often they get employed and dismissed by a company on the same day.  Swing trading is suitable to experienced individual shareholders and day to day dealers.

Swing trading happens very fast, as prices of stocks may rise within minutes.  The time frame is very short for swing traders.  They quickly identify a trend that has a tendency to have an extensive rise in stock volume.  When the stock value reaches its peak then the swing trader quickly sells these stocks as fast as possible.  This can only happen if the overall market of stocks has no specific prejudice.  In other words, the market in general does not head in one particular direction.  If it does, then it is very hard to recognize trending stocks because most of the stock prices just follow the market drift.

Trade Software

Swing trading software is now available to help investors and day traders in determining which stocks to buy and then when to sell these stocks.  It is also known as Day trading software and is a great help in computing and predicting suitable stocks that will yield profit when bought during its decline in price and then subsequently sold during the rise in its price.  Users of this kind of software will find it easy to swing trade stock for the reason that the software will do all the necessary computation within minutes compared to manual computing that takes hours long.

Swing trading software is currently being used by experienced and newbie investors alike.  To be able to maximize the utilization of this kind of software, the user must be able to understand the different stages of stocks in a stock market.  The first stage is called flat trading.  In this particular period, the stock has recovered from a downward trend but is not yet ready to rise up yet.  During this stage, the investors find the base of the stock.  The second stage is called the upward swing.  This is the tricky stage where the price of stocks constantly fluctuates.  If the price goes up, then it goes to the third stage called resistance.  In this period, the price of the stocks reaches its peak.  After reaching the peak, the prices of the stocks will go downward again.  This is the fourth stage commonly termed as downward movement.  Once the newbie swing trader understands these stages, then he or she is ready to gain experience in swing trading.

Since the function of swing trading software is to identify the best trend of a particular stock and computer whether or not to swing trade that particular stock or not it is very similar to stock trading software.  The difference is that in stock trading software any kind of stock, whether the stock will yield profit or not, can be processed.  Swing trading software on the other hand is concerned with only fluctuating prices of stocks that have a low end trend first but will eventually pick up a high trend after a few hours or a couple of days at most.

Most swing trading software available in the market today offer real time results.  This is an important feature for the simple reason that swing trading is mainly based on a spike in the price trend of a particular stock.  The user of the software must be alerted during the time the rise in the prices happen for the software to be considered as a real-time application.  Once the software alerts the user, the latter can now make the suitable decisions based on the data and information that the software has gathered together with the latest news and events that are currently happening in the prices of the stock to be swing traded.

Also similar to swing trading software is the option trading software.  The former is used as an independent program or application from Microsoft Excel.  It has been programmed using a different programming language by its developers.  Most swing trading software boasts of its user-friendly interfaces and easy to understand instructions and step by step guides in the world of swing trading.  Option trading software, on the other hand, is a stock trading option application or program that is used with Microsoft Excel.  Most kinds of option trading software use Black-Scholes option price model in order to imitate and evaluate different stock option trading stratagems. It is primarily used by experienced and veteran swing traders as it is not as user-friendly as most swing trading software.

Investors and day traders engaged in swing trading stock buys low priced stocks that have a potential trend to have high prices in just a short span of time.  They make use of expected market buy and sell algorithms or a scientifically calculable set of trade rules that can predict the future of stocks in the market.  As of the year 2000, many banking firms invest time and money in researching these algorithms in order to further expound the theories behind it.  These investments and research led to the further development of the swing trading system.  This system is now widely used in stock markets all over the world in analyzing the rate of growth of a particular stock in a short period of time.

Today, Forex markets are one of the largest buy and sell markets available in the world and also one of the most accurate.  The different rises in international commodities like oil and natural disasters like hurricanes and earthquakes can send the Forex market into a downfall or steep climb.  Forex Swing Trading is the application of swing trading into the Forex market by taking advantage of the surges in international commodities, the different financial status of multi-million companies together with calamities and disasters that strike the heart of these companies that may give a rise or fall to their stocks.

Veteran investors and experienced traders take advantage of option trading software together with swing trading strategies and other swing trading applications in order to make huge amounts of profit.  Together with the latest news regarding stock market prices usually coupled with a good hunch, these people have matured into making instant decisions about buying and selling of stocks.  By employing a good swing trading strategy, they find out what particular type of stock to buy at a particular time and when the price this type of stock will skyrocket.  When the prices are at its peak, they will now sell these stocks in order to garner profit.

The most fundamental swing trading approach includes extensive preparation for the upcoming trading week.  Most veteran investors prepare during the weekends in order to be ready for the opening of the stock market on the first working day of the week, usually Monday.  They spend this time gathering the necessary data and information coupled with the necessary computations and predictions of the stocks that can be potentially swing traded.  Swing trading software, option trading software and forex trading software are a great help in gathering accurate computations and predictions.  You will necessarily find this kind of software in the possession and use of experienced swing traders.

Although swing trading is a famous way of making profit thru buying and selling of stocks, it is accompanied with huge risks.  There are times when the prediction using scientifically based computations will not follow these computations.  This is a big risk that swing traders undertake whenever they buy stocks.  However, by using swing trading software, option trading software and forex trading software, the risks involved are greatly reduced.  Just make it a point to buy the software with the most accurate computations and predictions in order to have more precise data or information in choosing what type of stock to trade at a particular span of time.

To find the right swing trading software, the application must have numerous features that will help the swing trader in gathering the right information and computations in order to justify their predictions.  Since a swing trader cannot be present at the stock exchange 24 hours a day, the swing trading software must offer live updates regarding the latest in stock trends.  This should compose of stocks that have a huge potential in rise coupled with an accurate prediction of the trend of the stock.  Also, the swing trading software must also have compatibility with different mobile form platforms.  Given that a swing trader cannot be in front of his or her computer everyday, whenever there are updates in the stock market, an alert in the for of a text message must be sent to the swing trader in order to for him or her to initiate the proper action.  The swing trader must also have access to the software thru his or her mobile phone in order to engage in trading the stocks even when not in front of a personal computer terminal.

Posted by Judy Romero in Investing, Stock, Stock Market, Trading