The ultimate step by step guide to day trading penny stocks

The Ult im at e St ep- by- St ep Guide t o Day Trading Penny St ocks © Jason T Brook All Right s Reserved Copyr igh t , Le ga l N ot ice a nd D iscla im e r : This publicat ion is prot ect ed under t he US Copyright Act of 1976 and all ot her applicable int ernat ional, federal, st at e and local laws, and all right s are reserved, including resale right s: you are not allowed t o give or sell t his eBook t o anyone else Please not e t hat m uch of t his publicat ion is based on personal experience Alt hough t he aut hor has m ade every reasonable at t em pt t o achieve com plet e accuracy of t he cont ent in t his eBook, t he aut hor assum es no responsibilit y for errors or om issions This eBook is for inform at ional purposes only and is provided wit hout warrant y of any kind The cont ent , inform at ion, t echniques, m et hods and dat a cont ained in t he " The Ult im at e St ep- by- St ep Guide t o Day Trading Penny St ocks" should not be int erpret ed as invest m ent advice, or as a recom m endat ion t o buy or sell securit ies Furt herm ore, by viewing t his eBook, you agree t o hold t he aut hor harm less and t o com plet ely release t he aut hor from any and all liabilit y due t o any and all loss ( m onet ary or ot herwise) , dam age ( m onet ary or ot herwise) or inj ury ( m onet ary or ot herwise) t hat you m ay incur The aut hor assum es no responsibilit y and is not held liable for t he consequences, financial losses or ot her dam ages result ing from reliance upon t he cont ent , inform at ion, t echniques, m et hods or dat a cont ained in " The Ult im at e St ep- by- St ep Guide t o Day Trading Penny St ocks" The reader assum es t he ent ire cost and risk of any invest ing and/ or st ock t rading he/ she chooses t o undert ake Day t rading penny st ocks involves high risk You should use t his inform at ion as you see fit , and at your own risk Any t radem arks, service m arks, product nam es or nam ed feat ures are assum ed t o be t he propert y of t heir respect ive owners, and are used only for reference D e dica t ion This eBook is dedicat ed t o all t hose who wish t o break free of t he financial rat race which enslaves t he vast m aj orit y of people To t he beginning of your financial freedom Ta ble of Con t e n t s Dedicat ion Table of Cont ent s I nt roduct ion Overview of Day Trading Penny St ocks Get A Bird's Eye View of The Profit Making Process Get t ing St art ed The ABSOLUTE Minim um Requirem ent s You Need What Drives Penny St ocks Up I dent ify These and Wat ch Your Profit s Sky Rocket Wat ch Out For These Traps Spot These and Save Your Capit al From Being Wast ed The Power of Trends Learn To Spot “ Trend St ocks” and Easily Double Your Money The Best Tool Mast er The Tool That Gives You THE EDGE The 10 I rrefut able Laws of Day Trading Penny St ocks Follow These and Reap Consist ent Profit s THE ALPHA LAW of Day Trading Penny St ocks I gnore This And Be Doom ed To Failure Paper Trading Your Training Wheels Program To Ensure Success 10 Put t ing I t All Toget her A Day Trader's Daily Rout ine I n t r odu ct ion Warning: Do not dive int o day t rading penny st ocks wit hout a t horough com prehension of t his eBook How it all began: For as long as I could rem em ber, m y fam ily was never financially secure Sim ply put , we were poor and I hat ed it I was det erm ined never t o live like t hat when I got older so I st art ed t o educat e m yself on how t o m ake m oney I ’ve heard of people m aking m oney by invest ing in t he st ock m arket so I buckled down and hit t he books Blue chip, Warren Buffet , CANSLI M, holding, averaging down, com pounding, t hese were t erm s t hat I soaked up like a sponge at t he public library Then, I realized som et hing t hat m ade m y st om ach sink Lit t le did I realize t hat long t erm invest ing in t he st ock m arket on average, only ret urns 10% A YEAR For exam ple, if you t edious research on choosing t he right com pany t o invest in by looking at t heir balance sheet , indust ry, com pet it ion, fundam ent als, cash flow, EBI TDA, t echnical analysis, et c, and invest $1,000 in it , you’ll get $1,100 aft er year And t hat ’s not even a guarant ee All t hat hard work for a m easly 10% a year That ’s WAY TOO SLOW for m e I needed som et hing t hat ’ll ret urn profit s fast er About t his sam e t im e, I also st art ed a j ourney of personal and financial developm ent Along t his j ourney, I read a num ber of books such as Psycho Cybernet ics and Rich Dad Poor Dad t hat involved t he power of beliefs and ways t o obt ain financial freedom I read in Rich Dad Poor Dad t hat you’ve got t o m ake m oney work FOR YOU Many people reverse t his st at em ent They work FOR MONEY To t hem THEY ARE A SLAVE TO MONEY NO NO NO M ON EY I S A SLAV E TO YOU Let m e repeat t hat because it is t he underlying t hought of all financial success M ON EY I S A SLAV E TO YOU That is a very powerful belief I t changes your whole out look on finance Kiyosaki’s m ain t hesis in Rich Dad Poor Dad was t o use your m oney t o buy asset s, m eaning invest your m oney int o vehicles t hat will give you a nice ret urn So I asked m yself, what can I buy, wit h relat ively lit t le work t hat will give m e subst ant ial profit s fast ? I t sounded like a quest ion wit hout an answer That ’s where t he personal developm ent cam e in I read in David Schwart z’s The Magic of Thinking Big t hat if you firm ly believe som et hing, t he how t o part will t ake care of it self I fir m ly be lie ve d t hat t here was a way t o use m y m oney t o buy asset s t hat will give m e subst ant ial ret urns fast I wait ed for t he how t o part t o t ake care of it self And so I wait ed And wait ed And wait ed, t ill t he answer finally cam e The answer Day t rading penny st ocks Exam ple A St ock ABCD increases from $10.00 per share t o $10.05 per share A cent increase, a 0.05% increase Exam ple B St ock BCDE increases from $0.05 t o $0.10 The sam e cent increase, BUT a 100% increase I f you invest ed $500 in st ock BCDE, you would’ve got $1,000 – t he cost of com m issions That ’s m aking your m oney work FOR YOU right t here Now I know m ost of you are saying day t rading= losing all your m oney See, t hat ’s t he power of beliefs The prevailing belief is t hat day t rading is risky, you’ll lose all your m oney Because people believe t hat , t heir eyes are shut off t o t he possibilit ies of m aking m oney by day t rading They have t unnel vision Their belief dict at ed t hat As a result of t hat belief, t hey don’t bot her t aking t he t im e t o educat e t hem selves on day t rading penny st ocks That ’s ONE BELI EF There is ANOTHER belief t hat is EQUALLY POWERFUL I N TRUTH YOU COULD MAKE A TON OF MONEY BY DAY TRADI NG PENNY STOCKS and you know what … PEOPLE DO So I sim ply t ransform ed m y belief TH ERE I S M ON EY TO BE M AD E I N D AY TRAD I N G PEN N Y STOCKS BI G M ON EY The next quest ion I asked m yself was HOW CAN I DO I T? I asked m yself consist ent ly, “ How can I ident ify WHI CH st ocks will rise in value and how can I lock in t hose profit s?” I asked m yself t hat quest ion on a daily basis for years and discovered t he very knowledge t hat leads t o profit ing from day t rading penny st ocks That is what t his book will ent ail _ The inform at ion in t his eBook refers t o a specific niche I t ’s not general inform at ion I t is specialized knowledge t hat is derived from experience and pain, som e of t he great est t eachers known t o m an I t ’s a st ep by st ep guide t hat will show you t he ent ire process of profit ing from day t rading penny st ocks from st art t o finish Ch a pt e r : Ove r vie w of D a y Tr a din g Pe n n y St ock s I know when I first heard of day t rading penny st ocks, I was t ot ally lost There was so m uch vocabulary, so m any t hings t o rem em ber, I didn’t know where t o st art I didn’t know how everyt hing fit t oget her That ’s what t his chapt er will solve This chapt er is dedicat ed t o giving you t he overall process of day t rading penny st ocks Let ’s get down som e key t erm s first Day t rading sim ply refers t o buying and selling shares of a st ock on t he sam e day Penny st ocks are st ocks t hat t rade on t he OTCBB ( Over The Count er Bullet in Board) and Pink Sheet s ( t hink of t he OTCBB and Pink Sheet s as t he Nasdaq and New York St ock Exchange of penny st ocks) Their t ypical price/ share is around $0.0001- $5.00 Due diligence ( oft en referred t o as dd) – refers t o t he research t hat is necessary before deciding t o buy a st ock I t is ext rem ely im port ant Market m akers – inst it ut ions t hat regulat e t he st ocks on t he OTCBB and Pink Sheet s Bid – t he price at which m arket m akers are willing t o buy your shares I n ot her words, t he price you can sell your shares at I t ’s t he bidding price for your shares Ask – t he price at which m arket m akers are willing t o sell you shares I n ot her words, t he price you can buy shares at I t ’s t he asking price t o buy shares Profit Percent age Gain – t he m axim um percent age level at which you want t o t ake your profit s For exam ple, if your profit percent age gain is 20% , t hen you will a lw a ys t ake profit s when t he st ock rises by 20% You won’t wait for it t o go higher You’ll sell and t ake t he 20% profit St op Loss Percent age – t he m axim um percent age level at which you will t ake a loss For exam ple, if your st op loss percent age is 15% , and a st ock you invest ed in falls by 15% , you will a lw a ys sell your shares and t ake t he 15% loss t o preserve your capit al Now t hat we got som e basic vocabulary out of t he way, let ’s find out what day t rading penny st ocks is really all about Day t rading penny st ocks is sim ply buying and selling shares of a penny st ock on t he sam e day Now, why in t he world would you want t o t hat ? Be ca u se t h a t is h ow you ca n REAP t h e M OST PROFI T in t h e SH ORTEST AM OUN T OF TI M E Here’s an exam ple Penny st ock ABC is t rading at $0.05 cent s/ share That m eans each share is wort h cent s You buy 10,000 shares of ABC That m eans you spent $500 ( 0.05 * 10,000) Penny st ock ABC rises t o $0.08 cent s/ share You sell 10,000 shares of ABC at $0.08 cent s/ share That $500 dollars you invest ed in has t urned t o $800 ( you sold 10,000 shares at t he price of 0.08 so $0.08 * 10,000= $800) $500 - > $800 I N ONE DAY! That ’s a 60% gain You WI LL NOT see 60% gains in ONE DAY wit h st ocks t rading at t he NASDAQ OR NYSE ON LY PEN N Y STOCKS displa y t h is k in d of r a pid gr ow t h Hist orically speaking, long t erm invest ing in t he st ock m arket yields an average of 10% A YEAR W it h da y t r a din g pe n n y st ock s, you ca n ge t % A D AY We’ve all seen t he exam ple of com pounding 10% a year and becom ing a m illionaire in 60 or so years What would happen if you com pounded 10% A DAY? Would it t ake as long? You don’t need a m at h degree t o figure t hat one out The result s are j aw dropping! So here is day t rading penny st ocks in a nut shell Do research ( dd) and com e up wit h a list of st ocks t hat you would consider day t rading for t hat day Gauging how t he m arket react s, pick one st ock accordingly Ent er a LI MI T ALL OR NONE buy order t hrough your online broker Buy t he shares Sell t he shares when you reach your profit percent age gain Get on wit h t he rest of your day Repeat st eps 1- daily and go on a well deserved vacat ion wit h t he m oney earned Quest ions t hat m ay arise are: How I research? What am I looking for? How can I ident ify which st ocks will go up? Which st ocks I buy? When I buy? When I sell? How m uch m oney should I use? Fear not , all of t hese quest ions will be answered t hroughout t his eBook, but first you’ve got t o get st art ed Ch a pt e r : Th e I r r e fu t a ble La w s of D a y Tr a din g Pe n n y St ock s I f t he n e w s doe sn ’t m a k e you sa y W OW , it ’s N OT a ca sh cow I f you read a press release, and you have doubt in your m ind whet her or not it ’s going t o t urn out t o be a good play, chances are it ’s not The news has t o be good enough t o m ake you say “ wow” I t can be relat ed t o a current t rend, it can say revenues increased 100% , it can say it has part nered up wit h a m aj or corporat ion, et c Press releases saying we increased revenues by 5% and cut cost s by 3% isn’t going t o cut it Re m e m be r , if t h e n e w s doe sn ’t m a k e you sa y W OW , it ’s N OT a ca sh cow YOU a n d YOU ALON E sh ould m a k e a ll you r de cisions in de pe n de n t of ot h e r pe ople What happens when you st art t o list en t o ot her people t elling you t o buy t his st ock is t hat you play int o t heir hand They have a reason for want ing you t o buy t his part icular st ock Nobody is nice enough in t his world t o say, here, invest in t his st ock and you’ll m ake m oney, all for free Rule # in econom ics, t here is no free lunch These people can be VERY convincing and hide behind t he m ask of t he I nt ernet in m essage boards, forum s, and chat room s Make all your decisions by yourself That way, you and you alone t ake full responsibilit y for your act ions YOU a n d YOU ALON E sh ould m a k e a ll you r de cisions in de pe n de n t of ot h e r pe ople H a ve a pr e - se t st op loss pe r ce n t a ge Chances are, if a st ock is t anking, t here I S a reason Don’t t ry t o rat ionalize by saying it ’s going t o go back up, because 9/ 10 t im es, it s not Trust m e I know That ’s how I learned all m y m ist akes You m ight m ake som e t oo, so set a st op loss percent age For exam ple, if I lose 10% of m y original invest m ent , I get out Tom orrow is anot her day Don’t fum e over it Swallow your pride and accept t he fact you m ade a m ist ake Nobody’s perfect I m ake losses on som e invest m ent s at t im es t oo Just m ake sure you m ake m ore gains t han losses and you’ll be all right H a ve a pr e - se t st op loss pe r ce n t a ge Bu y a n d Se ll on The Sa m e D a y Why? The m aj orit y of penny st ocks only display huge spurt s of growt h in a single day The day aft er, it doesn’t seem t o t hat well Buy and sell on t he sam e day There is anot her reason as w ell I t helps keep your cash liquid I f you buy and sell st ock on t he sam e day, it has t o “ set t le” before you can t rade t hat m oney again I f you buy and sell on t he sam e day, t hen t hat m oney can becom e available t o t rade days aft er I f you held it overnight and sold it t he next day, t hen t hat m oney becom es liquid aft er days What would’ve happened if t here was a nice j uicy PR on t he rd day? Guess what ? You m issed it I cannot t ell you how m any t im es I m issed out on a st ock t hat soared m ore t han 100% because m y funds were st ill set t ling ALWAYS have m oney t o t rade everyday I n econom ics, it ’ called an opport unit y cost Every day is an opport unit y t o m ake m oney and if you don’t have m oney t o t rade, it ’ll cost you Get in, Get out Tom orrow is anot her day Bu y a n d Se ll on t he Sa m e D a y D on ’t H e sit a t e a n d N e ve r Ch a se a St ock Up I f you’ve done your research, DO NOT HESI TATE TO BUY THE STOCK That ’s what t his book is for To give you t he confidence so you won’t hesit at e Hesit at ing m eans t hat you’ll fight yourself and event ually give in and buy only t o have discovered you bought at t he highest point of t he wave That has happened t o m e num erous t im es I f you did your research and it ’s good, don’t hesit at e Aft er it ’s bought , DON’T worry Just get your profit and split Anot her sub rule of t his is t o N EVER CH ASE A STOCK UP Som et im es, you m ay ent er a lim it order on a bid price and by t he t im e you subm it it , t he bid price m ay have gone up due t o huge dem and You change your order, account ing for t he new bid price and subm it again The bid price has gone up again I f you keep on chasing t he st ock up, you m ay have bought on t he highest point of t he wave I f you cannot cat ch t he bid price wit hin t wo t ries, don’t bot her chasing it up There will be anot her play lat er on D on ’t H e sit a t e a n d N e ve r Ch a se a St ock Up H a ve a Re a list ic Pr e Se t Pr ofit Pe r ce n t a ge Ga in I ’m only going t o t ake profit s when m y st ock goes up 100% ! Get real Your profit percent age gain and risk of losing m oney is direct ly proport ional The higher you set your profit percent age gain, t he higher your risk of losing m oney will be Set a realist ic goal I m ake m ine 10% for everyday t rades and 20% when it com es t o t rends I can afford t o t ake higher percent age gains on t rends since t he dem and is so high 10% m ay not seem a lot , but 10% daily for a m ont h can really add up I t is a nice safe percent age gain and can easily be m ade on a daily basis H a ve a Re a list ic Se t Pr ofit Pe r ce n t a ge Ga in Le a r n fr om you r m ist a k e s You will m ake t hem I ’ve m ade a lot The reason I ’m successful is t hat I ’m learning from t hem I f you m ade a m ist ake, FI ND OUT WHY The reason m ay be because you got greedy and held t oo long, or m aybe you held t oo short , or m aybe you picked t he wrong st ock, or you forgot t o one aspect of your dd You WI LL m ake m ist akes What separat es winners from losers are t hose who learn form t heir m ist akes Le a r n fr om you r m ist a k e s St u dy t h e m a r k e t e ve r yda y Aft er t he m arket closes, spend about 30 m inut es each day going over t he t op perform ing st ocks This is where MicrocapFeed is ext rem ely useful I t ’s an educat ion in it self You pull up t he t op 400 st ock, and sort by % change This will give you t he great est percent age changes t hat have occurred in t he penny st ock m arket Find t he ones t hat have had t he great est percent age gain and find out why What was t he cat alyst ? What was t he high point of t he day? Would I have bought it ? When would I have bought ? When would I have sold? et c St u dy t h e m a r k e t e ve r yda y D o N OT u se m on e y t h a t is n e e de d for bills You’ll be em ot ionally at t ached t o your m oney and m ake st upid decisions I t put s enorm ous st ress on you and pressure t hat will alt er your j udgm ent You need t o use m oney you don’t need How you get t hat m oney? There are several ways Don’t drink t hat lat t e in t he m orning Save your lose change Build a hom e gym and quit t he gym m em bership Drink wat er inst ead of soda Pack your lunch t o work There are t ons of ways t o com e up wit h cash Just m ake sure it s cash you don’t need for bills for rent , car, insurance, food, gas, wat er, et c D o N OT u se m on e y t h a t is n e e de d for bills Alw a ys st ick t o you r r u le s You should always have a list of rules t hat include your m axim um profit percent age gain, your m axim um st op loss percent age, your rules for det erm ining whet her a st ock is wort h invest ing in ( m axim ize dem and, m inim ize supply) , et c Always st ick t o your rules because t hey are t here t o prot ect your capit al ALWAYS ALW AYS STI CK TO YOUR RULES Bon u s Ru le : N e ve r bu y w he n t he r e is a h u ge spr e a d be t w e e n t h e bid a n d t h e a sk For exam ple, if t he bid is $0.05 and t he ask is $0.10, t hat would m ean in order t o buy shares, you would have t o buy at $0.10 I f you want ed t o sell t hose shares, you would sell t hem at t he bid, which is $0.05 You would lose half your m oney I n order t o break even, you would have t o wait unt il t he bid m oves up t o $0.10 You will find t hat on plays where t here is lot s of volum e, which is what you want , t he bid and t he ask will be t ight ( i.e 0.09/ 0.091) That is good You want a t ight bid and ask That will give you m ore cont rol over your m oney Here’s a sim plified list of t he 10 I rrefut able Laws of Day Trading Penny St ocks Only use “ WOW” news You alone m ake t he decisions Have a pre- set st op loss percent age and USE I T Buy and sell on t he sam e day Don’t hesit at e and never chase a st ock up Have a realist ic pre set profit percent age gain and USE I T Learn from your m ist akes St udy t he m arket everyday Don’t use m oney needed for bills 10 Always st ick t o your rules Ch a pt e r : Th e ALPH A LAW OF D AY TRAD I N G PEN N Y STOCKS This law by far is THE LAW t hat will det erm ine whet her you m ake any profit at all from day t rading penny st ocks I T is SO CRUCI AL, t hat I ’ve dedicat ed an ent ire chapt er t o it Here it is, THE ALPHA LAW OF DAY TRADI NG PENNY STOCKS: On ce you r st ock h a s r e a ch e d you r pr ofit pe r ce n t a ge ga in , SELL I T For exam ple, if you decided t o t ake 10% gains, and you buy st ock ABCD at 0.10 and it reaches 0.11 ( your 10% m ark) SELL I T SELL I T SELL I T SELL I T NO MATTER WHAT I cannot em phasize t his enough Let ’s say you invest ed $1,000 and your st ock reached it s 10% level You essent ially gained $100 in “ paper m oney” I f som eone where t o offer you a crisp $100 bill and t old you t hat in 30 seconds, he would eit her give your m ore m oney OR less m oney OR NO m oney at all, what would you do? Take t he $100 bill! Now I know t his is a drast ic exam ple but it ’s t he kind of m ent alit y you need so t hat you don’t get burned by greed The # quot e for day t rading is “ pigs get slaught ered” I have experienced t his m ult iple t im es and know m any associat es who have had t he sam e woes On ce you r st ock h a s r e a ch e d you r pr ofit pe r ce n t a ge ga in , SELL I T Why am I so adam ant about t his? What happens if it goes higher? As hum ans, we want m ore We’re greedy and when we see our st ock clim bing, we fool ourselves by saying “ YES, j ust a lit t le bit m ore, j ust a lit t le bit m ore” Guess what Soon t hat t urns int o “ Oh crap, it ’s going down, it ’s ok, it ’s j ust a shake, it ’ll go back up” Then t hat t urns int o “ Uh oh, I ’m back t o m y original invest m ent , should I sell?” That t urns int o “ I ’m such a m oron, I had a profit but I didn’t t ake it Now I ’m st uck wit h less m oney t han before! ! ” This scenario has been ALL TOO COMMONLY experienced by day t raders at t he novice level As novices, you’re st ill at t ached t o your m oney You ’ve got t o r e m e m be r t h a t t a k in g pr ofit s is n e ve r w r ong As for you skept ics who say, what if it had gone up 200% m ore t hat day? Wouldn’t you have m issed out on t hat ? The answer is NO What happens when you st art flying by t he seat of your pant s is your j udgm ent st art s t o becom e clouded Sure you could’ve held and doubled your m oney, but t hat sam e t ype of em ot ional hot headedness can kill you in t he ot her direct ion You m ade a bad invest m ent , but as it plum m et s, you rat ionalize t hinking it will go back up Guess what , it keeps going down You keep t his kind of em ot ional react ion up, at BEST you’ll break even You m ust discipline yourself t o t ake your profit s Adopt t he kaizen philosophy Lit t le by lit t le everyday adds up So what is a good profit percent age gain? I t depends on how m uch you’re willing t o risk Personally, I set m ine t o 10% The higher you go, t he m ore risk you incur I will leave t his decision in t he reader’s capable hands However, I m ust st ress t hat 10% is not bad at all The nonpenny st ock m arket on average yields 10% A YEAR Com pared t o t hat , 10% A DAY is not bad Not bad at all Like all rules, t here is an except ion Trends You can not ch up your profit percent age gain That ’s because t he TREND is SO STRONG and t he DEMAND is SO HI GH t hat you can be com fort able t aking a higher profit percent age That is t he only except ion t o t he rule Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once your your your your your your your your your your your your your your your your your your your your your your your your your st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock has has has has has has has has has has has has has has has has has has has has has has has has has reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached your your your your your your your your your your your your your your your your your your your your your your your your your profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once Once your your your your your your your your your your your your your your your your your your your your your your your your your your your your your your your your your your your your your st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock st ock has has has has has has has has has has has has has has has has has has has has has has has has has has has has has has has has has has has has has reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached reached your your your your your your your your your your your your your your your your your your your your your your your your your your your your your your your your your your your your your profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit profit percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age percent age gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, gain, SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I T I ’ve hope I m ade m y point VERY CLEAR There is a reason why it ’s THE ALPHA RULE I N DAY TRADI NG PENNY STOCKS I t ’s because you can’t m ake any profit s wit hout following it Ch a pt e r : Pa pe r Tr a din g Paper t rading – your t raining wheels t o success You MUST paper t rade But first , what is paper t rading? Paper t rading is sim ply pract icing day t rading wit h im aginary m oney You basically keep t rack of what st ocks you buy, t he reason why you bought it , how m uch you bought , at what price you bought , and at what price you sold There are m any online t ools t hat can keep t rack of t his for you I f you have a yahoo account , you can keep t rack of your paper t rading t hrough t heir online port folio The web address is ht t p: / / finance.yahoo.com I used t heir online port folio and I suggest you t he sam e Do t his for one m ont h and record you progress The profit s/ losses will aut om at ically be calculat ed All you have t o is put in t he num bers Paper t rading serves m any useful funct ions First , it gives you a feel of t he whole process There is room for error, since t he m oney you’re using is not real You st art t o develop confidence in your decision m aking abilit y Once you see you’re m aking m oney, you’ll begin t o see t he m oney you can m ake from doing t his You’ll also definit ely m ake som e m ist akes along t he way That ’s good The im port ant t hing is you learn from it You’ll also get a feel of t he t one of PRs and develop your own sense of “ WOW” PRs The only cardinal rule of paper t rading is t hat you have t o be 100% honest When you decided t o sell at a cert ain price, record t hat price I f a st ock was t anking, don’t fool yourself and put a higher price t han what you would have really sold at Conversely, don’t put t he highest price as t he price you would have sold at Put t he REAL price down I f you are not honest wit h yourself, paper t rading will be m eaningless You will realize your m ist akes when you t rade wit h real m oney and wonder why you are doing so poorly, so be 100% honest But what ’s t he process of paper t rading? How you st art ? What you need? Do not worry Everyt hing you need and have read so far will be chronologically laid out in st eps for you in t he next chapt er Ch a pt e r : Pu t t in g I t All Toge t h e r You m ust have learned a lot of new concept s I t m ust be very overwhelm ing but fear not , t his chapt er will t ie everyt hing t oget her in chronological order, leaving no st one unt urned First off, you have t o decide how m uch “ pract ice” and real m oney you are going t o use Everyday is an opport unit y t o m ake m oney You have t o m ake sure you have cash everyday t o t ake advant age of t hat Here’s t he best way t o t hat St e p : Det erm ine how m uch m oney you are going t o use invest ing in one st ock For t his exam ple, let ’s assum e $800 You will buy $800 wort h of shares every t im e you invest St e p : Mult iply t he num ber in st ep by Exam ple: $800 * = $2,400 That ’s how m uch m oney should be funded int o your online account or int o your paper t rading account That ’s all t he m oney you will need so t hat you can t rade everyday St e p : Let ’s assum e you buy $800 wort h of shares on Monday, and sell it when t he st ock rises by 10% You’ve m ade $80 ( $800 * 0.10) – com m issions Let ’s assum e com m issions = $15 So in act ualit y, you m ade $65 in pure profit Repeat st ep for Tuesday and Wednesday You’ve used up all your cash What now? For Thursday, t he m oney you spent on Monday will have “ set t led” and will be available for t rading on Thursday The m oney you used t o buy and sell on Tuesday will have “ set t led” and be available for use t he next day, Friday, et c Once you buy and sell a st ock, t here is a t hree day set t ling period before t hat cash can be used t o buy and sell again on t he sam e day That ’s t he best way t o m axim ize your m oney Follow st eps 1- in paper t rading and when you act ually st art day t rading That way, you will have cash ready everyday t o t ake advant age of every possibilit y Pa pe r Tr a din g St a ge First off, you MUST m eet ALL of t hese requirem ent s in order t o st art pract icing day t rading penny st ocks ( aka paper t rading) Have a fast and reliable com put er Have a fast I nt ernet connect ion Soft ware t o record your paper t rading result s ( finance.yahoo.com ) MicrocapFeed - Click Here For The MicrocapFeed Discount I n dept h knowledge of t his book The m arket opens at 9: 30 EST Plan t o wake up 30- 45 m inut es before and your dd 1) Launch MicrocapFeed and go over t he news and filings t hat have been released by clicking on news and filings 2) Read t he PRs and pick st ocks t hat have released “ WOW” press releases and add t hem t o your wat ch list in MicrocapFeed ( click personal workspace, creat e a new wat chlist , and ent er in t he st ock sym bol You can creat e several wat ch list s in MicrocapFeed I keep one t hat I nam ed “ Today” , which cont ains t he st ocks t hat have released “ wow” press releases I also keep anot her wat ch list nam ed “ Trend St ocks” , which cont ains all t he penny st ocks associat ed wit h t he current t rend 3) Pull up t he float and RSI level of t hose st ocks in your wat ch list for t oday and m aking sure t he supply side is relat ively m inim ized I f it is not , delet e t he st ock from t he wat ch list Do t he sam e for your t rend st ock wat ch list You can check t he float at PinkSheet s.com ( ent er in st ock sym bol, select “ Com pany I nfo” t ab) if t he st ock sym bol is in pink let t ers I f t he st ock sym bol is not in pink let t ers, you can check t he float at ot cbb.com ( ent er in st ock sym bol, see box t hat says “ Shares” under quot e t ab) You can check t he RSI level at St ockchart s.com Just ent er in t he sym bol nam e I f you cannot see t he RSI level, go down t o t he indicat or windows and select RSI 4) Check t o m ake sure no S- 8’s were recent ly filed ( wit hin m ont hs) I f t he st ock is t raded on t he pink sheet s, t he st ock nam e will be pink in color in MicrocapFeed That m eans you have t o go t o PinkSheet s.com Just ent er in t he sym bol nam e and click t he SEC filings t ab t o see if any S- 8’s have been recent ly filed I f t he st ock is not in pink let t ers, it t rades on t he OTCBB You would have t o go t o ot cbb.com , ent er in t he sym bol nam e, and click t he Filings t ab t o see if any S- 8’s have been recent ly filed 5) Check prior PRs of t hat com pany t o m ake sure t hat it ’s not overdose ( som e com panies release t he sam e or near sam e PRs every ot her day) You can t his by pulling up t he chart / quot e m ont age in MicrocapFeed There, you will see recent PR’s t hat have been subm it t ed by t hat com pany under t he news and filings sect ion 6) Narrow down your wat ch list t o t hose st ocks t hat have passed t he supply and t rap t est s found in st eps 3- Be qu ick w h e n you you r dd D on ’t h e sit a t e 7) Wat ch t he st ocks t he first m inut es aft er t he opening bell t o see if volum e and dem and is pouring in M a k e su r e t h e r e is h igh volu m e ( get t ing t o/ surpassing t he 20 day average volum e) , t hat ’s good You can sort your wat ch list by # of t rades t o see which st ock( s) you picked are get t ing t he m ost at t ent ion Then zero in on t hat st ock and wat ch it closely for t he following t wo crit eria M a k e su r e t h a t pe ople a r e bu yin g You can verify t his by seeing if people are buying at t he asking price I f t he sales show shares being bought at t he current asking price, t hat ’s a good t hing People want t he st ock Make sure t hat t he num ber of people buying is subst ant ially great er t han t he num ber of people selling I f you see a 50/ 50 rat io of buys and sells, t hat will not increase t he price The num ber of buys m ust be high com pared t o t he num ber of sells That will drive t he price up M a k e su r e t h a t t h e bid/ a sk is t ight I f t here is a large gap bet ween t he bid/ ask, be wary A t ight bid/ ask would be 0.01/ 0.011 A large gap would be 0.01/ 0.03 8) Det erm ine how m any shares you will buy and at what price Do t his by t aking t he am ount of cash you are using ( rem em ber t he $800 dollar exam ple at t he beginning of t he chapt er) and divide it by t he asking price That will give you t he num ber of shares you want t o buy Exam ple: Cash t o be used: $800 Asking price: $0.01 Shares t o be bought when ent ering in lim it order: 800/ 0.01= 80,000 I f it doesn’t com e out t o an even num ber, t ry rounding it off so t hat it ’s a nice clean num ber For exam ple, if you t he m at h and t he shares t o buy com es out t o 91,234, round it off t o 91,200 I t j ust m akes t hings m uch easier and your order m ight be processed fast er 9) When you hit your profit percent age gain lim it , SELL I T When you hit your profit percent age gain lim it , SELL I T When you hit your profit percent age gain lim it , SELL I T No, t hat ’s not a t ypo I t was writ t en t hree t im es t o st ress t he ALPHA rule one last t im e W h e n you h it you r pr ofit pe r ce n t a ge ga in lim it , SELL I T No, t hat ’s not a t ypo eit her There’s t he last warning Consider yourself warned I f you lose, it ’s because you were greedy I f t here are no good PRs when t he m arket opens, have no fear, t hey are released t hroughout t he day You st ill have hours wort h of possibilit ies t o work off of 10) Record your result s int o your paper t rading port folio Evaluat e how well you did Which st ocks t hat you picked did well? Which ones did poorly? Why? Which st ocks did well t hat you DI D NOT pick? Why? Th e Re a l D e a l ( u sin g a ct u a l m on e y) You Must Meet ALL t hese requirem ent s in addit ion t o t he previous requirem ent s m ent ioned in t he beginning of t his chapt er t o st art t he real deal 1) Sign up wit h an online broker ( Scot t rade, E- t rade, Fidelit y, et c) and fund t he account wit h cash 2) Repeat st eps 1- 9, except act ually ent er in t he buy and sell lim it orders from your online broker En t e r in g a Bu y Lim it Or de r ( Scot t r a de ) Select Buy Ent er in t he num ber of shares t o buy ( calculat ed from st ep 8) Choose t he ALL OR NONE opt ion Ent er st ock sym bol Choose Lim it Order Type Choose Today for Durat ion Ent er t he asking price used when you calculat ed how m any shares you want ed t o buy Subm it I m por t a n t n ot e : Choose t he ALL OR NONE opt ion That m eans you want t o buy all of t he shares You don’t want t o buy half of t he shares one t im e and t hen half anot her t im e I f t hat happens, you pay com m issions t wice, and you m ight end up buying t he second half at a higher price En t e r in g a Se ll Lim it Or de r ( aft er you’ve reached your profit percent age gain) Select Sell Ent er in t he num ber of shares t o sell Ent er st ock sym bol Choose t he ALL OR NONE opt ion Choose Lim it Order Type Choose Today for Durat ion Ent er t he current bid price Subm it I f t hat was a lit t le t oo m uch, here are t he st eps again in sim plified form at St e p : Make sure you fulfill all t he st art ing requirem ent s ( fast com put er, fast I nt ernet connect ion, et c.) St e p : Launch MicrocapFeed and read t hrough t he press releases and add any com panies t hat have “ WOW” PRs t o your wat ch list St e p : Check float size and RSI level for t he st ocks in your wat ch list St e p : Check for recent S- filings St e p : Make sure t hese PRs aren’t j ust yest erday’s PR reworded St e p : Narrow down your wat ch list wit h t he inform at ion given in st eps 3- St e p : Wat ch t he st ocks like a hawk on t he opening bell Check for volum e reaching/ exceeding t he 20 day average Make sure people are buying at t he ASKI NG price Make sure t he bid/ ask are t ight St e p : Choose a st ock based on t he above fact ors and calculat e how m any shares you will buy St e p : Ent er an ALL OR NONE buy lim it order for t he st ock you w ant t o invest in St e p : W h e n you h it you r pr ofit pe r ce n t a ge ga in lim it , SELL I T Don’t fall for t he t raps ( Chapt er 4) , follow t he 10 I rrefut able Laws of Day Trading Penny St ocks, follow THE ALPHA LAW, paper t rade for a m ont h, and t hen follow t he above 10 st eps There you have it Your ult im at e st ep- by- st ep guide t o day t rading penny st ocks To t he beginning of your financial fut ure May day t rading penny st ocks bring you one st ep closer t o your dream s as it has t o m ine - Jason T Brook ... Wast ed The Power of Trends Learn To Spot “ Trend St ocks” and Easily Double Your Money The Best Tool Mast er The Tool That Gives You THE EDGE The 10 I rrefut able Laws of Day Trading Penny St... St ocks Follow These and Reap Consist ent Profit s THE ALPHA LAW of Day Trading Penny St ocks I gnore This And Be Doom ed To Failure Paper Trading Your Training Wheels Program To Ensure Success... rading penny st ocks That ’s ONE BELI EF There is ANOTHER belief t hat is EQUALLY POWERFUL I N TRUTH YOU COULD MAKE A TON OF MONEY BY DAY TRADI NG PENNY STOCKS and you know what … PEOPLE DO So