Penny Stock Newsletters
Whether you are just starting out on your day trading or investing journey or are a seasoned professional, financial newsletters, trading chat rooms, investing blogs and forums can play an important role. And there are a plethora of free and premium options to choose from.
Used wisely, such medium can provide a wealth of knowledge and give you an important source of real time information when making an investment decision.
The question is, which sites should one subscribe to?
A good place to start is by doing some research by looking at review websites like Feed the Bull and Investimonials. They give lists of newsletters, chat rooms etc and have unbiased reviews from users.
Find one that has plenty of positive reviews from users. Beware that many of the reviews may be fake or biased. You also want to find a newsletter that is owned and run by a reputable, experienced trader or investor. Look at the person’s biography, history of advice and commentary and trading performance. A good place to start is by following the individual on Twitter (this is usually free), to get a feel for the type of advice or commentary they provide.
As mentioned, you have a choice between free newsletters and fee based newsletters. In this game, the old adage “you get what you pay for” is generally pretty true. Often, free newsletters are publishing information that is paid for by the company they are “recommending”. You can check a website’s disclaimer to see if this is the case. Premium newsletters generally make their money from subscriptions, and as such, have less of a conflict of interest and are perceived to be less biased.
I personally have been following a few free newsletters and have found them to be quite beneficial. These include Shiznit Stocks and Penny Stock Alerts. They are stock promoters, but their picks provide great opportunities to profit because of the liquidity and volatility they generate. Both also alert members to stocks that are not compensated for, momentum stocks, which means there is no predetermined selling and these picks can really run huge at times. I have also previously subscriber to paid newsletters, and while they are ok, the cost can be prohibitive for many.
There are also many free investing forums made up of hundreds or thousands of contributors. These sites can be valuable in providing investment ideas and relaying real time news. You want to spend time familiarizing yourself with other members to get a feel as to who is trustworthy or worth paying attention to. As is the case with many community based sites, there are often contributors or posters that ulterior motives.
Twitter feeds and lists are also a good source of real time news and opinions. Again, you can search the review websites mention above to find reputable, trustworthy investors to follow.
Finally, spend time closely observing the investors or traders you wish to follow. Pay attention to their communication style, trading or investment philosophy and approach, and if possible, their verified investment track record.
It is important to remember that any financial newsletter, chat room, or forum is just one source of information that you can use to help form your investment decision.
Daily Stocks to Watch
There are many awesome free blogs and websites that offer free daily stock watch lists. I regularly visit a number of them just to get an idea of the hottest stocks to trade or invest in, as well as which ones have the best setups that give me the best chance to profit. I have listed below a bunch of free sites I visit daily. There are also plenty of paid websites, but I find the free ones just as good, so I won’t mention these.
Investors Live – Probably one of the better traders I follow. He has a sound track record. He runs a paid subscription site but you can get a good amount of free stuff if you follow him on Twitter.
Big T – A penny stock blogger who has a pretty good daily list of stocks to watch. I don’t subscribe to his emails or follow him on Twitter, so I can’t comment on that, but his watch lists are definitely worth checking out daily.
Fast Money Alerts – These guys have some nice daily picks on their website. Mainly penny stocks, many of which are being promoted, but these offer the best chance to profit (from increased trading activity and volume) if you know what you are doing. They have also won a bucket load of awards for “stock pick of the day” at Penny Stock Rumble.
Penny Stock General – These are the same guys as Fast Money Alerts (I think) as they usually have the same daily stocks to watch. Their stock picks they email out and discuss on Twitter are generally pretty good and can make you some quick money.
Stock Hollywood – This guy has some good stuff on Twitter, and posts a bunch of stocks to watch daily on his site. Worth checking out.
The Art of Trading – Daily stocks to watch – generally larger cap stocks so I don’t often pay too much attention to them because I mainly trade penny stocks. But if you are into larger stocks, check it out.
Day Trading Tips
Day trading penny stocks (or stocks in general) can be extremely rewarding, profitable and fun, but it can also be very risky. You can minimize these risks simply by learning how to day trade effectively. Here are some of the most important attributes of a good day trading stock that will help you become a successful day trader.
High Liquidity
Penny stocks are often not very liquid, meaning that there is little buying and selling going on through out the day. When there is little liquidity, a day trader should not attempt to trade that stock. The reason is because the spread, the difference between the bid and the ask will be much wider and you won’t be able to buy it at a reasonble price, and there is the possibility of slippage. Slippage is when there is not enough supply or demand for a stock and a buyer or seller executes a trade at any price. You will also have great difficulty selling the stock where there is little or no liquidity.
So, a day trader needs high liquidity. This means regular buying and selling throughout the day. The term high liquidity will mean slightly different things between different traders and different stocks, however in general it means regular turnover and the different between the bid and the ask is no more than 1-2% of the purchase price of the stock. For example, the minimum amount of liquidity you would want for a stock trading at $0.50 would be 200-300,000 shares in a day, or $100-150,000 in dollar terms.
High Volatility
Volatility can be dangerous for a beginner or inexperienced investor. It can frighten them out of positions if the get scared. However volatility is a must for day traders. A stock that moves 1% in a day just wont cut it. Stocks that have wide daily trading ranges, the difference between the high and low of the day, offer better opportunities for profit.
High Quality
For day traders, it often doesnt matter what the company does, its story, or its fundamentals. Remember, day trading is just that, holding a stock for a day, not investing. Day traders don’t care if the stock has the potential to go up 50% over the longer term. They only care about what the stock might do on any given day. However, the rule of thumb is to try and avoid junk stocks. This is because there is a risk that such a stock might act unexpectedly. For example, an insider might dump shares if the stock is getting some volume, or the company could come out with unexpected bad news causing the share price to tumble. So while day traders don’t go to the same lengths to analyze a company as an investor would, they still should be aware of what the company does and assess the risks of unexpected news.
Scalping
Scalping is one of the more popular strategies {due to its|because of its} simplicity. With scalp trading you are taking advantage of market inefficiencies with respect to the spread. The gap between the bid and ask price (i.e. the spread) can narrow and widen rapidly throughout the day creating buying and selling opportunities for quick profits.
Range Trading
Many stocks often trade in a set trading range throughout the day. With range trading your goal is to buy at the bottom of that range and sell near the top (or vice versa when shorting). If implementing this strategy, look for stocks that appear to have a fairly consistent trading range from day to day.
Momentum or Trend Trading
“the trend is your friend” is the most important maxim of a trend or momentum trader. Identifying trends through technical analysis and buying and selling according to that trend, can be very profitable. In basic terms, with trend trading, you buy a stock when it is trending up and sell as soon as it reverses that trend or conversely when shorting the stock you short sell it when trending down and cover your position at the point it starts to recover.
Real-time News Trading
Another common strategy used by traders is to buy penny stocks the moment good news is released and sell after the punch up or short the stock on negative news and buy back after the news has settled. This type of trading can be achieved through the use of a real-time news feed.
Rules of Penny Stock Investing
Penny stock investing can be a very rewarding venture, but with every reward comes risk and there are a few things you should know to avoid when starting out. First, now what you are investing in. Take the time to research the company are are thinking about putting your hard earned capital into. Read SEC filings, search the company’s website, call the CEO or investor relations department and ask questions.
There are several things you should be specifically looking for. These include strong fundamentals, quality and experienced management and a company that has a stong business model and competitive advantage. It can be difficult obtaining decent information on penny stocks, but gather all the information you can and don’t hesitate to contact company management to fill in the blanks. The time and effort you put in to conducting your own due diligence will pay big dividends in the end. If you do rely on outside analysis, ensure that you consult professionals with a solid track record.
Now there are a couple of things you should absolutely avoid. The first thing is to avoid averaging down. Many inexperienced investors buy a stock and when the price falls, they add to their position. The problem occurs when the stock keeps dropping and they feel they need to keep buying more shares at a lower cost. This is extremely dangerous. I have seen many $1 stocks dd up trading at less than $0.01, and never recover. The best thing to do instead is to wait until the stock pulls back to a cheaper level before you invest. When you do invest, only do so with 1/2 of a full sized position. Wait until the stock has proven it wants to go higher and then add the other 1/2. This is averaging up, which is the opposite of what most people think they should do. OF course, if the stock goes down after your initial investment, make sure that you have a “stop loss” in place of no more than 10% of your investment. If you get stopped out for a loss, accept it and move on. It happens to the best investors.
Averaging down does bring down the average cost of our investment but more times than not you will be throwing good money after bad. For example, you buy 1000 shares at a price of $2 and a further 1000 shares as the price drops to $1. You now have 2000 shares at a total investment of $3000 which gives you an average cost of $1.50. At the current share price of $1, you are already at a loss of $1000, and the stock needs to increase 50% just to break even on your investment.
The other thing you should be aware of when investing in penny stocks is that mathematics behind it. For example, if you buy a stock and it drops by 50%, you need for the stock to increase 100% just to break even. The best way to avoid being in this position is to make sure that you are investing in a quality stock with good growth prospects. You also want to ensure that you are buying the stock when it is trending upwards, but has pulled back temporarily. If you do invest in a stock, and it happens to go the other way, then make sure you are quick to admit you were wrong, and exit the position. A rule of thumb is to ensure your losses on any one investment does not exceed 10%. I see all too often small losses turn into very large ones because investors fail to use proper risk management.
Best Growth Penny Stocks
A lot of people wonder which penny stocks they should invest in for long term growth. As there are literally thousands of small cap stocks to choose from, it is extremely tough to select which have the best long term growth prospects.
Not all penny stocks are equal. You need to figure out which are legitimate and which are scams because unfortunately this industry is weighed down with some shady and corrupt people. Some of the companies, typically traded on the Pink Sheets or Over-the-Counter Bulletin Board (OTCBB), are set up for their owners to make money by selling shares in the company for profit, rather than sell goods and services like a normal legitimate business. These businesses usually have no actual business with zero prospect of generating any revenues or profit in the future.
However, most penny stocks are legitimiate and could potentially be invested in. Fascinatingly, some companies that were once considered penny stocks include Green Mountain Coffee Roasters Inc (NASDAQ:GMCR), Netflix Inc (NASDAQ:NFLX), and even Apple (NASDAQ:NFLX) once traded below $5. There are hundreds of more examples of such stocks that once traded below $1 and are now trading above $10 and listed on major exchanges.
This brings me to the ultimate question. Which companies are legitimate and offer the best growth opportunities?
First, you need to filter stocks using multiple criteria. This could be stocks which are trading below a certain dollar amount, stocks with a market capitalization under a particular threshold, or those that have a price-earnings ratio under a particular value. All of these indicators will help identify a potentially undervalued stock.
Next, look at the industry. Search for stocks in growth industries. This changes over time, but today for instance, growth industries might include mining companies (specifically in commodities like gold, silver, molybdenum, and rare earth metals), commodities such as coffee and social media technology companies.
After you have narrowed down the industry, you need to complete sufficient research on these individual companies. Go through the company’s SEC filings and annual reports to determine their business operations, growth plans, current profitability, financial health and ability to raise finance in order to expand. Also, a solid management team is critical to a company’s success. You don’t need to be an accountant or finance expert to gain a better understanding of how these companies operate and their long term prospects, most of it is common sense.
I would also encourage you to call the company directly and speak with senior management or the CEO. Ask them about their growth plans, financial situation and anything else you need to know to have comfort in your potential investment. You will be surprised how accessible these people can be, especially in smaller companies. Larger companies will have dedicated investor relations team to answer many of the questions you may have.
After you have reduced the number of penny stocks that have a realistic potential for growth, next apply sound risk management rules to your investing.
Invest small amounts at regular intervals, rather than one large sum. Dollar cost averaging, whilst frowned upon in some circles, is often a good way for the average investor to accumulate shares in a company at a reasonable overall cost. The key is to try and average when the stock is moving higher, not when its moving lower.
If circumstances change with the company or its industry, don’t be afraid to admit the investment has stopped being considered a growth opportunity and decrease your position. Quite often, taking a loss is the best decision you possibly can make.
On the other hand, if you start seeing real progress and growth in the company, look to acquire more shares if the stock price is going up.
Penny stocks have the potential to offer tremendous growth opportunities that large cap stocks simply cannot. If you do your homework and apply sound risk management to your investing, you can really grow your portfolio with these investments.
Penny Stock Investing v Trading
I am often asked whether it is better to invest or trade in penny stocks. Quite often the two terms are used interchangebly, however they are actually two different and quite distinct concepts. It is important to know whether you are an investor or a trader, as this can often depend on things such as your personality type and time you have to commit to the markets. I outline some of the key differences between penny stock trading and penny stock investing below.
Penny Stock Trading
Trading penny stocks is by far the most popular of the two, not because it’s necessarily any more profitable longer term but because you can make a significant amount of profit in a very short period of time, while at the same time often reducing your risk. This is mainly because you are actively monitoring the trade and can buy and sell at a moment’s notice, rather than being a passive investor in which case you would not likely be monitoring your position every minute of the day. Penny stock trading methods include intra-day trading, swing trading, momentum trading, technical trading, and scalping. All these techniques have their own advantages and disadvantages but the key is that they are all executed either within the same day (i.e. day trading) or sometimes over the course of a few days. You must have strong stomach to trade penny stocks as they can move quickly in either direction. You must always be monitoring your trade, and be ready to buy or sell immediately to take profits, or cut your losses.
Penny Stock Investing
Investing in penny stocks is quite different. Generally, and investor in penny stocks will base their investment decision after analyzing the company from a fundamental perspective. Once you have searched for penny stocks with above average growth potential and narrowed your criteria, you will buy these stocks and hold them for a longer period of time. This time frame varies but generally it might be anywhere between 3 months to 3 years. It may seem risky, even absurd to some traders to hold penny stocks for that long but that is probably because they are traders, not investors. Remember, just because a stock trades on the OTCBB or pink sheets or has very low capitalization, doesn’t automatically mean it’s junk. There are ample penny stock investment opportunities with potential for significant gains over the long term, you just have to know how to find them.
How to Invest in Penny Stocks
So how do you invest in penny stocks? Firstly, due your due diligence and select quality penny stocks that have potential for growth and might be considered “cheap” at the time you are investing. Then you must use a quality online discount broker to transact. . Only buy companies that you understand. Never invest in a company (or anything for that matter) in which you do not understand what they do, at least on the most basic level.
You may also wish to subscribe to a few of the more reputable penny stock newsletters out there. Some are free, and some cost, but find a few good ones and use this to further enhance your knowledge on particular penny stocks.
Best Penny Stocks to Buy
The secret to successful penny stock investing in knowing which stocks to buy, and when to buy them. There is no 100% fail proof way to always pick the best stocks to invest in at exactly the right time. If there was, I would be selling this secret and making millions! The fact is, we can’t always be right all the time, but we can use several different screening criteria to narrow the list down to select those stocks that have the best chance of giving us profits.There are a number of indicators you can look at when searching for hot penny stocks which can significantly increase your rate of picking profitable penny stocks versus losing ones. You should never just use one indicator when picking stocks however. Rather you should look at a variety of indicators. All indicators should be considered together all together to more accurately analyze a penny stock’s potential. The following are some indicators to consider when penny stock investing:Strong Price Movement – If a stock has large percentage price gains with heavy volume over the course of a number of days, this may be an indication that the stock is starting to trend up and build momentum.ROE (Return On Equity) – ROE, often considered the most crucial ratio in stock analysis, is basically the quantity of net income returned as a percentage of shareholders equity (SE). It’s calculated by dividing the net income by shareholders equity. Penny stocks that have a positive ROE no matter how small suggests the company has value and is turning a surplus. It’s a indication of quality.
Technical Analysis Indicators – Technical Analysis is a method to predict a stock’s future performance based on past performance. One of the most important indicators is the MACD (Moving Average Convergence / Divergence) ratio. The MACD ratio measures whether a stock is trending up or down. The idea is that if a stock is trending up it has a tendency to continue that trend until the trend starts to change (which the MACD can indicate). The most popular parameters used in the MACD ratio are (12,26,9). Another popular indicator is moving averages, in particular the 50 day and 200 day moving averages. Its generally thought that if the stock is above the 50 day, it’s a positive sign and if the 50 day is above the 200 day, even more so.
Business Model – There are literally thousands of companies listed on the various stock exchanges and they are all competing for investors attention, and investing dollars. Because of this, they issue spruced up press releases and use creative language to entice investors into investing in their company. Some of these business sound very exciting but if it is a business that you cannot understand, even on the simplest of levels, stay away. One of the golden rules to investing is to know what you are investing in. It’s as simple as that. There are so many quality companies to invest in that have definite upside potential, so don’t waste your time investing in something or some business you do not understand.
Insider Buying – When company insiders are buying their own company’s stock, it’s a very positive indicator. The reason is quite simple. They believe in their company and the future growth prospects of the company. Also, these insiders are in the best position to know the financial health of the company, so who better to follow?
Stock Promotion – This is especially significant to day traders and swing traders. If a stock is being actively promoted by a stock promoter, investor relations firm, or penny stock newsletters, the buzz surrounding the stock will likely create significant volume and price appreciation for a short period. A typical promotion might last a day, a few days, or even several months. You should be careful because some times insiders or the stock promoters themselves are dumping (selling) their shares into your buying, which will halt the price appreciation of the stock. When the buying dries up, and there are only sellers left (often referred to as bag holders), the stock price can rapidly crash. However if you use other indicators (such as those mentioned above), you can most certainly profit from a stock promotion by knowing when to buy and sell, not being greedy in the process, and using strict risk management rules in the event the trade goes wrong.
These above indicators are just a few that will give you an advantage when searching for the best penny stocks to buy with the most growth potential.
Penny Stocks – The Basics
What Are Penny Stocks?
There is little doubt that penny stocks carry more risk than a typical stock trading on a larger exchange. The primary reason for this is the low value of the company makes the price easy to manipulate by wealthy individuals or small groups of people. A 100 billion dollar company cannot easily be manipulated by any individual person. A $50 million dollar company however can have 20% of the whole company traded by thousands of different individuals or small trading groups. Surges in buying and selling activity can manipulate the value of the company on the short term causing inexperienced traders and investors to change their buying and selling activities.
There are two primary penny stock scams that focus on the inexperienced traders and investors. For traders the biggest risk is the pump and dump. This is where an advertising campaign will generate buzz and interest in a penny stock, often times by getting people who aren’t even into penny stocks, buying them. Then this will trigger your trading signals which under natural conditions would make a great trade. The promoters, or insiders, often times then dump their stock quickly into the buying spree. Once the marketing campaign is over and the scammers made their money, they are out and the price collapses.
Penny Stock Trading and Investing
Generally when penny stock trading you’ll often do better with short term trading rather than holding stocks for a long period of time. This is because there is greater risk that a company will hire promoters, issue more shares causing dilution or simply have negative information released. When penny stock investing you’ll also do best if your good at getting information no one else has. Normally, this is done by talking with people who work at these small companies to see how viable the company truly is. Those people who are prepared to dig deeper than the information available online can really win huge with penny stock investing.
Traditional technical analysis (i.e analyzing stock charts) and fundamental analysis (analyzing the financials) can also help identify a potentially profitable penny stock so don’t underestimate these traditional yet extremely effective stock screening methods.
Hopefully this gives a good penny stock overview; continue to educate yourself by reading my other posts and consider subscribing to a reputable penny stock newsletter. The more knowledgeable you are with proven penny stock strategies and solid investing advice, the better your outcome.
Follow a System that Works
Now if you’re really serious about making money trading penny stocks I highly suggest you subscribe to a reputable newsletter that provides real-time trading alerts and has a proven track record. Trading penny stocks is a high risk, high reward venture so it is absolutely vital to have a seasoned professional guide you.
One such newsletter I can recommend is Shiznit Stocks. One thing I really like about this service (aside from the nice gains) is their straight honesty – Unlike other newsletter and alert services out there that are often nothing more than paid penny stock pumpers, Shiznit Stocks is run by actual traders who cut through the crap and give you their straight profitable trade alerts and stock picks.
Now, in the interests of fairness, there are other decent newsletters out there, but many of them cost $100′s, some even $1,000′s, per month (you can check out some reviews of other newsletters on my site). Shiznit Stocks is free. Typically the term “you get what you pay for” is so true, but this is definitely an exception. Their picks are generally on the money and have personally made me a nice sum of cash over the past couple of years.
Now, its not automatic. You still need to learn how to trade, and more importantly, learn risk management. This is critical for success. You can’t just jump in on any old pick expecting 1,000% returns. Yes, this can happen, but many times you need to be strategic. For example, some of these stocks skyrocket at the open and its just too quick for me buy unless I chase it higher. This is what a novice investor would do. Instead, I will wait for the stock to pull back and try to buy once I am confident it will go higher.
Sometimes this doesn’t happen, and I need to cut my losses. This is probably the hardest part about investing, is admitting you are wrong, taking a loss, and moving on to the next stock. Yes, there is and always will be a next hot stock.
Market News
- I'll Have Another wins Preakness Stakes May 19, 2012
- Spain may again revise 2011 deficit upward: AP May 18, 2012
- Alabama Trust is year's 24th U.S. bank failure May 18, 2012
- Facebook drives up market volume to 2012 high May 18, 2012
- SEC to review Nasdaq Facebook IPO trading problems May 18, 2012
- Bets oil will go higher lowest since Sept. 2010 May 18, 2012
- Nasdaq benchmarks slide into technical correction May 18, 2012
- Longest weekly down streak of 2012 for Dow, S&P May 18, 2012
- J.P. Morgan returns $168 mln to MF Global trustee May 18, 2012
- Facebook closes with fractional gain following IPO May 18, 2012
- Trading of Facebook shares exceeds 488 mln May 18, 2012
Yahoo! Finance
- ETF Insider: Stocks In Free Fall May 19, 2012
- Wall St Week Ahead: The market is oversold, but major signs say "sell" May 18, 2012
- Final Glance: Chemicals companies May 18, 2012
- How the major stock indexes fared on Friday May 18, 2012
- Messy Facebook debut marks weak day on Wall Street May 18, 2012
- Stocks fall on Europe worries; Facebook debuts May 18, 2012
- Social media stocks tumble on tepid Facebook IPO May 18, 2012
- Socks fall on Europe worries; Facebook debuts May 18, 2012
My name is Brett Jarret. I have been investing in and trading penny stocks for over 5 years. Like most in this business, I started off losing frequently, and only really started making consistently good money after about 12 months. Today, I make between $10k to $20k a month trading stocks (mainly penny stocks). This blog is a to help anyone who may have an interest in trading stocks or penny stocks and want more unbiased information, tips or tricks of the trade. Please take look around my blog. I have nothing to sell, so all of my opinions are truly independent, unbiased and free!