The Penny Stock Alerts site will try to shed some light on the theoretical side of picking stocks as a system for trend trading. We also have our own letter. It comes as a blog, free to subscribe and to read. Generally these stocks picks are geared towards the trader. This means we also highlight larger stocks or ETFs and you have to know how to trade them.
In the penny stock world, ranging from real penny stocks to small cap stocks, the trading part is less important and the stock picking part becomes more important. The higher you go up the capital ladder, the more trading skills and algos are what really counts. This culminates in stock index trading with futures. Often these strategies concentrate on one single contract.
Nothing to pick in futures trading and the same is true for Forex. There are only a few currency pairs. For the small trader Forex is dominated by robots. Sounds interesting, and the only thing that can actually be picked is the Forex trading algorithm, the robot. Unfortunately they all crash and burn your capital.
So and so many Forex traders learnt it the hard way or are still underway making their experiences with the rich man’s world, the banks. It could be so easy for many of them if they were just switching to the stock market and putting on some real bets where the odds are in their favor.
So, the life blood of stock picking flows in the small cap and penny stock arena. There are diamonds in the rough and fallen angels both offering huge potential. But this is also the world of the underground, by which I mean not only the garage companies that want to become the next Apple, but also the scammers and cheaters, the stock pumpers and dumpers.
On the other hand, with small stocks are huge gains of literally hundreds or even thousand percent possible and that sometimes in a matter of days or weeks. The small cap universe is a world of light and shadow. So, it is important to test and try the various stock picks sources. Evenly important is the right money management:
- Never use margin. It is the large possible potential that should make trades interesting.
- Always divide your capital among at least a few investments.
- Never go short. You want to make monster gains, not monster losses.
Keep these rules in mind, and you will survive the occasional backlash by a bad service or tip.