Penny Stock Zen is the smartest of all trading systems for penny stocks. So, what is so smart about it?
Nothing!
…and that is exactly the Zen way of trading.
Zen trading penny stocks means buy low and sell high. That sounds reasonable but also ridiculous. Let me explain.
Buy low means buy when prices have fallen far below a historic high and not when you think that they are below the intrinsic value of a company. Instead of gauging the potential by reasoning about fundamentals, we are going to just do it statistically. Some stocks recover for whatever reason and some not.
This statistical method may seem primitive, but it is actually more robust than deluding yourself that you know better about a company’s value than the market. Let’s face reality here as this is especially in the world of small cap stocks impossible.
Even for large stocks the small private investor has the least information. It is obvious, but we tend to repress this uncomfortable truth. The big players have the advantages and so even our most detailed and thorough analysis is bound to be inferior. But we are humans and so we feel and act differently…
We also need a buy signal. A stock price that went down to the ashes is not enough. Most fallen angels keep on wandering around as zombies in the hades of the stock market.
The Zen trader’s buy signal is a new sign of life. A stock must show rising prices with exploding volume. How exactly the price is going up is secondary. Erratic price movement is normal in the penny stock world, and that’s why TA isn’t working satisfactorily. Exploding volume is meant relatively. In absolute terms it is still small compared with large cap stocks.
Sell high means sell relatively high by using a special sort of stop. When the action in a stock fades, it is time to sell. Volume is drying out and prices are heading down or nowhere. This is the Zen trader’s simple and robust sell signal for penny stocks. It is also psychologically sound. You will neither cling to a loser, nor to a winner that threatens to turn into a loser. When the action is over, the time has come to rake in the gains or to preserve the capital. Investing is for dreamers.
The Zen trading system aims to be simple. If there is new price and volume action, something is happening. That’s for sure. Whether more of the same is to come or not is statistics, and that’s trading anyway. Even with the most elaborate analysis of a chart or company situation trading remains statistical…
In other words, it is hard to shift the odds away from fifty fifty, and it is impossible to arrive at eighty to twenty or something like that. The whole trading and investing world, including yourself, wants to make you believe that changing the odds is easy. But it is not. We are accepting this very fact upfront!
To put it all together,
- we don’t want to outsmart the market with an uber-thorough fundamental analysis, as we don’t have all information that others have.
- We also don’t want to judge a chart situation with uber-precise technical analysis, as this doesn’t work well in a market with sporadic buy thrusts.
- We just want to use a system where the power of potential is on our side.
One thing is still missing. The most important ingredient is a source of trading ideas that searches exactly for the above pattern of reignited interest combined with a relative low price while filtering pump and dump scams. The latter happens all too often and while it is possible to still make money on these with the “sell on fading action” system, it is better to concentrate on real revitalizations.
And here is the missing link. We are utilizing what is already there in the microcosm of trading. It is hard to do it better than this expert with years of experience. Evenly important is his honesty. You can test drive his free stock picks with our system and then you get:
Penny stock picks for the relaxed Zen trader.
With the system above the maximal loss of hundred percent of one stock is overcompensated with a gain of possibly many thousand percent. Apply a sensible money management to the Penny Stock Zen trading system, use the right stock picks, and voila – you have the whole secret!
Good luck,
TT
