I don’t know if you’ve noticed, but plenty of big names in the industry have been flooding the news networks with dire predictions about the stock market becoming overheated.
Here’s Carl Icahn – a trading icon you really need to know – warning that we’re approaching a crisis similar to what the economy went through in 2008.
And here’s Jim Rogers – another billionaire investor – talking about how he feels about the “artificial ocean of liquidity” we’ve created:
Man, if you listen to all that doom and gloom, you’d probably walk away thinking that it’s time to get out of penny stock trading. And you know what? That’s what a lot of traders out there want you to do.
If you’re willing to keep an open mind, I’m going to try to convince you that – far from facing the market’s “end of days” – it’s actually a great time to get started (or to keep trading). Or, what I should say, is that now is a great time to get started with penny stocks if you know what you’re doing.
And I have to tell you, that’s a pretty big “if.”
A lot of wannabe trading teachers out there will give you different trading tips for how to handle bull versus bear markets (and by “give,” I mean charge you thousands for worthless advice). My system is different.
Part of the reason I’ve been so successful is that the trading rules I’ve spent years developing work in any market environment. They work if the market is “overheated” (as all these industry leaders want you to believe it is today), and they work when things have cooled down.
Learn them once, and you’ll never have to worry about market fluctuations again.
Know Your Patterns
It sounds crazy, but all of my money – and that’s more than $4,305,000 so far – comes from following a few patterns. That’s all there is to it. I know my patterns, I wait for them to appear, and when I see them, I make bank.
Want to know what happens when you don’t follow the patterns?
This is PBMD. You’ve probably heard of it before, because recently, people lost 20-100% of their money shorting it when they shouldn’t have.
I didn’t trade this one. In fact, I was over here sounding the alarm not to get into it, because the pattern didn’t work and the risk was too high. The volume and the number of people shorting it were all wrong – and that’s something my students picked up on, even as tons of other traders lost their shirts.
That’s how important patterns are.
I drill these patterns into the heads of my Millionaire Challenge students, but I’ll give you a little tip here. The best signal to buy a penny stock that I’ve seen this year is when a billionaire buys a penny stock.
It sounds simple, but it’s working like gangbusters for me and the students in my private chat room. And even better, you don’t have to be a slave to breaking news to catch these opportunities. When you catch these tips, wait for the news and the percent increase, then make your move.
Remember, it isn’t worth a billionaire’s time to take 20-50% profits on a penny stock. They’re only in the game if they know the upside potential is big, and you can cash in as well if you ride their coattails.
Don’t Think You Have to Trade Everyday
The thing about my patterns is that they work in any kind of market. Overheated? Cooled off? It doesn’t matter. As long as the patterns appear, there are profits to be made.
Of course, I can hear you saying, “Tim, what happens if I don’t see your patterns?” And that’s a really great question that brings me to my next point.
The reality of the market is that there are times that aren’t right for trading. Hell, I’ve gone months at a time without making a single trade, simply because the patterns that fit my rules haven’t appeared.
But you know what? I’d rather sit out a bad stretch than try to force trades that aren’t actually there. That’s a quick route to the kinds of huge losses that can take you out of the game permanently.
Instead, I want you to think of yourself as a retired trader – someone who’s only going to come out of retirement if there’s a trade that’s good enough. If you think of yourself as someone who trades every day, you’re going to get too hungry and you’re going to make bad decisions. Be someone who only risks money on the best of the best opportunities.
The way I look at it, no one play as a penny stock trader can “make” you, but one play can absolutely break you. You aren’t going to go from having $1,000 in your portfolio to $1 million on a single trade, but moving in the reverse is completely possible.
Let me give you an example…
This is NUGN. It’s a good stock, but it’s not a good buy today. It’s one that I’ll probably play at some point, but for now, I’m just watching – I’m not trading.
That said, don’t think of yourself as so retired that you spend all day golfing or hanging out at the pool. You’re still an investor – and you’re still on the clock – even if you aren’t actively trading.
So what should you be doing in the meantime? Investing in something different – yourself.
Invest in yourself and invest in your education so that, when the right opportunities come along, you’re prepared. Study old stock charts. Read through the archives of this blog. Join my Millionaire Challenge to really take your skills to the next level.
Don’t Try to Reinvent the Wheel
I can’t emphasize this enough – you lose your gains when you stray from your patterns.
And really, I get the temptation. You’ve got a few successful trades under your belt, and you decide to trust your “gut instinct” on a stock that wouldn’t usually meet your criteria. You start thinking that you’re the kind of trading rock star that’s going to beat the market with an unexpected pick.
You’re not. Unless you’re truly a once-in-a-generation trader, there’s a reason that stock isn’t getting much attention. People who are much smarter than you have seen the signals that tell them to stay away.
Simply put, if you trade random stocks, you’ll get random results.
I want better for you. I want you to be consistent and to follow the patterns to success so that you can grow your account exponentially. But that only happens through hard work and discipline.
Think about it as if you were trying to lose weight. If you’re down a few pounds thanks to consistent exercise and healthy eating, you might be tempted to have “just one bite” of cheesecake. Instead, you wind up out of control, eat the whole thing and have to face the gains on the scale the next morning.
That’s the kind of discipline you need to be a successful trader. If you’ve tried and failed to lose weight before, you know how tough it can be. Trading is the same way. I wish I could tell you that it’ll all be easy. And the truth is, my patterns can help, but they can’t do the work for you.
They can’t analyze a stock to determine whether or not it’s worth buying or shorting.
They can’t tell you when to get into or out of a position.
And they can’t be the ones to pull the trigger on a deal.
That’s all you. And getting to the point where you’re able to do that successfully – time after time – takes a lot of practice (and a lot of learning from your mistakes).
I get a lot of emails from people I like to call “bag holders” – people who were left holding the bag after a play went south. They’re always asking me what to do, how to get out and how to cut their losses.
Well, I hate to break it to them, but most losses can’t be recovered. Stocks aren’t going to magically bounce back up just because you’ve still got a sizable position – and no amount of wishing or praying is going to help.
You have to learn these rules for yourself, and you have to stop trying to reinvent the wheel. If you want to know how to spot a top so that you aren’t left holding the bag, watch my Level 2 DVD. Learn to think for yourself and to spot warning signs for yourself.
It sounds like common sense, but we all know that common sense isn’t as common as its name suggests. But it is that straightforward. Learn your patterns, don’t trade when they aren’t there and stop trying to reinvent the wheel. With consistent practice and hard work, you’ll break through to the kind of generational wealth others only dream of.