What Are Penny Stocks?

What are penny stocks

What Are Penny Stocks?

I LOVE reviewing the basics over and over and over again, see my free guide to penny stocks here, but what are penny stocks exactly, and how can you stand to earn from trading them?

Here, I’ll offer a brief primer of the basics, as well as invaluable information about how my millionaire trading challenge students and I have personally found success with penny stocks.

This is vital information for new traders, but it’s also a great reminder for more established traders. This overview is also a great preparatory read before you delve into my FREE e-guide: Penny Stock Trading 101. This guide will take you from the basic question of “What are penny stocks?” and well beyond so be sure to study it meticulously!

To be clear, despite the entire world hating on this niche, I have made my millions by trading penny stocks. The Tim Sykes Millionaire Challenge was designed as a means for me to teach others how I did it, in hopes that they can find their own success and in just a few years we already have several millionaires created and they actually help me mentor other students now too! I really do believe that this can be a method of earning income that can help people improve their lives and make their dreams a reality, but to do so, you’re going to have to study harder than you ever thought possible as no matter the niche, never forget that 90% of traders lose money and it’s due to lack of preparation!

What are penny stocks? You may be surprised to learn that penny stocks rarely actually cost pennies. “Penny stock” is a catch-all term for low priced stocks, typically under $5 per share. They are VERY lowly priced because the companies in question are small. They usually only have 1-2 products and are not making huge profits.

Actually, most of these companies will never begin to turn big profits. The majority will likely fail.  Wait: if most of these companies are going to fail, why on earth would you ever trade penny stocks? As I teach students of the Tim Sykes Million Challenge team, this risk factor is exactly what can deliver rewards.

Why are penny stocks so little-known? In general, penny stocks are lesser known than stocks traded on the big national exchanges. In part this is because the companies are smaller; however, it’s also because in large part, investors are disinterested in penny stocks.

Additionally, these stocks aren’t always listed on the national exchanges like the NYSE or NASDAQ, either. Rather, they are offered via other markets, such as Pink / Grey Sheets, OTCBB (Over-the-Counter Bulletin Board) and the NASDAQ Smallcap Market. These exchanges have varying degrees of regulation for company reporting, but in general are not as stringent as the major exchanges. Because of this, there is an inherently higher level of risk involved in trading, and it’s vital to do your own research on the companies.

The fact is, very few of these “long shots” will get lucky; as previously noted, many of the companies will fail. As such, many investors don’t like the odds and steer clear, choosing to focus more on safe bets.

Why trade penny stocks? Interestingly, it’s these negative points about penny stocks that can actually be some of their greatest selling points.

Since many investors are disinterested in penny stocks, this allows traders like me (and you) to get in there and trade with FAR less competition than anywhere else in finance. That is to say: the same volatility that is a turn-off to so many investors can be an opportunity for other investors.

The caveat here is that as a penny stock trader, you must know that there is an inherent danger to trading penny stocks. Respecting this risk, and doing all you can to mitigate it, is very important. This makes it extremely important to learn the “rules” and study carefully so that you can make educated and calculated trades. If you don’t take the time to learn, you will likely lose money and get discouraged quickly.

Benefits of trading penny stocks. The benefits of trading penny stocks can be many. For one, there’s an easy entry into the market. For new traders with small accounts, penny stocks are accessible both in price and the ability to buy and sell. You really just need a brokerage account and a laptop, really. My top student really did start with just $1,500 of his money as this article highlighted.

Trading penny stocks is a profession which rewards routine and regularity and punishes those who get too cocky or lazy. I am constantly urging my students to be diligent about studying and preparing, learning how the market works, and keeping track of what is working for them. As you improve in your trading technique, chances are you’ll reap rewards in your career.

Additionally, trading penny stocks allows for flexibility. You can trade from anywhere. As you can see by my social media feed, I work from a laptop and have taken trading to all sorts of far flung destinations.

How did I become a millionaire? With such low priced stocks, how did I become a millionaire by trading penny stocks? By adding up my gains over time. Honestly, my average profit per trade is just $2,000. However, these trades add up. If I am making $2000 per trade over time, and make 1,000 trades, after a while I’ve earned $2 million. I never feel the need to go for the home runs; I’m content taking the singles, since they win the game and help me make steady income over time. 

I’m not always right! I feel like it’s important to say that I’m not always right in my choices for stocks to trade. I’m wrong about 30% of the time, but the keys are that I keep my losses small, and I learn from my mistakes, never letting small mistakes turn into potential big disasters.

I like to emphasize this again and again because many traders become discouraged at early losses, but they shouldn’t as it’s something you’ll have to learn to deal with and minimize over time. Losses don’t have to mean that you’re failing. They are part of the process. As long as you minimize losses and learn from them so that you can approach succeeding trades differently, they can actually become your greatest teacher over time!

What are penny stocks? For some, they can provide an opportunity to make income. Trading penny stocks is not for everyone. It requires patience, prowess, and determination. You have to be willing to learn how the market works and be ok with some bumps in the road as you learn. But if you stick with it, trading penny stocks can be a potentially life changing career move.

Did this article help you understand penny stocks a bit better? Leave a comment and let me know if you would like more basic posts like this, I think they’re EXTREMELY useful, but you tell me what you think!

What’s The Difference Between An Investor And Trader?

what is a stock

The Difference Between an Investor and Trader

It’s good to review the basics over and over and over and over again, so I cannot encourage you enough to read and review my free stock market guide here and understand that despite beginning with just a few thousand dollars each, ALL of my millionaire trading challenge students have become millionaires within a few years**…not the decades that would be required such feats if they were investors.

As for the question at hand, there’s a world of difference between an investor and trader. When talking about how your money can make more money, the words “investor” and “trader” are often used interchangeably, but they most certainly shouldn’t be. Continue reading

4 Lessons From The Conor McGregor Assault /Upcoming Downfall

conor mcgregor assault

Conor McGregor Assault

I’ve followed Conor McGregor’s career pretty closely over the years as I’ve been VERY inspired by his work ethic and rise to stardom, even having ringside seats at UFC 194 when he needed just 13 seconds to knock out then champion Jose Aldo who got defeated for the first time in 10 years.

I’ve laughed at the countless McGregor memes and always click play on videos that have shown him trash talking just about everyone, and even tuned in when he tried boxing Floyd Mayweather a little while back. Continue reading

What Is A Head And Shoulders Pattern?

Trade Like A Pro: Head And Shoulders Formation

Head And Shoulders Formation

As you might know, my top millionaire trading challenge students and I rely on predictable patterns to create our wealth and a head and shoulders chart pattern signifies a particular change in desirability for a stock or security. Have you ever wondered how Wall Street, or reputable traders, always seems to know ahead of time when a stock is about to go sideways, and gets out at just the right time? Or that they know just when to get in, before a stock surges?

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To a newer trader/investor, this can be puzzling, it not troubling, to always feel like you’re on the outside looking in.

Well, knowing chart patterns inside and out is key to your success so I HIGHLY recommend you watch my brand new guide that’s 50% off here for just a few more days since I just finished it (finally, whew!), and studying that can help you to play along with the big boys. It’s not clairvoyance, and it’s not magic. But it works for me more times than not, nonetheless.

The trend shifts from bullish to bearish to bullish in one of the most predictable volatility patterns in the world of Wall Street. Right afterwards, traders know that there’s a high degree of probability that the end of an upward trend is near.

The pattern usually occurs in three parts:

  1. An asset rides the bull to a relative peak, before falling to form a trough.
  2. Once the price reaches a bottom, it begins an upward motion again, peaking at a crest higher than the security’s previous one, but then falling again right afterwards.
  3. In its final act, the price rises to the level of the first peak and then declines again for a final time.

In the preceding description, the first and third peaks represent the relative shoulders, while the second one is bound at the neckline of the figurative human formed by the market activity.

It is called head and shoulders because it visually resembles a silhouette of a head and shoulders.

 

But this can be upside down, too. Sometimes a head and shoulders pattern can signal an upcoming bullish trend after a period of bearish activity. In this case, stock prices would reach three lows in a row, punctuated by short rallies. The lowest trough becomes the head, while the two adjacent troughs form shoulders.  Once the pattern is through, the true tendency of the stock takes dominance.

 

The head and shoulders pattern is a true testament to the tug of war that plays out in all open markets. In quantum physics, scientists say that either a particle’s mass or location can be known for certain at one point in time, but not both. The speed of transactions in today’s computer trading world works similarly. A price point moves quickly relative to the market forces acting upon it, especially if the related stock is popular amongst a niche market.

The first description of the head and shoulders pattern tracks the waning momentum of a previously bullish stock. Market bulls, who generally already have a stake in the success of the stock, increase their exposure to the security, pushing the stock’s value upwards in two consecutive price shocks. It is possible that other investors will buy into the higher valuation, putting in their money to further the future of a security that would have otherwise failed.

But if the head and shoulders pattern is allowed to continue through the second trough, the security’s demise is certain. Knowledgeable investors – the kind that newbie traders follow on twitter and on blogs – thrive on easily identifiable patterns to gain a following. They hawk the markets for clear head and shoulders patterns to share to their subscribers. On today’s Wall Street, these patterns rarely last beyond their second trough because of the thousands of experienced traders on the lookout for this trend.

A related fluctuation tracks a “triple top” phenomenon, which marks three consecutive price hikes, all at nearly the same level, indicating that buying interest is losing steam despite efforts by market movers to keep the stock desirable.

Necklines connect the pattern’s two troughs, which might be drawn at a slight angle, depending on the nitty gritty details of the stock at hand. The neckline works as a symbol of resistance that causes prices to “bounce” from the level of a previous trough (or crest, depending on whether or not an inverted head and shoulders pattern was occurring).

Moments of controlled volatility create the trend disturbances that make and break hit securities. Three bumps on a relatively stable upward trajectory indicate turbulence ahead, or at least nervousness on behalf of the key stakeholders watching the stock’s price in the most paranoid fashion.

More embarrassing versions of this trend reveal themselves in the descending tops pattern, where organized buys of a particular security cause prices to rush upwards temporarily, before continuing a downward trend. This repeats one, twice, and sometimes even three times before key investors give up on their bet and sell off their stakes.

Every security has its own struggle. If the price changes have to do with corporate performance, the stock price will fluctuate in lockstep with corporate filing dates and major speeches by the company’s leadership. But, if the changes relate to slights of hand on Wall Street, the numbers could change at the whim of key investors, whether or not their outlooks match performance figures published by the corporation’s public relations staff.

In the end, the head and shoulders chart pattern is just one of many, and charting is just one small part of an overall strategy that every successful trader must understand, and can hopefully take part in. See this free guide to better understand my 7 key indicators that I use daily.

Learning to identify this chart pattern, and what it will mean for the future of any given stock will allow you to capitalize on the same information that even the big boys on Wall Street use.

Leave a comment below and tell me your favorite chart pattern too, maybe it’s the morning panic pattern here that I love so much! And I love hearing what’s working best for everyone!

A Survival Guide During Slow Stock Market Times

Slow Market Survival

Slow Market Survival

Nobody likes thinking about a slow stock market, but sometimes it does happen so you better be prepared. Yes, yes I know; it’s not fun, it’s not exciting, and it’s not typically time when traders are making big earnings. However, it is an important and inevitable part of trading so you better to learn to survive during the bleak times as it’s good for your training as if you’re going to be my next millionaire trading challenge student you must learn to adapt to different market environments.

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Since the stock market is cyclical, it’s very important to consider your game plan for when the market gets slow as it does happen from time to time. Here are some tips for how to stay sane when the market seems to be standing still, too many traders get impatient and do stupid things that cost them big so don’t let that happen to you!

1. Know that the market moves in cycles. It may not be the most exciting fact of trading, but the market is ever evolving. Various factors including the economy, the time of the year, and world events can play into stocks and how they perform. As a trader, it can be scary and disorienting to realize that the market has shifted. If you’ve been working a certain setup that has been working well, a change in the market can throw your technique off balance. 

Simply knowing that the market can, and will, shift is a big part of slow market survival. You can’t take it personally, and you can’t change it. Accepting it versus fighting it is really a big part of the battle…adapt…or perish.

2. Consider whether or not trading is a good idea. Actively trading during times when the market is slow isn’t always a good idea. It’s a risk that should be strongly considered. This is a key aspect of slow market survival.

Overtrading in slow times can be a bad decision, not only for your account, but for your state of mind. When the market is thriving, that is the time to get in there. However, when the market is very still, you are likely just going to mess with your own mind and self confidence as a trader, not to mention grind your account down. Sometimes, an element of watchful waiting can be beneficial. 

3. Know how to recognize market changes. One of the biggest keys slow market survival is simply being able to recognize that the market has shifted. Believe it or not, it’s not always immediately evident; it might just seem like you’re having some off days. But if you’ve been reliably making profits using particular setups and it doesn’t seem to be working anymore, in spite of your best efforts and careful research, it might not be you: it might be the market. 

Recognizing market changes is something that you’ll learn in time as a trader. The ability to identify market shifts will allow you to be proactive about altering your trading methods so that you can survive. 

4. Adapt to the market. Beyond simply recognizing market changes, it’s important to know when it’s time to make a change in your trading based on the state of the market. One way to stay on top of this is by monitoring your winning percentages. If your percentages are going down consistently, this can be a sign that it’s time to adapt. Be honest with yourself: is it just you getting lazy, and not doing your research? If so, it may be time to get yourself back into following good habits. However, if you’re being responsible, studying, doing research, and working reliable setups and your percentages are still going down, it may be necessary to adapt to meet the market where it stands.

5. Look at who is making profits. The market may get slow, but it’s not at a standstill. Someone is still profiting. If you want to continue trading during slow market times, one technique that members of the Tim Sykes Million Challenge team might use is to really study the market to determine not only who is profiting, but how…for example learn from my newest millionaire student here as he’s been banking nicely lately!

Copying another trader’s techniques will rarely work out for the best. However, you can gain plenty of inspiration and direction from other traders who are making money when the market is slow. So if you can find who is making money, try to evaluate how they are doing it so that you can adapt their methods to fit your own routine.

6. Know what to look for. Particularly as a new trader, it can be hard to know what to look for in a trade. This is true all of the time, but definitely when the market is slow. Unfortunately, there’s not one easy answer to this: a lot of it comes with observation and experience. But over time, you’ll begin to identify what types of trades work in various market conditions. Take notes and learn from your experience. The market will come back up to speed, but in time, it will become slow again. Knowing what to look for in trades in all sorts of market conditions is a truly valuable thing for traders…be sure to watch this entire free guide to learn how to pick the best stocks to trade and obviously this tool is crucial too!

7. Improve your knowledge base. So, if you’re not actively trading when the market is slow, what are you doing? Members of the Tim Sykes Millionaire Challenge won’t be surprised to hear what I have to say. Study!

When the market is slow, you have an opportunity to increase your knowledge base, study up, and improve your trading know-how. This means that when the market bounces back, you’ll be a better trader.

8. Enjoy the time off. When the market is moving at a rapid pace, you need to keep up with it as there are plays galore, but it can also be exhausting. So when the market is slow, be sure to enjoy your time off!

Rest up, go travel or workout, spend time with friends and family, engage in activities that are meaningful to you. The market is not going to be slow forever, so enjoy this rest while you can and make the most out of it!

Surviving a slow market is challenging for traders of all levels, from the newbies to the old pros. However, by following these tips you’ll be able to improve your overall outlook and mindset during these slow times so that you can ride whatever waves the market sends your way…and this is part of your journey to becoming my next millionaire trading challenge student as knowing when NOT to trade is an key component of your overall knowledge.

So, leave a comment below and let me know what you like to do during slow periods and make sure you stick to it when the time comes!

11 Ways To Trade Penny Stocks

Ways to Trade Penny Stocks

What are some of the ways to trade penny stocks? This is a question I am asked a lot, and honestly, there’s not just one answer and that’s why my millionaire trading challenge students are taught not just by me, but also by several of my top millionaire students too as we all have slightly different patterns that we prefer to trade.

However, there are certain tips that can prove helpful to just about any trader. Here are some of my favorite ways to trade penny stocks, ranging from specific and tangible tips to mental games to help improve performance.

1. Don’t believe the hype. If you do a little research about the best ways to trade penny stocks, you’ll find plenty of stories about how so and so struck it rich in weeks. While reading about someone’s success and how they made a fortune in penny stocks is great if it inspires you on your own journey, you should never take these stories at face value.

In spite of what some so-called penny stock “teachers” will tell you, it’s highly unlikely that you’ll get rich quickly trading penny stocks. Many who subscribe to that mentality are really just going to be gambling with their trades, rather than actually having a targeted plan of attack…read this key article to understand the dangers of hoping and not strategizing. Continue reading

What Is Market Capitalization And Why Should You Care?

What is Market Capitalization ?

What is a stock’s market capitalization? Why does it matter? Market capitalization is the value of a company, largecaps being worth tens or even hundreds of billions of dollars, midcaps being worth a few billion or even “just” $1 billion whereas smallcaps, which my top millionaire trading challenge students and I mainly trade, are companies valued at under $500 million, usually under $250 million which sounds big, but is actually small potatoes on Wall Street. Continue reading

How You Can Bank $2,000-$100,000 In An Hour [ MUST WATCH VIDEO ]

must watch video

[ MUST WATCH VIDEO ]

TRUST ME, I KNOW HOW RIDICULOUS THE TITLE OF THIS BLOG POST SOUNDS, BUT IT’S REAL SO JUST HEAR ME OUT. It’s a MUST WATCH VIDEO

Sorry for the all caps, my caps lock was on, but I’m going to keep it that way because this same damn pattern will happen again and again and if you’re prepared like my top trading challenge students and I were, you can make four, five or even six-figures inside of an hour, depending on how big your account size is.

Because as all my Millionaire trading challenge students and I have learned, that’s the beauty of my strategy, it’s the same patterns every time, you just choose how big you want to trade it…and this past week we had SEVERAL opportunities to make six-figures inside of an hour on either the long or short of some of these volatile penny stocks like GERN.

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I HIGHLY encourage you to save 50% off on the pre-sale price of my newest guide HERE as this one specific pattern is outlined in detail again and again and again!

Watch the video below and learn, and watch it several times if need be…we’ve also transcribed it for my valued deaf trading challenge students too: Continue reading