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How To Chart a Stock

June 9th, 2010


If you trade stocks, you must know how to chart them. Some people search through charts to find buy or sell signals. I find this wasteful of a stock traders time. You can and need to chart all types of stocks including penny stocks. Charting tells you where you are on a stocks price pattern this means it tells you when to buy or sell. There are plenty of great companies out there, you don’t want to get caught buying them at their 52 week high and having to wait around while you hope the price comes back to the price you paid.

What is a chart: Charts plot the price of a stock over time. The best charts are candlesticks, these charts plot open and closing price while depicting whether the stock closed higher or lower. A red candlestick shows that the price closed below were it closed the day prior and a white stick shows the price closed higher. Within a chart there are also many additional features that depict the overall trend of the stock.

Choosing a time frame: If your day trading, buying and selling intra day, a 3 year chart will not help you. For intra day trading you want to use 3,5 and 15 minute charts. Depending on your longterm investment strategy you can look at a 1 year, which I use most often to a 10 year chart. The yearly chart give me a look at how the stock is doing now in todays market. I’ll look longer for historical support and resistance points but will make my buys and sells based on what I see in front of me in the yearly.

Stock Patterns: There are many patterns out there, either bullish or bearish. Bullish means that a stock is looking strong and bearish means the stock is looking weak. Most of your patterns are based on the trends, which way the stock is moving currently. There are different patterns that represent reversals, bottoms and tops. Some are more worthy than others.

Price Support: Support is a level of price that you do not expect the stock to fall below. You can think of a stocks price going up as a staircase, it will bounce against a certain price and trade sideways, then it breaks through and trades higher, the old price that the stock had trouble breaking above is now the support price.

Price Resistance: This is the price that the stock had previously stopped at. As a stock is moving up it will eventually pull back. That pullback point becomes resistance and the next time the stock approaches that point traders will be cautious. The more times a stock stops at a certain price the stronger the resistance becomes at that price.

Daily Moving Averages: There are many moving averages which is just the average price of a stock over a long period of time, on a yearly chart I like to use 50, 100 and 200 daily moving averages. They provide a long smoothed out curve of the average price. These lines will also become support and resistance points as a stock trades above or below its moving averages.

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Trading Stocks from Hilton Head Island.

April 26th, 2010

Hello everyone!

Just returned from a vacation in S.C at Hilton Head, it was amazing. The weather was fantastic, the water warm and full of dolphins. The restaurants were excellent. It was very relaxing I am not happy to be back and I’m still exhausted.

Trading stocks while in Hilton Head? Are you nuts. The family would’ve killed me. I just wanted to let everyone know I was still alive and functioning, while I catch up on the market you may want to check out these points of interest.

Our Penny stock forum is full of lurkers watching for the latest stock picks. We don’t run a hype board so its quieter than all of your pump forums. You know the ones the new penny traders tend to flock to.

This is a must read for those of you who buy penny stocks. If you haven’t visited our hope page check out everything you need to known about penny stocks.

If your looking for how to trade stocks with dividends on their ex-dividend date

Here are the stock market holidays and stock market hours.

Hope you find these links useful in your trading life. Some I check daily. I’ll have something new for everyone soon.

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Dow 11,100 Time For Pullback!

April 14th, 2010


Settle in and prepare yourselves for a pullback here. Everything technical is suggesting the stock market will pull back. We are at a strong resistance point here. I just want everyone to be prepared, the news is screaming 11,000 and more to come. Some are also suggesting this means the recession is over. I personally think this is insanity.

Does anyone know why the stock market went up? Yes, it was an oversold bounce from March 09. Were there more reasons you ask? Maybe, but none that I’ve seen. This rally has come on low volume while the market was at a bottom and way oversold. During this time, the worlds economy was also going very poorly. With everything looking bad the good old U.S.A is as stable an investment that you can find especially when the technical analysis screams buy.

Unemployment bad, business tax situation bad, new hirings bad, gas and oil bad, debt bad, housing bad, and the stock market is running why? In my opinion its because of Technical Analysis and timing. During the election race and the end of the Bush cycle the market besides being oversold went down more than it should and there is some correcting going on. In order for the market to hold 11,000 and keep on running it will require some good things to happen and I do not see that happening at the moment.

According to the numbers there are a lot of day traders in the market but major investors are bearish on the current situation. Investment advisers begin to turn bearish at these types of major resistance levels. The safest bet for them here is to watch their investments but invest nothing new. This creates a tired look in the technical analysis, a kind of rollover point.

Don’t run out and sell your stocks today then start shorting ,but set up your portfolio for sells to maximize current gains. Figure out what you will sell and where when my call is proven to be correct. Never jump the gun on this type of call, You don’t want to sell to early or begin shorting too early. This can cost you a lot of new losses and missed gains. Today If I was trading the Dow, I would sell it and wait for a pullback, if I still wanted to own it. Then when it began to head downward I would short it to make some gains on the way to my pullback point. I will trade the stocks I own in a similar fashion. Some are ready to sell now and others I can give a little room to wait

This is my advice. I am not your professional trading adviser but I do understand the market. I am not a professional and any mistakes made are yours I can’t be liable. Keep it simple and take my advice to look at your portfolio here, either alone or with your trusted financial assistant. Play it right and you can capitalize on your gains and the downturn in the market, not like the last time it crashed when you just held on for dear life.

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How to Buy Penny Stocks

April 6th, 2010


Penny stocks, microcap stock, or nano stock are the three main terms used for stocks trading under 5$. Most traders will use these terms as interchangeable. There is no set rule to determine a penny stock by specific definition. A broader definition refers to the companies outstanding shares and their market capitilization. This is a more accurate way of finding a penny stock than relying on the 5$ rule.

One way to find the market cap of a company is to multiply the price of the stock by the amount of outstanding shares. This will help you find the monetary value of the shares at any time. Penny stocks may be inaccurate in their share count, when calculating the market cap you may want to speak with the companies transfer agent and ensure you have the amount of outstanding shares correct. Penny stocks are traded on the OTCBB market by market makers. Commisions are made and there are tricks the market makers use to entice a trade. Here is a list of market maker (mm) signals.

Brokers often receive a commision for facilitating the sale of penny stocks. They can also make money on the price spread and will be able to buy and sell shares at the best times to make the most money for themselves. This spread is the difference between the bid and the ask. Penny stock spreads can be very slim or they can be 25 to 35% difference in price. Furthermore, there is what is known as the inside and outside bids. If someone tries to buy or sell a lot of shares the price will change instantly. Penny stocks also may come with a mark up in pricing due to the brokerage holding the penny stock for a period of time therefore holding it through risk.

Trading penny stocks is a dangerous process that can quickly remove the money from your brokerage account. Even with these problems and scams, many companies continue to trade penny stocks for the chance at an enormous profit and a chance to be in on the bottom floor of a ground breaking company or product. The best way to find a company is to research on your own, use reliable sites and brokers to help you find companies but be careful, there is a lot of money to be made scamming the penny stock traders. Always do your own due diligence.

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Penny Stocks

March 30th, 2010


Penny Stocks are a very interesting investment. Many traders consider these types of stocks to be a little risky. A lot of traders avoid penny stocks whenever possible or completely. However, there is an opportunity to make a very large return, you just need to know what to look for.

Penny Stocks are any share trading under 5.00 but when i’m trading penny stocks I look for them to be under 2.00. Look for a company that is growing and new, with a minimal trading history. All penny stocks are trading this low due to tough financial issues and difficulties. Instead of investing in the struggling companies you could choose to invest in new and growing companies. Focusing on these types of companies allows you to minimize distraction and focus on companies that have the potential to become huge.

How do you find companies to buy?

Find the company your interested in by meeting the above criteria, then take a look into the industry. Is the industry growing, is it predicting to be hot over the next 10 years? How is the competition in the industry for the product or idea being marketed? Take a look at the industry as a whole and whether or not this companies product is worthy of your investment.

If everything is solid, then dig deeper into the company to find out more information about their operation. Find businesses that are different from others look for something that stands out with this company. Maybe they have a better product, better price or a more streamlined and financially sound company. Original products that you would be willing to buy are often signs of an interesting investment.

When you take a look at the companies financial situation there are many things to look for. These are penny stocks, you will find them with negative income and in debt. This is natural, often these companies are just beginning and it takes money to make money. This is often the situation with new companies. When your company is in this situation, look for them to have a line of credit available or some other source of funding.

Finally, look for a stock of a company that maintains strong communications with shareholders. When you can read periodic updates from the business, either on a website or some type of newsletter, you can keep up with exactly what is happening within the organization.

When you begin buying penny stocks you will find yourself making huge gains (addictive) and taking some losses. Ensure you can look back to find out what you missed on the bad trades. Learn from your mistakes and try to limit these losses in the future.

Use the penny stock tips you find on our penny stock forum and the hot penny stock picks that are randomly placed upon this blog.

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Where is my Penny Stock Watch List?

March 29th, 2010

I know, and no results either from last week.

On results: I know some of you are lazy :) but you can pull them up.

I’m late on the watch list and the results due to a busy weekend. Sorry about that, I do them for my own trading and since I type fast I normally post them for you. If I make one for the week I’ll post it.

I hope I’m fogiven.

Have a great week of Trading!

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Finding Profitable Penny Stocks

March 18th, 2010

Penny stocks are the stock offerings of companies that are too small or have little capital and therefore have more shares out in the market. These shares are then lower priced than the major exchanges. Informed penny stock investors like these OTCBB stocks due to the limited amount of money needed to invest, and the possibility of making huge gains. Often new traders to this market wonder: How do I find the best penny stock picks?

How do I choose profitable penny stocks to buy?

In order to select the best OTCBB stock to buy, you will need to look at the technical analysis and the fundamental analysis of the company. You also want to investigate how long the company has been operating and whether they have a history of reverse splits. Take a look at how the price is, has it dropped recently, has it exploded recently and try to find out why. With all stocks it is a great sign if you find the company is being invested in by the owners of the company. This is called insider buying.

It is very important but extremely difficult to find quality information about the company. This is very important in order to be successful trading these stocks. It will help limit your losses and poor investments.If you need help in finding these types of stocks there are many services and newsletters around some are free and some cost money. You can always find great information for free at our forum and read our blog which has penny stock picks and watch lists.

Remember most penny stock services whether paid or free are not able to live up to their expectations. At times they are great for ideas and if you want a quick trade. Often companies pay for the service of these stock picking sites. If you have been looking at penny stocks for any length of time you will know exactly what I’m talking about. If you are looking for great penny stock information, you have found the right place.

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Ex-Dividend Date on Forward Splits and Dividends

March 10th, 2010


Someone showed us an interesting dividend site yesterday although we have our own article about dividends

This excerpt is from the site Ex-Dividend Date

The Ex-Dividend Date is the most important date when you are playing a stock for a dividend or forward split! There are so many dates involved during the dividend process that some traders don’t actually understand when they are eligible to receive dividends. It is important to understand how the dividend process works and what role the ex dividend date plays when compared to the record date and payment date.
A trader who lacks the understanding of the dividend process can lose out on profit. Trading is a difficult occupation as it is, no being able to capitalize on trades for maximum profit is unacceptable. Failure to understand the dividend process can lead the trader into selling his stock to early which may mean taking an unneeded loss. Selling early will also mean the trader is ineligible for the dividend payout. Holding the stock to long after the dividend is paid out can bring other problems. Many traders may sell a stock after the dividend is paid out causing a dip in price. This dip will decrease the traders chance of maximizing profit.
The EX-Dividend Date is the first day a stock trades without the dividend attached. If you buy a stock on the Ex-Dividend Date you are not qualified for the dividend. Therefore, if you’re very interested in receiving a companies dividends, you must own prior to the Ex-dividend date.This also means you can sell a stock on the Ex-Dividend date and still receive the dividends even though they have not been placed in your account yet. Some of the other names sound more formal, such as record date and payment date but the one you need to focus on is the Ex-Dividend Date.
The Record Date is when the company begins to work on dividend payments to the shareholders, or the shareholders on record.
The Payment Date is when the company expects the payout to shareholders to be completed.
It must be noted that this can all happen rather quickly but that there can be a long period of time between the ex-dividend date and the payout date and that is very important in case you feel the need to exit ownership of a stock but would like to receive the dividend first.
For those long term buy and hold traders these problems will never arise unless your planning on buying a stock for the dividend or selling one after you receive your dividend. Most long term traders will hold a stock through the price cycles.

EX-Dividend Date and Penny Stocks
Dividends with penny stocks follow the same rules as every other company. With penny stocks problems have arisen during forward splits because a company may not understand how the process works and begin to sell shares they do not own yet. Not only is this a bad sale on the part of company ownership but now those shares are elligable for the forward split. These mistakes have been known to increase the share amount beyond the authorized share limit with the SEC having to step in and halt trading.
The main issue with penny stocks and dividends is the ability to pump and dump the dividend excitement. Pumpers create scams that drive the price of a penny stock up so that others may sell for higher profit and leave those traders waiting for dividends at a loss. There are a few ways these scams are perpetrated, anyone who has traded penny stocks for a while will notice these scams immediately. Hopefully they weren’t victims of these scams themselves. It can be a tough lesson to learn.
A reason companies often exploit penny stocks in this manner is their ability to manipulate penny stock traders who are often novices to trading and can easily be duped. One way a penny stock company will exploit the dividend process is to announce a dividend in advance of actually filing it. The press release will say something to the effect of: Company XYZ trading at .015 has just announced they are issuing a .02 per share dividend to each share holder pending shareholder approval. This causes excitement in the penny stock world, a 100+% dividend! Thats a big dividend for a penny stock company and then the pumping begins. After purchasing company XYZ they begin to place the dividend announcement on ever penny stock forum and penny stock chat room they can find. This causes the volume in the stock to rise which in turn causes the price of the stock to rise. While the price rises, those who own the company and own the majority of shares begin to sell into the excitement. This allows them to sell at a better price without worrying that the amount of shares they are dumping will drop the price per share. The may even continue to issue press releases that remind traders of the promise of the company and the fact that they are issuing such a large dividend. At a time in the future they will announce that there will be no dividend as a majority of shareholders voted no. Being that the same people who write the press releases also own 51% of the company this is obviously a fixed outcome and a very simple penny stock scam.

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Penny Stock Trading Business Style

March 3rd, 2010


Penny stock trading is like any other business. Your goal is to maximize the return on investment. When trading, your inventory is how much money you have in your brokerage account. You then take this amount of cash and try to grow your account.

When trading, not every trade is profitable, you will need to figure out what are the situations that make for profitable trades. The only way to gain this knowledge is by trading. As you reflect back on your trades you will realize which situations were profitable and which weren’t even when your not in a trade. You can paper trade or open a practice account but when your out in the world think like a trader and realize how stocks are actually doing. You must do this yourself, headlines are worthless.

If you start trading with cash before you have enough experience, you may lose some or all of your account before you learn enough to be successful. This may turn you off from the stock market before giving it an chance. It takes years of trading to be successful at all sorts of trades. Still to this day I’ve met many traders that are able to trade runners better than me, but I can nail the dips in a stock trade before they can. Often I’ll make my money on the contrarian end of the trading cycle. Your main investment should be time, not money that way you will learn your way around the market and find out what actually moves a stock compared to what your being told.

Plan your trade before you enter it, what are you expecting to make, what will you accept for losses. Do not buy penny stocks and hope for the best. You are dealing with the unknown, you don’t know what news will come out tomorrow good or bad and thats just in regard to the stock, something in the world may effect the sector your in i.e. gold/oil/tech. There could be a terrorist attack, what you are doing is making an educated guess using all the knowledge you have.

Keep a record of every trade. Why you entered, what you were thinking then you can look back over months or years and evaluate your trades. Which trades were good ones, which ones were bad, do you have better days? How were you feeling on those days? If you’re not keeping these kinds of records your not doing your best to be successful and you’ll probably end up failing. When trading, there are too many factors involved that you will not remember when you look back at that awful trade of xyz 6 months ago.

When your review your trading log, whether it be yearly or quarterly you may find out that trading after a night of partying is bad for you or trading a certain sector for you is good. This information is invaluable. You may be great at swing trading but not be great at getting in and out for a dime. This knowledge should help you shape your trading plan.

Don’t let anyone fool you, trading is a very difficult process because of all the unknowns you are dealing with. Thats why the best traders are just making an educated guess if they say anymore than this they are simply not being honest. When analyzing a sector to invest in you will always find contrarian information and advice this is inherently stressful and you need to trust your knowledge. The better you are at being right by trusting your gut, the more likely you will succeed as a penny stock trader.

When you trade, you are alone, this is very solitary and I like it best this way. Others like to use chat rooms and trade in groups, some very large and some very small. Try different groups to see if you gel with them. Personally I find myself making more bad trades in a group as the chat room people are constantly excited by one stock or another. Keep it in perspective though a chat room is a great place for the pump and dump crowd to get in and pump up their penny stocks to make a buck off of unsuspecting beginners.

With all this in mind, the rewards of being a successful trader are huge. There is a lot of money out there to be made. You will probably work from home or the office and develop your own schedule. Just don’t try to take care of 5 babies and trade from home. Your environment needs to be conducive to trading. An easily manageable area that you are completely comfortable with minimal distractions.

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Penny Stock Tools

February 25th, 2010

We all know that Penny Stocks are a risky investment. To reduce the risk of trading these stocks you must work on some basic guidelines of what the company looks like as well as the chart of the specific penny stock. The more knowledge you have about reading charts and the back grounds of penny stocks, the better off you will be.

Research is the key to finding successful penny stock picks. You will need a stock screener to find stocks that meet your first criteria. You will also need some help with reading about a companies financials and how to dig through their SEC filings. You must learn charting basics. We have a helpful forum on our site but still, don’t just trust, gather ideas and investigate.

Once you find a stock and the chart looks right, watch it trade for a day or 2 and then plan your trade. What price are you willing to buy at and what price will you sell. How can you determine this?

This type of research can be a chore, it can be difficult and tiresome. Finding ideas on our penny stock site will help you. Then you find a chart you like and then dig through the company. If you dig through a company before checking the chart, you’re wasting your time.

There are some things to speed along the process. Join our forum and become active, ask questions about stocks, read our newsletters, look at our picks and our screened stocks. Use the forum to bounce your fist picks off of others. We do a good job of getting rid of the pumpers, dumpers and other scammers but some still get through. So don’t just trust, do your own research and read our newsletters.

Your knowledge and gut instinct are the best tools out there, we like to provide a site that facilitates your learning about penny stocks and helps you spread your knowledge. To other learners we love if you place your picks and we can watch them run. As professional traders we love watching other people make picks, the more good eyes watching the market the better chance we have to score big! There are also plenty of articles we have published that can help you get acquainted with these inexpensive stocks and the difficulties of trading them.

The best part of The penny stock blog is the knowledge you can find everywhere you turn. Because crazy constant pumping is not aloud, the board seems quieter than other places where penny stock pumps are why the board was created.

You don’t want to use any one tool for determining how to trade these otcbb stocks you need to use all the tools mentioned and lean which ways work best. Sometimes, sitting on the sidelines is better than attempting poor thought out trades.

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