I have seen a billion websites all with get rich schemes dealing with how to's and ebooks for investing in Forex or Penny stocks. What i want to know is if there are any DP members here that have truth be told, no lies, and no fish stories, made over $5000 in Forex or Penny Stocks and actually cashed out without loosing it the next week?
I make about 20% of my total income from forex but that doesnt mean it is easy. It took me 1+ year to make $5k+ consistently per month and i must admit that i have lost a lot on my way to success. Also dont waste your money on stupid ebooks and BS systems that guarantee billions of dollars. You will have to learn it all yourself you cant just follow someone elses system and become successful. Demo trade for 6 months then put real money in your account and trade in micro lots until you are so confident about your trades that you can hit enter with your eyes closed Another very important thing is patience. Dont try to become rich over night because thats not going to happen
I have a friend who plays FOREX, I think he's doing good. But the problem is that he never gets any sleep.. Always thinking, always worried. I don't want to have that life.. So I stuck to this business.
Currency was originally a way to hedge. Just like any market, money can be made and lost. It's not magic. As to penny stocks, the same valuation applies as it does to large caps. If you want to start looking for smaller company stocks with some upside, look for microcaps ($500M or less in market capitalization). You need to understand that it's about % up and down and not share price. A stock with a share price of 10 cents can be vastly more "expensive" than say ExxonMobil at $88 per share. Rather than being an amateur who "plays," take the time to learn about the market(s), the participants, an industry/sector and why things happen. One tip I'd give would be to stay away from Pink Sheets. There's plenty of money to be made out there in other areas. No need to sink cash in the wild west.
well earlyer this week i tried my hand at the penny stocks idea, and the stupid stock just keeps on going down, i wonder at what point i should pull out, stock symbol is INSM http://finance.google.com/finance?q=INSM my idea was to enter into the position at 72cents and then pull out at 73 cents and make a quick 1.3 percent increase, but yesterday the stock closed at around .69 cents Jaree, do you rely purly upon technical indicators or do you do fundamentals?
First of all, do you know the spread? It's not even, which means that if you buy at 72 cents, the stock must go HIGHER than 73 cents for you to sell at 73 cents and make your one penny profit. Also, why did you pick this stock? Do you know anything about the company? Management? Financials? Products/Phases? Why would this stock go higher? It has a 101M float, more sellers than buyers, and lacks coverage, so where will the demand come from? If you're trying to be a trader (not investor), there's easier prey out there.
I do not use OANDA anymore although i started with OANDA. I use Northfinance now and i use both technical and fundamental. When i get a signal from my technical indicators i check if any news contradict that signal incase it is just a whipsaw and after fundamental confirmation i enter the trade so in other words i use both but i do not rely just purely on one kind of trading.
I am aware of what a spread is, and understand that the stock would have to jump up, I picked this stock (INSM) for three reasons, becuase it had a low RSI, high volatility, and was below a dollar a share, how do you tell if a stock has more buyers than sellers? and what do you mean by the 101M float? thanks for the help, im trying to learn - btw thanks for your comments all
The float is the shares outstanding that are available for the public to buy. It's vital that you know this. For instance, let's say this company just signed a deal that will bring in $30 million in revenue. Is this okay, so-so, good, really good or outstanding and how will any earnings factor into the share price? You need to know the float to answer this question. Why was the share price being under $1 important to you? Just curious. As to figuring out the demand, you need to watch the stock and look at how it's moving. There are entire books written on stock valuation, so I won't try to condense them into a forum post. So, you picked a stock without knowing anything about the company, management, products, future or financials, but solely on: 1. It was under a buck a pop. 2. It "appeared" to be volatile enough for trading. (It's currently not) 3. RSI While the RSI is a nice piece of info, it's by no means something to use as a sole indicator of buying and selling. But, let's say it is. This stock's RSI has been within acceptable ranges. It's not, according to RSI, overbought or oversold. So, let's throw that out. That leaves just 1) price under $1 and 2) volatility appearance. Correct me if I missed something. I'm just trying to get you to talk it out, because this helps the learning process. Aside from what I said above, I'm also curious what you did to determine that this stock was volatile enough for trading? BTW, did you sell off your position?
Thanks for the thoughful reply Marketjunction Let me describe to you my plan, i am looking for the safest way to make just about a 1% profit in 1 day or so and then exit the position. so ran some screens and i choose INSM i wanted to find a cheap stock so i could afford tons of shares so that i would be profit off of just a small jump in the price. ie if i can afford 10,000 shares and it jumps just one cent ive made a profit. and so i wanted to choose a stock that was below 1 dollar. (thank goodness i didnt buy anywhere near 10,000 shares yet, i started small as i am still just learning how to do it) I know very little about the RSI, but i read a page that says if the RSI is below 30 it is considered oversold and the price should tend to go up as the market re-balances itself. and this is what i was looking for, i dont care what the stock will be in a month from now, i just wanted a stock that had technical indicators that indicated a current upward trend so that if the stock didnt immediatly jump up 1 cent i could hold on to it a few days and there would be a pretty good chance that it would eventually bounce back and i could get that 1% a day or two later. on the MSN delux screener, if i remember right the 3 month RSI was at around 20 for INSM i wanted a stock that was bouncing up and down as much as possible because i figure if it is going up and down all the time, the odds of it jumping up and crossing that 1% profit line are increased, even if it goes right back down after i sell it. i used the beta indicator to judge the volatitly of the stock so i screend for beta above 2. I didnt mention this previously but i also took into account averge daily volume, i wanted to make sure that their would be enough buyers once i had the shares of such a low stock. i have already made the mistake of buying cheap pink sheet stocks that i couldnt sell, (not going to do that again) thats kind of my idea, im not to concerned with what happens to the stock in a few weeks, i just want to make a quick profit and then close out of the position, i am aware that buying the stock at such a low price is more risky than just buying into the big companies, im just trying to beat the 10% a year you get from mutual funds
Okay, here's your first problem. Don't feel bad. Many, if not most, amateur investors think this way (at least at first). It's wrong. It's the PERCENT and not the PRICE that matters. Let's use your stock as an example. In fact, all more shares does is make it harder to get in and out of a position and it can possible cost you more money (some brokers charge higher fees for sub-$1 stocks). Let's imagine you have $500 to invest in a position. You pick INSM, because it's "cheap." We'll use the price of .70 per share. You buy 714 shares (forget fees for this example). You're thinking that just a 1 cent increase will give you a $7.14 profit. Forget the spread for a moment. To get that one penny increase, the stock must go up 1.43%. If the spread is one cent, you need a 2.86% increase. Now, let's imagine I've got $500 smacks and I buy ONE stock of something @ $500 per share. You own 714 shares and I own 1 share. A 1.43% increase for you is $7.14. A 1.43% increase for me is $7.15. It's actually the same, because your shares came in just under $500. Ah but wait. What if your broker charges a 1% premium on the transaction, because these are sub-$1 shares? You've actually come up short. And of course, there's the fact that I can easily move in and out with my one share. And here's something else to think about. Do you think it's easier for a share of this stock to go up almost 3% or for something in the spotlight, like Google, to go up 3%? Not if the company has problems hahahah. RSI is just a nice little technical indicator that you can use as part of a broad package of information. It's based on the past and it's absolutely irrelevant if the stock has issues. Want an example? There's a stock I've been following for a bit. I spotted a buying opportunity and made some money. I then spotted trouble and I jumped out. The stock fell slightly at first. I knew it was going to implode. Early this month, the RSI was 25. Signals an oversold and you'd be a likely investor to buy it. The stock was around $5.50. A few days later the stock was an RSI of 20 and traded at $5. Buy it? On Friday, the stock closed with an RSI of 10, yes 10. Price? $3.90. Buy it? LOL See, if you didn't know anything about the company and just based your buying on RSI or some other one-shot factor (like many do), you'd be losing. The stock was a clear short back when it was in the $6.50 range. So yeah, you could have held this stock and followed the RSI and prayed for a 1% gain. Meanwhile, you're losing money hand over fist. What does "BETA" have to do with anything? Just curious. Do you know how BETA is calculated? Why does it matter? If mutual funds returned 10% annually all the time, I'd tell you to put your money there and kick back. But, they don't.
once again thanks for your reply, are you telling me that a stock that sells for $70 has the same potental to go up 1% in one day as a stock that sells for just $.70 cents? to sum up your advice as i see it is you believe that it is very important to look very closely at the fundamentals of the underlying company first, is this correct? Judging by your signiture link it looks like you are quite involved with small cap stocks, in all honesty what percentage of your income actually comes from investing in small caps? and one last question if you dont mind, do you have any links to good online sources where you can read up on how to understand how well a company is doing? thanks
yes im a forex trader. I trade my own account, and a (larger) client account. the commission was paid on the 15k i made for him.
1% is 1%. The share price isn't relevant unless you're looking for "cheap" and "expensive" stocks (not cheap as in $1 or less, but rather, the valuation). I'd argue that it's far easier for a stock in the $70s or so, like Caterpillar, ConocoPhillips, etc to go up 1% than a stock for who knows what at 70 cents. Why? Exposure. Here's the problem. You can't look at any one indicator. The market is fueled by demand. And that's why if you look at P/E, you'll see stocks trading at 8 PE, 10 PE 80PE and so forth. (Another reason why PE by itself is worthless) To figure out if a stock will go up, you need to know if the stock will get more buyers than sellers (share quantity)--that's it. You need to know how value players, technical players, and growth players think, so you can figure out where a stock is going. As to links to sites, I don't know of one that "tells" you what to do. I watch 4-5 hours of CNBC Mon-Fri to get a handle on where public perception might go. I spend time at my broker's site and Yahoo finance daily. I listen to conference calls, read reports and so forth. I also get about 25 magazines and trade journals monthly/weekly/etc and receive various newsletters. The one thing I don't do is visit stock message boards. IMHO, I think most traders (penny stocks or otherwise) fail because they don't know (and never learn) why stocks move the way they do. I knew to short a position in Google recently (when it was around $548). Why? Am I a brilliant? No. Through watching and knowing the market, I knew that there was a ton of "tension" built in the ownership. Through looking at SEC 13F's, I saw lots of Google positions. I knew that anything less than a smashing earnings report would send the stock lower. Google releases good, but not great report and vooosh, the stock tumbled. Here's my point. In the early days I was like you in some way (although I actually wrote to companies for investor packets and such). Like probably most people, I figured that if a stock was down $1 today, it would be up $1 tomorrow. And yes, many work that way. However, over the many years, I've seen many stocks that never came back up for air--especially penny stocks. Sites: finance.yahoo.com SEC.gov http://biz.yahoo.com/cc/ (for conference calls) your broker As for the site in my sig, that's a little something I recently started up to target microcaps. I also started up a financial blog a month ago (and I'm slowly working on my energy investing blog), but it's not linked here (don't want it to be). Good luck
The vast majority or stocks change in price +/- about 10 cents or less per day. That's why penny stocks tend to pay off better in the short term. Say you want to double your money, it's a lot easier for a 10 cent stock to go up to 20 cents than it is for a $10 stock to go up to $20. A penny stock could go up 10 cents in a day where a $10 stock could take years to go up to $20. It's also a lot easier for a 10 cent stock to be delisted costing you everything you put into it. When dealing with penny stocks, the number of shares and pennies matter. If you have 1000 shares of a stock and it goes up 1 penny, you make $10. When dealing with dollar stocks, percentages start to matter. If you have $1000 worth of stock and it goes up 1% you make $10. You also have to remember that you don't make or lose anything until you sell. You have to know when to walk away and when to run. I track my real and fake portfolios here http://www.dawnofthegeeks.com/stocks/
I always wanted to give it a try. Got to get something out of my time spent doing business + economics at college. What would be the best place guys? I want to have a go for free first. What would be the best play money website? Thanks!