The Penny Stock Trading System
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System
Preface
This publication is designed to provide accurate and authoritative
information in regard to the subject matter covered. It is sold with
the understanding that the author is not engaged in rendering legal,
accounting, financial, investment, or other professional service. If
legal advice or other expert assistance is required, the services of
a competent professional person should be sought. The information in
this book is only for educational purposes.
Welcome to the most comprehensive system on penny stock
trading. The goal of this book is to supply the novice investor along
with the experienced professional equity trader with all the information
he or she will need to be educated in the realm of penny stock trading.
This book can be used as an educational totem for those investors who
were always curious about trading in penny stocks but did not know where
to start. This book will guide the investor by explaining the various
concepts and terms in an easy to understand language. Besides its usage
as an instructional book for those who have never invested in a penny
stock, this book will also serve as a manual for the veteran trader.
As an investor you will be familiarized with all the concepts behind
micro cap investing. You will learn what the difference between a reverse
merger and a reverse split is. You will be presented with many new terms
and concepts. Some of those terms will be familiar since they are used
in connection with investing in the broader market while other terms
will be specific to penny stocks.
In addition to the various terms and concepts you will
be able to benefit from another facet of this book.
You will be able to personally benefit by using this book
as a manual on penny stock trading. This book will teach you proven
strategies that work when it comes to penny stock investing. Instead
of repeating shallow, but nice sounding ideas, the concept of buying
low and sell high, you will be given substantial strategies that are
extremely effective when done correctly. You will have at your disposal
strategies that only experienced traders know. The strategies in this
book have been collected from first hand experience and from the collective
experience of numerous experienced penny stock investors.
We all know the frustration we encounter upon spending
a few weeks reading a book on investing and then being left out to dry
when we are dealing with a real life situation. After finishing the
book we feel excited since we have just read 400 pages telling us that
the key to investing is following a few simple ideas. All we will need
to do is read the daily business newspaper. The investment mass media
publications will have us believe that once we have written down their
simple ideas and have a newspaper handy we will be on our way to making
our first million in the market. Unfortunately this approach to investing
is as far from the truth as possible. How many times have we read a
strategy in an investment book only not to be able to apply it in the
real world of trading? The reason that we often cannot apply the strategies
we read in an investment book is that most of the strategies we see
and hear on the evening news are based on theory and are not proven
outside of the classroom. Many theories only work in a perfect world
where the market always responds the way it is supposed to respond to
an event. Among the popular misguided theories is to only look for companies
with solid earnings. But reality has shown us that this theory does
not hold its weight in the market. How many times has a company released
positive earnings and still experienced a loss in its market value?
On the other hand how many stocks continue escalating in value in light
of the fact that they do not have any earnings? If you knew that a company
was going to earn a billion dollars in six months would you let yourself
be preoccupied with the fact that it is loosing money now? The simple
fact is that there are many other investing rules which are more accurate
than the frequently repeated advice we hear thrown out every day by
analysts and the popular media. Next time you hear someone tell you
that “all you need to do is buy a stock and hold it” ask
him how long he plans on holding the next horse and buggy company. The
point is that once a market for a product becomes eliminated then the
companies involved in that segment will either have to change direction
or will shortly be bankrupt. Now you might be wondering if there is
a method altogether for investing or if you should just throw darts
at the financial pages and see on which stocks the darts fall. Well,
before you give up investing and head for the black jack tables read
on. There is a method to the game. And the method consists of many smaller
steps which when followed properly will lead on to successful investing.
This book will provide you with the broader method and the small steps.
If you follow the advice and stick to the enclosed discipline you will
learn allot and might even become substantially rich from your investments.
Why penny stocks?
This book is focused on penny stocks. While there are
many different types of investing one can partake of the author believes
that micro cap investing is the most rewarding one. Micro cap investing
has the potential to yield huge gains in a short period of time. It
is very common for penny stocks to move upwards of 25% in any given
day. Keep in mind that the adverse means that they can also move down
25% on any given day. The nature of penny stocks makes them both very
rewarding and very dangerous. Then why invest in them at all? Because
in this world the more risk you take the more reward you are posed to
gain. If you put your money in a bank account you will eliminate all
risk short of a total banking melt down. You will always be able to
access your money regardless of the general condition of the market.
A bank account seems like the perfect type of investment vehicle until
you realize that the interest you earn hardly keeps up with inflation
after you have paid taxes. You can then choose to increase your tolerance
of risk and invest in a bond with relative security and safety. You
will then have peace of mind but also a very small return on your investment.
If you decide that you are willing to risk your money you can enter
the security arena via a mutual fund or the purchase of a security like
General Motors and hope that by the end of the year your investment
has grown by 20%. You have increased your risk and have increased your
return potential at the same time. By investing in an established mutual
fund or company you have both minimized your risk and potential at the
same time.
But what if you wanted the opportunity to double or triple
your money in a month? You would be hard pressed to find a stock trading
on one of the larger exchanges that had the potential to double in a
month. Now keep in mind that if a stock existed which had the potential
to double in a month it would also have the potential to lose all of
its value in a month. But what if you decided that knowing the huge
risks you were about to undertake you still wanted a crack at buying
stocks that could double your money in a month. You would find those
stocks among the ranks of the penny stocks. These companies would be
small companies with small operations but large aspirations. These companies
would be driven by a dream and the necessary ambition to beat the odds.
The odds would be stacked against them in many aspects. A majority of
these companies will never progress beyond the development stage. But
the slim percentage of companies that do beat the odds can experience
dramatic growth in their stock prices of upwards of 10,000% in a year.
So is it worth investing in penny stocks? The answer is
yes and no. You will have to look within yourself and discover if you
have the ambition and persistence to learn everything there is about
penny stocks. This book should prove to be more than enough ammunition
to beat the odds and discover the right next penny stocks. But it is
up to you to decide if you have the courage and ability to take the
large risks associated with investing in them. Use this book as an educational
manual, and make sure to consult a broker before making your decisions.
This book is not meant to give advice, it is only written for educational
purposes. Read the conclusion of the book before making any investment
decisions. It is located at the end of the book. Good luck.
Proudly brought to you by Donny Lowy - Copyright 2002
