Penny Stock Jockey Math

It’s time to make cents of penny stock math.

The one characteristic of all millionaires, no matter what field, is their ability to know when they’re making money and when they’re not. They ensure they’re not being “penny wise and pound foolish.” Unfortunately, most penny stock investors don’t think that way.

Lets do the math. Sure penny stocks are cheap. But only if you buy right and then sell right. So lets review the rules of penny stock math.

Rule 1: Buy right. By this, I don’t mean you have to buy at the bottom (although that helps!). It means buy the right quantity. And its important to use the right broker.

Rule 2: Sell right. By this, I don’t mean you have to sell at the top (although that helps!). It means sell at the right time, and for the right price.

Let me explain further.

A lot of people make the mistake of buying the wrong number of shares. If the penny stock is really cheap, they buy way too many shares. This is not a problem if the promoter is able and brings in huge volume. However, if he’s not able, no matter how cheap the stock is, without volume, you will not be able to sell your position and make a profit.

By the same token, a lot of people make the mistake of buying too few shares. If the penny stock is priced closer to a dollar or higher, a lot of speculators will buy about 1,000 shares or less. This limits your ability to profit in two ways. If the promoter brings in volume, 1000 shares need to rise in price much higher in order for you to make a decent profit. And the small amount of shares all need to rise in price much higher in order for you to cover your commissions.

And that leads to the second part of buying right. Since most brokers/analysts don’t bother with penny stocks, why use a full service firm? A full service firm is fine for your blue chip retirement funds, but for penny stocks use an online firm that charges a low price per trade and has no minimum dollar or share order. This will ensure more of your profits stay in your account.

The ideal number of shares you should buy is determined by your risk profile. If you’re a beginner, you need to balance carefully. Just as a business has to keep a close eye on cash reserves vs. investments for growth, so do you. I don’t recommend beginners put more than $5,000 into a penny stock that’s priced above $0.50, and not more than $3,000 into a stock priced under. This will give you enough shares that a commission isn’t a problem, enough shares to make a profit, but not too many that you’ll be stuck if volume doesn’t come in.

Just as important as buying right, is selling right. Greed is dangerous, but necessary, and naturally comes into play. After all, if you weren’t a little greedy, you wouldn’t be investing in penny stocks. So the best time to decide your exit price is right when you buy. Pre-determine for yourself the kind of return you’re looking for, and the amount of time you’re prepared to wait. For example, if you said to yourself I’d like 20% in one month. Then stick to it. As soon as you’re up 20%, whether its in an hour or a month, get out. If it hasn’t hit your target in the time you’ve allotted, re-evaluate. Remember, its not the last deal you’ll ever be in and every dollar you have tied up is a dollar you can’t invest elsewhere.

When a stock is rising quickly its tempting to stay in, but remember, they can reverse direction just as fast. Its not something you control. The only thing you control is the amount of return you want and the time you’re prepared to wait.

Do the math and you’ll profit more times than not.

Become a member of the Penny Stock Jockey Winners Circle and start trading penny stocks for profits today.

www.PennyStockJockey.com

Penny Stocks, Bulls, Bears and Promoters

Unless you've been living under a rock, you've no doubt noticed the action taking place in the penny stocks sector. There are a few things to take particular note of:

• The action isn't discriminating against any penny stock company or favoring any penny stock sector
• Its happening during what some call the beginning of a bull market
• Its happening during what some are calling a bull rally in a bear market
  

What this tells me, and what it should tell you, is that money doesn't discriminate among penny stocks. So the big question in your mind should be what makes some penny stocks move, and others not?

It's not the charts; every penny stock has a different chart...and a different capitalization structure. Every company, if it wants to can tell a compelling story. Most of these penny stocks are similar in terms of their income statements and balance sheets.

Vive La Difference!

So what is the elusive difference? Simple: penny stock promotion. While some companies out there is trying to figure out whether we're in a bull market, or a bear market, penny stock companies that have employed a good stock promoter are increasing their valuations; it doesn't matter if its a bull market or a bear market or a bull rally in a bear market. The right stock promoter will always be able to work within the confines of a free economy.

So Does the Promoter Matter?

Absolutely. The reason I keep mentioning the right "stock promoter" is because the wrong one can completely destroy a company. Its been proven in the past that SPAM does work. - for the spammers. These days, most often, once a stock is spammed, pinksheets puts out a skull and crossbones on the stock and large online brokerages like Ameritrade, Etrade, Scotttrade and Schwab will not allow online trading in the stock. So the company hiring the wrong promoter really does suffer.

Where's the Advantage?

Unless you've been investing in penny stocks for a long time and know the game, its hard to tell the players without a programme. You could sign up for anyone of a multitude of free penny stock pick sites, but generally you'll get what you pay for. These companies are paid to tout stocks having done almost no research, and without even looking at management.
Or you could subscribe to a site that doesn't take any compensation from the companies it profiles. The site, www.pennystockjockey.com takes no compensation from any company we profile. Further, if the company profiled has a market cap large enough (generally anything over $20 million) we'll pay for an independent CFA report to justify our own conclusions. And ofcourse, the whole premise behind the company is that WE KNOW THE PROMOTER behind the deal. We will never recommend a company that isn't interested in promoting its stock, and we're not interested in profiling a company not willing to hire the right type of promotional services.