It’s a Hot Market for Singles
Dear Penny Stock Millionaire,
There are SO many trades right now. The best lesson when there are so many plays is simple: take singles. If you’re always trying to hit a home run, you’ll end up striking out and blowing up your account.
On Cannabix Technologies Inc (OTCPK: BLOZF), I had a small $210 win. Another on the same stock was basically a scratch at $7. There are also a few bigger wins, but they’re still relatively small.
But check this out…
In the first seven trading days of the year, I made $10,645. That’s an average of roughly $1,500 per day. So how is my average higher when I’m mostly taking small wins?
I follow rule #1: cut losses quickly. Which means the bigger wins are MUCH bigger than the losses. In other words, I keep the losses small so the wins — big or small — add up.
On a third BLOZF trade, I made $1,337 on a 7.64% win. On another trade, Rafarma Pharmaceuticals, Inc. (OTCPK: RAFA), I made $1,050. And on January 8, I had my biggest win of the year with a slightly bigger dollar position.
Zion Oil (NASDAQ: ZN)
There was a lot of movement in oil stocks for a few days as the crisis with Iran unfolded. Zion Oil was a recent runner on January 6.
Look at the Zion Oil one-year chart below:
ZN chart: 1-year, daily candle — courtesy of StocksToTrade.com
The stock spiked again premarket on January 8. My goal was to take 5%–10% on a morning spike and cut losses quickly if it failed.
Here’s the ZN intraday chart from January 8:
ZN chart: morning spike, January 8, 2020, 1-minute candlestick — courtesy of StocksToTrade.com
As you can see, it had a nice morning spike. I’m glad I took a slightly larger size. The trade was a 12.2% win for $2,750 profit. My plan is to size up in the next few days as I get used to taking bigger positions again. But I’m still getting used to the crazy market.
There are just SO many plays. So take singles. Don’t go for home runs, because just as fast as these stocks spike … they can drop, too.
“Tim, considering the market is at all-time highs and you’re still easing back into trading with a big account, are you keeping your risk levels tight?”
Yeah … but still … you always have to keep it trade by trade. You can’t get too cocky like I did in these trades.
Also, more than just the big account … and more than the market at all-time highs … there are five to 10 stocks spiking 50%–100% … every day.
So you have to choose your spots. And sometimes you have to be OK with missing out.
Take Trillium Therapeutics Inc. (NASDAQ: TRIL) on January 9, for example…
TRIL had a multi-day breakout in the $1.60s–$1.70s range. I’ve been watching the stock for a while. It was one of my top five penny stocks to watch for January.
I saw it, but didn’t trade. Another trader I know did though, I think he got in around $1.70 and sold around $2.00. Then the stock just kept going. While I wasn’t trading it, I was watching it and I even said, “I’d be selling in the $2.40s NOT buying/chasing.”
The stock went to $3 plus … the same day. So it nearly doubled. It was the biggest move the stock has had for months. I missed it.
What you have to remember is…It’s OK to miss a play
You have to be OK with missing it. If you see it … and if you can profit from it … that’s awesome.
But it’s important to learn to…
Choose Your Trades Carefully
If you miss a trade, try to take the lesson … “OK, I saw what happened there. I recognized it. I’ll try to do better next time.”
For me, I don’t do as well with short squeezes — and that’s what’s been working best in the market lately. Sometimes that happens.
Some people ask why I don’t trade a stock like TRIL when I see it. Again, there are so many plays right now you have to choose what works best for you. For example, I prefer OTCs to Nasdaq stocks.
Which brings me to an important lesson…
How to Avoid Becoming the Typical Penny Stock Gambler
The good news is there are a lot of plays. Which means there’s a lot of money to be made.
The bad news is…
… because there are so many plays, students stop studying the past.
They say, “Yeah, yeah … OK, Tim … your pattern … blah, blah, blah…”
Then they focus on whatever’s hot. So they become the typical penny stock trader: a gambler. They chase other people’s alerts. They chase big movers and wonder why they’re not having success.
Learn From the Past
Don’t forget the past. All these plays should encourage you that there’s money to be made. But if you truly want to maximize your profits, you MUST study the past so you can be fully prepared.
Here’s another question I get a lot: “Why are your students trading stocks that you’re NOT trading?”
Unlike many fakes in this industry, I teach my students to be self-sufficient. I don’t want you following me into a trade. You should avoid following anybody else into trades.
How do you become self-sufficient? Study the past. Study like you’ve never studied before…
Use Evenings and Weekends to Study
Use every weekend … and every night to study. Every single newbie is playing a game of catch up. Remember, this game has been played for decades. You’re just getting used to it. You’re just learning about it.
You have to trade for several years before you move out of Newbieville. You have to go through different market conditions and gain a lot of experience.
There are those of us who have been profiting from this stuff for decades. We pick off newbies for fun…
So don’t be easy prey. Instead, arm yourself and learn from the past.
The Bottom Line
That’s it for today.
Be happy to take singles. They will take you much further than trying to predict the top and bottom of every moving. Taking a small amount of money off the table is better than gambling on a big win and walking away with nothing.
Choose your trades carefully and don’t allow fear of missing out get to you. There will always be another hot play.
Editor, Penny Stock Millionaires