Eight Ways to NOT Blow Up Your Account
Dear Penny Stock Millionaire,
The secret to success really is to simply master a few key market patterns and rinse and repeat thousands of times with profits of a few thousand dollars…
All while cutting losses when wrong.
Add those two things up over time… and that’s it!
Now obviously that’s easier said than done. And patterns go in and out of usefulness every few years, months or even weeks, so you must always adapt and study, study, study.
But that’s the gist of what you need to do to be successful. And it’s through obsessive studying of the past that you’re able to better understand these patterns and formulate a strategy that works best for you and your personality.
Yes, there’s no one magic formula. We’re all different so we all see and trade stocks in a slightly different manner…
But aside from all my top students’ and my success, 90%+ of traders lose.
And out of those who lose, many traders lose everything and “blow up.”
I know too many traders who have lost 30%, 50% or even 100% of their money on just one or two trades due to flaws with their approach.
That just isn’t right.
Trading doesn’t have to be like that if you have the proper mindset and risk management in place beforehand.
What’s even worse is I know many people don’t start trading in the first place for fear of losing big and blowing up. They never even give themselves and their future earnings a chance…
They’re crippled by their fear of the unknown and unimaginable.
And that’s bullsh*t as there IS a safe way to trade stocks, even ugly, manipulated, volatile, scary penny stocks.
How do you do it?
Here’s a list of rules to help lessen your fears and give you specific instructions on what NOT to do because I’ve experienced big losses.
I’ll tell you straight up that each and every time you lose money it absolutely sucks.
All your hard work and studying doesn’t matter sometimes and it’s like a punch to the gut … it’ll feel like you can’t breathe.
So memorize these lessons and don’t stray from them…EVER:
Way to NOT Blow Up #1
Remember Rule #1: ALWAYS CUT LOSSES QUICKLY.
My dad likes to say “big losses always happen this way, it goes from green to red to stubborn”, meaning a student will have a small profit on a stock, get greedy and not take the profit. Then they will start losing money on the trade, or go into the red on their position, and then they get stubborn, refusing to cut losses quickly and that’s how small gains and losses can turn into potentially big losses.
I don’t care what your ego tells you…
I don’t care what gunslinging traders who wear their blow ups as badges of honor, while they’re really just addicted to “action” tell you…
Here’s what you need to do: LEARN TO TRADE LIKE A COMPLETE COWARD LIKE I HAVE.
Your trading does not have to be stressful if you’re willing to simply exit trades quickly when they’re not heading in your direction like you wanted.
Way to NOT Blow Up #2
Don’t Go All in.
No matter how sure you are on ANY play, long or short, something can always happen that will change the trade.
Sometimes it can happen slowly or sometimes even in a heartbeat. Since you cannot predict these events, all you can do is learn to prepare for them ahead of time by taking reasonably smaller position sizes.
Yes, it’ll take you longer to make millions, but remember 90% of traders lose so the odds are against you. Especially in the beginning.
If you are somehow going to be successful, you have plenty of time to bet bigger and take more risks AFTER you have some financial cushion and experience down the road.
Way to NOT Blow Up #3
Don’t Use Leverage and Don’t Borrow.
I know many people think leverage is the key to turning a few thousand dollars into millions.
Let me cut through that bullsh*t and tell you it’s not. And I’m not basing this just on my experience alone… but on the experiences of SEVERAL of my millionaire students and upcoming millionaire students too.
Penny stocks are plenty volatile for you to grow an account exponentially within a few years without the need to borrow money from your broker, or anyone else for that matter too. Yep
Way to NOT Blow Up #4
Obviously it’s more fun to try to find a huge winner than a small winner. But my millions and the millions of my top students have been made one 10%, 20%, 30% gain at a time.
We NEVER aim to make 100%, 200% or 500% like too many newbies and gunslingers try to do. Those people usually miss their mark and miss out on singles over and over and over again in the pursuit of home runs. They often striking out.
The cool thing is that if you aim small, you miss small. But sometimes you will hit the occasional home run just by being so dead on with a trade. You shouldn’t expect it or aim for it, though. Be the Ichiro of penny stocks, don’t do steroids and end up like Sammy Sosa or Mark Maguire (if you’re unfamiliar with my sports analogies, look up these baseball players and shame on you!)
Way to NOT Blow Up #5
Accept That Stock Prices Are NOT Rational.
There’s a famous Wall Street quote that stock prices can remain irrational longer than you can remain solvent.
This holds true for both longs and shorts who too often go down with the ship when they’re so narrow-minded in their thought process.
They lose track of proper risk management on their positions, succumbing to pathetic forms of ego-management which doesn’t usually end well for their accounts.
Way to NOT Blow Up #6
Understand the Stock Market’s Complex with Multiple Indicators Interacting at All Times
Once you do that, you won’t question or whine about why a stock doesn’t do what you want even though it’s the right price action or pattern or has the right news or earnings.
I use over half a dozen indicators on EVERY trade and it’s fascinating to see how they interact with each other and change a stock’s risk/reward.
For example, often times a company reports record revenues and profits and CNBC hypes it up all day long and yet the stock drops…
CNBC viewers are left scratching their heads wondering why?
They don’t realize that the TV channel is entertainment, not useful for traders at all. In fact, several studies have been done that claim consistent success by betting AGAINST whatever they’re positive on, that’s how bad they and their ugly bald mascot are as stock pickers!
And that’s why their ratings are now at multi-decade lows too.
Or, sometimes a hot biotech stock gets FDA approval and the media is all over the “positive” news. Yet, the stock drops because the approval was already priced in ahead of time…it’s never as simple as you or the media wants it to be.
Way to NOT Blow Up #7
Don’t Try To Guess News Ahead of Time.
This is a classic lesson I learned a while ago when I used think if I could research enough — and I mean 20-40-60 hours of hardcore digging into one stock. I thought I could have some “edge” in predicting upcoming earnings or analyst calls or conference presentations. But I discovered there’s always something you can’t see that can change everything.
For example, a biotech company gets FDA approval, but the stock is halted for a negative open because the FDA also smacked a warning label on their approval and the stock drops 50% when it re-opens for trading.
Or a company reports bad earnings like you wanted if you’re short the stock, but the CEO surprises by introducing a new product that they’ve been working on in secret and is showing promise amongst their customers and the stock spikes 25% the next day.
There’s PLENTY of money to be made AFTER the news is out.
Way to NOT Blow Up #8
Stick to Patterns with a History of Success
After 2 decades of intense study and experimentation, I proudly show off my favorite patterns off to my students outside of Agora Financial.
But over-inquisitive students always want to ignore my hard work, trying to find their own patterns, inevitably coming away disappointed.
I’ve done all the heavy lifting for you, it’s your job to just digest it all and master it like several of my top students have in becoming better traders than me…you don’t have to reinvent the wheel here.
If you don’t know what patterns have been successful, then you haven’t studied the past enough…and you’re also not prepared for the many dangers in the penny stock world.
I used to be VERY narrow-minded in my trading and teaching, but now after 10 years of teaching and nearly 20 years of trading I’ve mellowed out and just want everyone to be safe and learn to trade all these great setups the best they can.
So, promise me you’ll be a safe trader. Not one who risks blowing up or losing big! Life is too short to trade too risky and be stressed out all the time.
Editor, Penny Stock Millionaires