How to play PennyStocks Posted by shawn | at 5:16 PM

To make money on penny stock trading you first need to throw out everything you know or think you know about stock trading and come to the realization that

Pennystock trading is penny stock gambling.

Over the years I have honed a maverick trading style based on realistic view of what this “market” is actually all about. If you can get in the proper mind set, you can read the future movement of a penny stock and know when to get in and get out.

To snap you of the world of real stocks let me give you Penny Stock rules to live by:

1.) Penny Stocks do not represent real companies. They exist for one reason, to make people money on the increase of share prices. The transfer of wealth from the dumb to the smart. (Of course, a few Penny Stocks are real companies, but finding them is next to impossible and you will be wasting time that could be better spent on fake companies.)

2.) Great news can be a powerful mover of penny stocks but other than temporarily increasing the price of the stock’s shares it means nothing.

3.) Newsletter tips are just that – tips. Study the newsletters to see who gets the best bounce from their picks but never believe what they tell you.

This is how it generally works: Newsletter or newsletters decide to promote a stock. Many times they work for the Penny Stock “company” and get free shares or buy cheap shares for their services before the promotion starts.They release their newsletters promoting the stock, the penny stock company then will release some “great” news to coincide with the newsletter pump. The stock doubles or more, the newsletter folks and insiders involved with the companies sell shares into the buying spree. After an hour, day, or week the stock returns back to its original price or lower.

4.) Any good news about a penny stock should be considered a LIE.

5.) Never fall in love with a penny stock, it’s like falling in love with your blow up doll.

Ok, now I hope you realize the whole Penny Stock game is the dirty underbelly of stock trading. The thing is, if you understand and live buy rules 1 – 5 above you can make a lot of money.

Why? Stock goes up you get in for a short while and take a small percentage profit, get out. Why would you care if the stock goes back down and those that don’t understand rules 1-5 have lost money? You have made a profit and are already in your next play. Oh, one more rule but it isn’t mine – “pigs get slaughtered” – those that hang on hoping for more profits or to recover a loss aren’t in the penny trading business very long.