We are presenting you with a $200/day Challenge. If you are able to
make $200/day in the market you will be making over $50k/year. How
would an extra $50k/year change your life? In order to make $200/day in
the stock market you have to learn a successful trading strategy and
you have to learn to follow rules. One of the biggest causes of loss
among new traders is over trading and failure to manage risk. We teach
our students to take 3-5 trades in the morning based on the trading
strategies we’ve proven are successful, including the Gap and Go, Momentum Trading, and Reversal Trading strategies.
When you join the Warrior Trading team we take you under our wing. Our mission is to see you succeed as a trader. You will be able to watch and learn as we trade the markets in our live Day Trading Chat Room. You will hear trade alerts, breaking news, and be able to chat with hundreds of other traders in real-time. In the evenings you are welcome to join us in our Trading Courses where we cover the advanced trading techniques I use to profit from the market each day. I would also encourage students to join us in our simulator. We run a Demo Trading Simulator that allows you to practice trading with $50k in pretend money and is setup so I can monitor the trades of ALL of our students. That means when we see you making mistakes we can point them out immediately!
Remember to follow your max daily loss. You never want to have a daily loss that exceeds your daily goal. If you goal is $200 profit, your max loss is $200.
Sure, it’s possible to
profit when you understand the game, but the odds are against you when
you don’t. And worse: manipulators and scammers often run the
penny-stock game.
For investors who can’t afford shares of Google or Apple, the potential gains from trades like this are too good to pass up. So penny-stock trading thrives. With a relatively small investment you can make a nice return if — and this is a big if — the trade works out. For example, say you buy 10,000 shares of a $.30 stock for $3,000. If the stock reaches $1, you’ve made $7,000, doubling your money.
Penny stocks and their promoters also tend to stay one step ahead of securities regulators, though just last month the Securities and Exchange Commission charged a Florida-based firm, First Resource Group LL C, with penny-stock manipulation. Read more: Simple rule: Don't buy a penny stock.
Even with these clear dangers, some people insist on trading the pennies. So, if you find yourself on the receiving end of a telephone call from a penny-stock promoter, or you spot an advertisement that promises dollars from your pennies — and you still decide that maybe penny stocks aren’t wooden nickels, just remember these 10 rules:
1. Ignore penny-stock success stories
Timothy Sykes, a penny-stock expert who trades both long and short, says you must not believe the penny-stock stories that are touted in emails and on social media websites.
“You have to say no,” Sykes said. “You can’t invest in penny stocks as if they were lotto tickets, but unfortunately that’s what most people do, and they lose again and again. Think of penny stocks as inmates in a prison that you can’t trust.”
Instead, Sykes says, focus on the profitable penny stocks with solid earnings growth and which are making 52-week highs.
2. Disregard tips and read the disclaimers
Penny stocks are sold more than bought — mostly via tips that come your way in emails and newsletters.
Sykes says there is a difference between stocks making a 52-week high based on an earnings breakout and stocks making a 52-week high because three newsletters picked it. Reading the disclaimers at the bottom of the email or newsletter, which the SEC requires them to do, will usually reveal a conflict of interest.
“Most newsletters don’t tell you the truth,” Sykes said. “They are being compensated to pump up the stock, and they rarely tell you when to sell. Often it’s far too late.”
3. Sell quickly
One allure of penny stocks is you can make 20% or 30% in a few days. If you make that kind of return with a penny stock, sell quickly.
Unfortunately, many traders get greedy, aiming for a 1,000% return. Considering that the penny stock you’re in might be getting pumped up, take any profits and move on.
4. Never listen to company management
In the murky penny-stock world, don’t believe what you hear from companies.
“You can’t trust anyone,” Sykes said. “The companies are trying to get their stock up so they can raise money and stay in business. There is no reliable business model or accurate data, so most penny stocks are scams that are created to enrich insiders.”
Sykes says large rings of the same people run promotions using different press releases and companies, including the reappearance of a notorious stock manipulator who was first convicted for an email pump-and-dump scheme when he was in high school.
5. Don’t sell short
Although shorting pumped-up penny stocks may seem attractive, don’t do it.
Penny stocks are too volatile, and if you’re on the wrong side of the trade, you could easily lose 50% or more on a short squeeze. Another problem is that it’s difficult to find shares of penny stock to short, especially those that made huge moves based on hype and newsletter tips. Leave shorting penny stocks to the pros.
6. Focus only on penny stocks with high volume
Stick with stocks that trade at least 100,000 shares a day. If you trade stocks with low volume, it could be difficult to get out of your position.
“You must be aware of the number of shares traded and the dollar volume,” Sykes said. He also suggests that you trade penny stocks that are priced at more than 50 cents a share. “Stocks that are trading less than 100,000 shares a day and are under 50 cents a share are not liquid enough to be in play,” he added.
7. Use mental stops
Because the bid-ask spreads on many penny stocks can be high, as much as 10%, hard stop-losses can actually cause you to lose money.
Although it takes more concentration, use mental stops. “I focus more on risk-reward than stops,” Sykes said. “If I want to make a dollar a share on a three-dollar stock, I will cut my losses at 20 cents so I have a 5:1 risk reward. I aim for 3:1 or 4:1, but not 1:1 or 2:1. If I think a dollar stock has only 50-cents upside (2:1), my mental stop loss will be at 10 cents because the risk-reward is better.”
8. Buy the best of the bunch
Sykes looks to buy penny stocks that have had an earnings breakout.
“I love buying penny stocks when they have good earnings, or when they are breaking out to 52-week highs on volume that is at least a quarter million shares a day,” he said. “They are easy to find if you look.”
The challenge is to find stocks that make 52-week highs that aren’t due to a pump-and-dump scheme. Examples of penny stocks that have fit Skye criteria in the past include Tango TNGO, -0.50% , Ma-gal Security Systems MAGS, +0.20% , and Staar Surgical Co. STAA, +1.45% .
9. Don’t trade large positions
“You really need to be careful with position sizing,” Sykes said. “I learned the hard way not to trade big. My rule now is not to trade more than 10% of the stock’s daily volume.”
In addition, he said, limit your share size so you can get out of the stock faster.
10. Don’t fall in love with a stock
Every penny stock company wants you think it has an exciting story that will revolutionize the world. If you enter the penny stock arena, be cynical, do your own research, and diversify, even if a friends or family member is touting a stock.
Penny stocks have earned their bad reputation, so beware.
When you join the Warrior Trading team we take you under our wing. Our mission is to see you succeed as a trader. You will be able to watch and learn as we trade the markets in our live Day Trading Chat Room. You will hear trade alerts, breaking news, and be able to chat with hundreds of other traders in real-time. In the evenings you are welcome to join us in our Trading Courses where we cover the advanced trading techniques I use to profit from the market each day. I would also encourage students to join us in our simulator. We run a Demo Trading Simulator that allows you to practice trading with $50k in pretend money and is setup so I can monitor the trades of ALL of our students. That means when we see you making mistakes we can point them out immediately!
How to Day Trade a Small Account $1000 to $8653 in 1 Month
1. Join the Day Trading Chat Room
The first step is to become a chat room member in the Warrior Trading Chat Room! This is where you will learn all the strategies we trade on a daily basis.2. Learn the Momentum and Reversal Day Trading Strategies.
My absolutely favorite strategies are Momentum and Reversal Trading Strategies. I use these to make a living trading the markets. In our Day Trading Courses I will teach you all the details of these strategies.3. Adopt a Trading Strategy and Write your Trading Plan
Once you’ve decided which strategy feels like the best fit for your risk tolerance and account size, you are ready to create a trading plan. A written trading plan is the documentation for how you will trade the markets.4.Trade the Strategy for 1 month in a simulator
Before ever trading with real money you should trade in a Simulated Trading account for 1 month to test your skills. You goal is simply to maintain an accuracy level of at least 60% and a profit loss ratio of 1:1, meaning the winners are equal size or bigger than the losers). If you can achieve these bench marks, then you are going to be ready to trade live. During the 1 month of practice, try to take 6 trades per day as a starting point.Remember to follow your max daily loss. You never want to have a daily loss that exceeds your daily goal. If you goal is $200 profit, your max loss is $200.
5. Scaling Out of Winners
I use an aggressive strategy of scaling out of winners. This means if I’m hitting my first profit target, lets say $100 on a trade, I always sell half, and adjust my stop to breakeven. That means even if the stock drops back down, I’ll still have a small winner. In other words, if I’m right on my entry and the stock goes up, it will always be a small winner. Instead of trying to hold the whole position and look for a home run, I look for small wins and consistency. This is a critical skill for a new trade to adopt.6. Hitting the Daily Goal & Profit Loss Ratios
Lets say for example that you take a total of 6 trades each day with a $100 max loss and $100 profit target. If 2 traders are losses and 4 traders are winners, you will have about 65% accuracy. You will be down $200 in losses and up $400 in winners, giving you a net profit of about $200/day. We always want students to aim for a 2:1 profit loss ratio, risking $100 to make $200, but we understand that isn’t always easy, especially for a beginner. But just think, with a 2:1 profit loss ratio and 6 trades, your 2 losers would still be down only $200, but your 4 winners would now be over $800 in profits, giving you $600 in net profits! That is 3x your $200/day goal, and its’ simply the result of improved profit loss ratios. So if you aren’t able to improve accuracy, you can work to improve your profit loss ratios.7. Maintain You Accuracy By Being Disciplined
In order to maintain long term success you have to be disciplined. That means following your trading strategy to the T. No short cuts! And no venturing outside your strategy because you think you see something that could be a big winner. Don’t let temptation allow you to break rules. I force myself to run 5miles when I break rules. Discipline is critical and you have to enforce it.8. Increasing position sizes
Most traders start with small daily goals of $50-100 dollars, and then slowly work their way up to $200, $300, and higher. Currently I’ve scaled up to daily goals of $1k, but I know some traders who have daily goals as high as $5k. Many traders will end up finding their comfort zone in the 400-800 daily goal range and be perfectly happy with that. Our goal is to get you there as quickly as possible!10 ways to trade penny stocks
Omar Aguilar, chief investment officer
at Charles Schwab, tells MarketWatch's Jonathan Burton investors are
transitioning to a search for growth from a flight to quality.
For investors who can’t afford shares of Google or Apple, the potential gains from trades like this are too good to pass up. So penny-stock trading thrives. With a relatively small investment you can make a nice return if — and this is a big if — the trade works out. For example, say you buy 10,000 shares of a $.30 stock for $3,000. If the stock reaches $1, you’ve made $7,000, doubling your money.
Dollars and sense
Penny stock promoters make sure to attach a disclaimer to their email, Twitter, or Facebook page, and take advantage of this language to embellish and deceive.Penny stocks and their promoters also tend to stay one step ahead of securities regulators, though just last month the Securities and Exchange Commission charged a Florida-based firm, First Resource Group LL C, with penny-stock manipulation. Read more: Simple rule: Don't buy a penny stock.
Even with these clear dangers, some people insist on trading the pennies. So, if you find yourself on the receiving end of a telephone call from a penny-stock promoter, or you spot an advertisement that promises dollars from your pennies — and you still decide that maybe penny stocks aren’t wooden nickels, just remember these 10 rules:
1. Ignore penny-stock success stories
Timothy Sykes, a penny-stock expert who trades both long and short, says you must not believe the penny-stock stories that are touted in emails and on social media websites.
“You have to say no,” Sykes said. “You can’t invest in penny stocks as if they were lotto tickets, but unfortunately that’s what most people do, and they lose again and again. Think of penny stocks as inmates in a prison that you can’t trust.”
Instead, Sykes says, focus on the profitable penny stocks with solid earnings growth and which are making 52-week highs.
2. Disregard tips and read the disclaimers
Penny stocks are sold more than bought — mostly via tips that come your way in emails and newsletters.
Facebook IPO: What could go wrong
“The free penny-stock newsletters are not giving you tips out of the goodness of their heart,” Sykes said. “If you read the disclaimers at the bottom of the newsletters, they are getting paid to pitch a stock because their investors want exposure for the company. There is nothing wrong with wanting exposure, but almost all penny newsletters make false promises about their crappy companies.”Sykes says there is a difference between stocks making a 52-week high based on an earnings breakout and stocks making a 52-week high because three newsletters picked it. Reading the disclaimers at the bottom of the email or newsletter, which the SEC requires them to do, will usually reveal a conflict of interest.
“Most newsletters don’t tell you the truth,” Sykes said. “They are being compensated to pump up the stock, and they rarely tell you when to sell. Often it’s far too late.”
3. Sell quickly
One allure of penny stocks is you can make 20% or 30% in a few days. If you make that kind of return with a penny stock, sell quickly.
Unfortunately, many traders get greedy, aiming for a 1,000% return. Considering that the penny stock you’re in might be getting pumped up, take any profits and move on.
4. Never listen to company management
In the murky penny-stock world, don’t believe what you hear from companies.
“You can’t trust anyone,” Sykes said. “The companies are trying to get their stock up so they can raise money and stay in business. There is no reliable business model or accurate data, so most penny stocks are scams that are created to enrich insiders.”
Sykes says large rings of the same people run promotions using different press releases and companies, including the reappearance of a notorious stock manipulator who was first convicted for an email pump-and-dump scheme when he was in high school.
5. Don’t sell short
Although shorting pumped-up penny stocks may seem attractive, don’t do it.
Penny stocks are too volatile, and if you’re on the wrong side of the trade, you could easily lose 50% or more on a short squeeze. Another problem is that it’s difficult to find shares of penny stock to short, especially those that made huge moves based on hype and newsletter tips. Leave shorting penny stocks to the pros.
6. Focus only on penny stocks with high volume
Stick with stocks that trade at least 100,000 shares a day. If you trade stocks with low volume, it could be difficult to get out of your position.
“You must be aware of the number of shares traded and the dollar volume,” Sykes said. He also suggests that you trade penny stocks that are priced at more than 50 cents a share. “Stocks that are trading less than 100,000 shares a day and are under 50 cents a share are not liquid enough to be in play,” he added.
7. Use mental stops
Because the bid-ask spreads on many penny stocks can be high, as much as 10%, hard stop-losses can actually cause you to lose money.
Although it takes more concentration, use mental stops. “I focus more on risk-reward than stops,” Sykes said. “If I want to make a dollar a share on a three-dollar stock, I will cut my losses at 20 cents so I have a 5:1 risk reward. I aim for 3:1 or 4:1, but not 1:1 or 2:1. If I think a dollar stock has only 50-cents upside (2:1), my mental stop loss will be at 10 cents because the risk-reward is better.”
8. Buy the best of the bunch
Sykes looks to buy penny stocks that have had an earnings breakout.
“I love buying penny stocks when they have good earnings, or when they are breaking out to 52-week highs on volume that is at least a quarter million shares a day,” he said. “They are easy to find if you look.”
The challenge is to find stocks that make 52-week highs that aren’t due to a pump-and-dump scheme. Examples of penny stocks that have fit Skye criteria in the past include Tango TNGO, -0.50% , Ma-gal Security Systems MAGS, +0.20% , and Staar Surgical Co. STAA, +1.45% .
9. Don’t trade large positions
“You really need to be careful with position sizing,” Sykes said. “I learned the hard way not to trade big. My rule now is not to trade more than 10% of the stock’s daily volume.”
In addition, he said, limit your share size so you can get out of the stock faster.
10. Don’t fall in love with a stock
Every penny stock company wants you think it has an exciting story that will revolutionize the world. If you enter the penny stock arena, be cynical, do your own research, and diversify, even if a friends or family member is touting a stock.
Penny stocks have earned their bad reputation, so beware.
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