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What’s the BIG deal about Penny Stocks?

Penny Stocks are probably the easiest way to go from rags to riches literally overnight!

So many people, every year become millionaires from Trading Penny Stocks, I think it would be a safe bet to say that they create more millionaires than anything else on the planet!

It’s alot more common to hear of a stock going from $0.10 to $0.40 (400% Increase), than it is to hear of a stock going from $10.00 to $40.00! The margins with Penny Stocks are simply OUTSTANDING!

Like anything else, there are downsides to Penny Stocks, and lot’s of risk. I’m going to go over with you some of the best ways to profit from these types of stocks to try and help you minimize your risk and maximize your potential gain!

First off, you need to understand how the markets work!

The Stock Market is like an auction. On one side of the fence you have people who are ‘Bidding’ for a stock (This is the amount a person is willing to pay for a stock) and on the other side you have people who are ‘Offering’ their stock for sale (Self explanatory). Seeing how everything is based on supply and demand, the more ‘interest’ there is in a stock, the more the price tends to rise. Usually stocks get more demand based on a few factors: Financials, News, Speculation, and many other factors.

In the case of Penny Stocks, it’s usually speculation. Look at it as finding a company that YOU think is going to ‘hit it big’ one day, and having the opportunity to purchase shares in that company for pennies on the dollar.

This is where it can get a bit tricky! In my experience, the vast majority of Penny Stocks never make it too the ‘big times’ (Just think about how many coffee shops, stores, etc. etc. close down in your city EVERY YEAR) .. The concept is the same. The question then becomes, “How do I make money with these stocks”?

Ever heard of the term ‘Day Trade’? Day Trading is an art! You need to pay very close attention to what’s going on, and never trade with emotion. Look at it as a business. Everyday there are dozens of Penny Stocks that have these extremely large jumps in price, but they are very short lived. The idea here is to get in early, and sell at the top, or close to it. This may sound easy, and it can be, but it is not that easy if you don’t know what to look for, how to properly trade, and if you get to greedy!

When we profile a certain stock, we think it’s a good idea to put in a stop loss order. A stop loss order is like your safety net, you have to allow for a certain amount of ‘flux’ in the market in-case it has as intra-day low before bouncing back up. A 10% stop loss is usually a good bet, that way if the stock goes down 7-8% before going back up, you’re covered, and on the other hand if the stock goes down 10%, you automatically sell all of your stock and limit your loss.

The rest is based on your own perception of the market. What I mean by this is really quite simple… Let’s say you invest $5000 in a .10 company (50,000 shares) right in the morning as soon as the Markets open. You put in your stop loss (-10%) and the stock starts to go up. We usually sell in increments of say, in this case, 10,000 share blocks until we are even or so on our money.

Here’s an example (based on the above transaction): – 10,000 shares sold at .15 = $1500.00 – 10,000 shares sold at .20 = $2000.00 – 10,000 shares sold at .30 = $3000 for a TOTAL of $6500.00

As you can see from the example above, we just made a $1500.00 profit (+30%) and we still have 20,000 shares left. Now based on the momentum of the stock we’d either let the rest of the shares ride, or just get rid of all of them and make a nice little profit. This is all based on the fact that the stock was going up, and going up fast. The beautiful thing about this situation is the fact that you can place these orders the second you purchase your shares, and seeing how you’ve already put in place a Stop Loss, if this transaction were to go completely sideways, you’d limit your losses at a maximum of $500

Keep in mind that EVERY Stock you trade is different, and the rules may need to be tweaked a little here and there in order for this situation to be optimal.

On the other hand, some stocks take more time to go up, and are not what we’d consider a true day trade. If that is the case, the principle stays the same, but you need to be a bit more patient with it.

Key things to ALWAYS keep in mind!

Make sure whatever stock you decide to trade is a liquid stock. What I mean by this is really quite simple, and you will be able to tell right away. Make sure the stock already trades on a day to day basis, otherwise you can get stuck with shares that you can’t sell! Remember, if there’s no buyers, then there’s no demand, and if there’s no demand, nobody will buy the stock off of you! In short, look at a chart and check out the average volume that the stock trades on a day to day basis, and make sure it’s well over the dollar amount you plan on investing into any stock.

I have a lot more to say, but that’s really what my newsletter is for! Sign up today! My newsletter is 100% FREE, and risk free. You can cancel at anytime, but why would you want too!

My newsletter is focused on showcasing stocks to you that I think you stand a good chance at making good profits from fast, and we always throw in Trading Tips and Tricks, Trading Strategies, and how we personally think you can maximize your profits with any given profile we show you.

Check it out today for FREE and let us know what you think! All you need to do is use any of the boxes on the website and enter a valid email address, and you will be on your way to learning new and exciting ways to profit in the stock market.

Feb

05

2010

German Business Confidence May Rise to Highest Since July 2008

German business confidence probably increased to the highest since July 2008 in December, a sign the economic recovery is on track.

The Ifo institute in Munich will say its business climate index, based on a survey of 7,000 executives, rose to 94.5 from 93.9 in November, according to the median of 33 forecasts in a Bloomberg News survey. That would be the highest reading since July 2008. The index reached a 26-year low of 82.2 in March. Ifo releases the report at 10 a.m. today.

Recent reports have painted a mixed picture about Germany’s recovery. While the ZEW institute said four days ago economists are tempering optimism about the outlook, the Bundesbank this month raised its forecast for 2010 growth and Volkswagen AG on Dec. 11 posted the strongest sales gains this year.

“There’s probably further good news to come from Ifo, even if the improvement isn’t as rapid as before,” said Laurent Bilke, a former European Central Bank economist now at Nomura International Plc in London. “Exports are the place where you’ll see the recovery coming from in Germany, even if the very strong euro means they may not benefit as much as they would have done normally.”

Ifo’s gauge of the current situation probably increased to 90 from 89.1 while an index of executives’ expectations may have risen to 99 from 98.9, according to the survey of economists. The institute conducted the survey between Dec. 1 and Dec. 17.

Exporters are helping to fuel Germany’s recovery, overcoming a 14 percent appreciation in the euro since February. Sales at Volkswagen, Europe’s largest carmaker, rose 19 percent in November from a year earlier. Deutsche Bank AG, Germany’s biggest bank, says business in Asia will help push pretax profit to a record 10 billion euros ($14.3 billion) in 2011.

Recovery Doubts

While factory orders and industrial production fell in October, exports rose more than economists forecast.

The end of government stimulus measures and market turmoil stemming from concerns over Greece’s budget health are nevertheless casting doubt on the pace of recovery.

The Bundesbank says German economic growth will slow in the current quarter from the 0.7 percent rate recorded in the third, when expansion was boosted by stimulus spending.

The central bank then expects the economy to grow 1.6 percent in 2010 after a contraction of 4.9 percent in 2009. It previously forecast the economy would stagnate in 2010.

“Exports are still strong, last month’s factory orders and industrial production were disappointing, but it was a temporary blip,” said Aline Schuiling, an economist at Fortis Bank in Amsterdam. “The underlying trend remains well set for exports and the industrial sector.”

Dec

19

2009

Model-Driven Trading Strategies: Less Stress, Less Work, More Profit?

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What are model-driven trading strategies and why might they be the way to go for short term traders in 2010 and beyond?

Model-driven trading is about having a specific trading plan, a specific set of trading strategies, and relying on those trading strategies to produce more winning trades than losing trades over a period of time. Model-driven traders may be fundamentally or technically oriented. What is unique about this approach to trading is that it is rules-based.

The opposite of model-driven trading is discretionary trading. Discretionary traders are not without their own rules for spotting opportunities in the market. But those rules tend to be flexible, some times very flexible – and more often than not are more a set of principles than a true blueprint or guide.

Deciding which approach to trading is best for you can be tricky. The idea of casually taking a trade every now and then – a popular stereotype of discretionary trading – may seem like the perfect approach for a part-time or retail trader. But we have discovered a number of features about model-driven trading strategies that may provide significant advantages for the average end of day trader.

Less Stress, Less Work

With model-driven trading, traders are able to focus their decision-making on following the rules and custodial issues related to risk management. Unlike the discretionary trader who may be receiving a large number of conflicting inputs to be decided upon, the model-driven trader needs simply to follow the rules of his or her trading strategies and systems. This is an example of “see the trade, take the trade” trading.

While trading is never a simple walk in the park, being able to rely on a set of backtested trading rules can help relieve much of the stress that can accompany active trading. By following a set of rules when trading, the model-driven trader is much less likely to be swayed by the “news of the day” or to second-guess his or her individual trading decisions.

In this way, model-driven trading also tends to require a lot less work. This is especially important for the trader whose trading day begins after the close or in the evening several hours before the market opens. Even those model-driven traders who do not use automated or mechanical trading systems benefit from a trading strategy that is based on merely following a specific set of trading rules. Compare this to a process that requires extensive research and analysis before every single trade and consider which approach might actually better accommodate the busy life of the average trader.

More Profit?

Can traders using model-driven trading strategies make more money than the average trader using discretionary methods? There are many factors involved, but addition to those mentioned above – less stress and less work – that can contribute toward more profitable trading (less room for trader error), model-driven trading strategies tend to be backtested and quantified. And while past results provide no guarantee of future performance, traders who rely on quantified trading systems can trade with a sort of positive expectation that many discretionary traders cannot have.

Importantly, rules-based, model-driven trading strategies need not be especially complicated. One of our most powerful high probability trading strategies, have three or four simple rules – including the entry and exit. What is important about model-driven trading strategies is not that they are complex, but that they are robust (work over a variety of markets and market conditions), accurate (high win per trade win rates) and clear (the rules must be easy to understand and not subject to broad interpretation).

We simplify this for you in our FREE eBook, and through our Email Newsletter. Our goal is, and always has been, to educate all of our subscribers in an easy to understand method that will help you maximize your profits, while greatly reducing your risk!

Sign up today, 100% FREE, and receive tons of tips and tricks pertinent to making money Trading Stocks, coupled with our award worthy Trading Ideas (that could make you a fortune), but most importantly… A total understanding of how the Markets REALLY work!

Dec

07

2009

Tiffany Profit Higher Than Expected; Raises Outlook

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Tiffany & Co. reported a larger-than-expected quarterly profit and raised its forecast for full-year earnings on the strength of its overseas sales and a solid start to the holiday season, sending the upscale jeweler’s shares up nearly 6 percent.

The company’s [TIF 43.21 -0.68 (-1.55%) ] sales showed double-digit growth in Asia and a slower rate of decline for the United States.

As with other luxury retailers, Tiffany has struggled during the recession as consumers curtailed spending on nonessential items like jewelry.

Global sales at stores open at least a year, an important retail gauge known as same-store sales, fell 6 percent during the quarter and were down 10 percent in the United States.

The declines eased as the quarter progressed, Tiffany said, and November worldwide is signaling a strong start for the holiday season.

“We were pleased to see that the rate of sales declines in the U.S. lessened as the year progressed,” said Chief Executive Officer Michael Kowalski. “At the same time, many countries in Asia Pacific and Europe achieved considerably better-than-expected sales.”

At Tiffany’s flagship story on Manhattan’s Fifth Avenue, sales shrank 8 percent during the quarter.

Tiffany’s results came the day after rival jeweler Zale Corp reported smaller losses than expected and a week after upscale U.S. department store Saks Inc posted a surprise profit, suggesting the pressure on luxury retailers could be easing.

Tiffany raised its outlook for full-year profit from continuing operations to between $1.88 and $1.98 per share. It previously had expected $1.65 to $1.75.

Profit Beats

Earnings edged down to $43.3 million, or 35 cents per share, in the third quarter ended on Oct. 31 from $43.8 million, or 35 cents per share, a year earlier.

Excluding one-time items, such as a charge from a diamond sourcing agreement and a tax benefit, Tiffany reported a profit of 33 cents per share from operations.

On that basis, analysts on average had forecast earnings of 24 cents a share, according to Thomson Reuters I/B/E/S. Sales fell 3 percent to $598.2 million from $616.2 million.

Analysts had forecast $575.1 million.

In the Americas, overall sales fell 9 percent to $303.5 million, but in Asia, they rose 10 percent to $225.8 million, helping mitigate some of the decline.

Most retailers have reined in inventory levels to try to avoid steep discounts on extra merchandise. Tiffany’s inventories were down 6 percent from year-earlier levels.

The company operates 215 Tiffany & Co stores and boutiques globally.

In trading before the market opened, Tiffany shares were up 5.8 percent at $44.25.

Dec

01

2009

What Causes Stock Prices to Change?

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Stock prices change every day as a result of market forces. By this we mean that share prices change because of supply and demand. If more people want to buy a stock (demand) than sell it (supply), then the price moves up. Conversely, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would fall.

Understanding supply and demand is easy. What is difficult to comprehend is what makes people like a particular stock and dislike another stock. This comes down to figuring out what news is positive for a company and what news is negative. There are many answers to this problem and just about any investor you ask has their own ideas and strategies.

That being said, the principal theory is that the price movement of a stock indicates what investors feel a company is worth. Don’t equate a company’s value with the stock price. The value of a company is its market capitalization, which is the stock price multiplied by the number of shares outstanding. For example, a company that trades at $100 per share and has 1 million shares outstanding has a lesser value than a company that trades at $50 that has 5 million shares outstanding ($100 x 1 million = $100 million while $50 x 5 million = $250 million). To further complicate things, the price of a stock doesn’t only reflect a company’s current value, it also reflects the growth that investors expect in the future.

The most important factor that affects the value of a company is its earnings. Earnings are the profit a company makes, and in the long run no company can survive without them. It makes sense when you think about it. If a company never makes money, it isn’t going to stay in business. Public companies are required to report their earnings four times a year (once each quarter). Wall Street watches with rabid attention at these times, which are referred to as earnings seasons. The reason behind this is that analysts base their future value of a company on their earnings projection. If a company’s results surprise (are better than expected), the price jumps up. If a company’s results disappoint (are worse than expected), then the price will fall.

Of course, it’s not just earnings that can change the sentiment towards a stock (which, in turn, changes its price). It would be a rather simple world if this were the case! During the dotcom bubble, for example, dozens of internet companies rose to have market capitalizations in the billions of dollars without ever making even the smallest profit. As we all know, these valuations did not hold, and most internet companies saw their values shrink to a fraction of their highs. Still, the fact that prices did move that much demonstrates that there are factors other than current earnings that influence stocks. Investors have developed literally hundreds of these variables, ratios and indicators. Some you may have already heard of, such as the price/earnings ratio, while others are extremely complicated and obscure with names like Chaikin oscillator or moving average convergence divergence.

So, why do stock prices change? The best answer is that nobody really knows for sure. Some believe that it isn’t possible to predict how stock prices will change, while others think that by drawing charts and looking at past price movements, you can determine when to buy and sell. The only thing we do know is that stocks are volatile and can change in price extremely rapidly.

The important things to grasp about this subject are the following:

1. At the most fundamental level, supply and demand in the market determines stock price.
2. Price times the number of shares outstanding (market capitalization) is the value of a company. Comparing just the share price of two companies is meaningless.
3. Theoretically, earnings are what affect investors’ valuation of a company, but there are other indicators that investors use to predict stock price. Remember, it is investors’ sentiments, attitudes and expectations that ultimately affect stock prices.
4. There are many theories that try to explain the way stock prices move the way they do. Unfortunately, there is no one theory that can explain everything.

Oct

28

2009

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