, The Green Pennies Stock Report: A More Personal Introduction (Part 2)

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Monday, August 7, 2017

A More Personal Introduction (Part 2)

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Okay so, I learned my lesson with the larger stocks. When looking at my intentions with making this trade, I found that I actually was somewhat aggressive with my trading style. At that time, I was all big risk, big reward. So I want to get rich with my $400 dollars (now about $380), how will I do it? Well, there is a form of stock out there that is known for being high risk/high reward, and its name is the penny stock. 

It was around this time that I learned how to scan for stocks with TDAmeritrade's thinkorswim trading platform as well as talking with other investors (and honestly learned a lot from them) through Ihub (google >> IHub). I found another stock that showed a lot of promise at the time and seemed like an excellent deal. I bought into the stock and managed to make $100 after commissions after the trade. This was the first time I made my own money, and it wasn't like my first dollar or anything, it was my first $100. I was simply ecstatic that I've found a way to make money on my own (that honestly works)!

With this being said though, my story with that stock isn't really over. I was lucky as when I sold, I was able to sell at the stocks peek. From there, the stock pretty much slowly went down and down (and is still going down even today). The company was hyping up the idea that they were developing a brand new type of credit card that hackers simply wouldn't be able to hack/crack/steal. The problem was that on their balance sheet (provided by OTCMarkets), it showed that they were using investors funds from their IPO (initial public offering) to develop these new cards. As an investor (even then), I wouldn't feel comfortable until they actually started to bring in profits. As the hope that we'd see the day that they started making money dwindled, so did the share price. I pretty sure that this stock is a pump and dump although it's totally possible they were developing this product and simply keep throwing money at it. Will they actually release a worth while product? Who knows??? 

With that stock behind me, I learned more about pump and dumps as well as how to avoid them (aka look at the quarterly/annual reports, investors opinions, and news). Then the day came that I found the stock that will simply make me rich! The stock price was low, the company is making revenue, and has a month over month improvement in revenue such that the company would become profitable overall. They also were paying off their debt at the time (which they did). I read all this, did all the research, talked to all the investors in the forums (and got really acquainted there), and was ready to buy the stock.

I bought in with as much money as I could back then (still roughly about $400; I saved the $100 as a trophy) and bought in. The thing about penny stocks is that there can be some pretty crazy (and volatile) when new news comes about. It's because of this that I really struck gold for the first time. 

I was on break, and as usual, I'd use my phone to check the stock price. What I saw surprised the living heck out of me. The stock price rose by a factor of 10!!! That $400 dollars just became $4000. I quickly sold as to solidify my gains. I remember calling my friends and family telling them what happened and honestly freaking out. The feeling of winning the lottery honestly washed over me!

I learned two things from this. When the stock price jumped up and I sold, the next day the stock price plummeted. This has been an honest to god "golden rule" for me for the longest time. To the many people that I've taught how to invest, I made sure they all know my rule of, "What goes up must come down." If the stock price is constant and then has a big move, the move will often times correct itself. The only time this wouldn't be true was if the news was either that great or really awful (lost a lawsuit, trials of a new cancer drug failed, etc.). 

The second thing I learned is that while you started with little money, there are definitely (if not always going to be) people with big hands and tons of money willing to throw at a stock. This is where I learned that you have to be clever. You can watch the bid and the ask and find the perfect time to strike to either get the price to move the way you want it to, or to sell at the best price possible. You can use Ihub to change popular opinion about that stock as well. If you hype the stock up, I've always had positive results from doing so. Some investors (mainly MM's) bash stocks to try to get the price lower so they can get more shares at the same price (more band for their buck).

Me being the crazy daredevil I was saw a great future in the company and patiently bought in and waited for the stock price to rise yet again. While it took about 3-5 months for this to happen, I got a times 7-8 return on my investment. I had about $25,000 - $30,000 in my account at that time. As time went on I had to take money out to pay off some college stuff as well as living expenses. Today, I have about $16,000 of that money left, though I'm currently patiently waiting for my next move to strike. I personally think I'll be rich in the next few years, but I won't know until I get there. 


Did you learn anything from this? Did you find this story motivational? 
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