Problem: Need Money
Solution: The Stock Market has Money
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I'm a Day Trader in the stock market. I day trade penny stocks only, however, and regular day traders who trade the bigger stocks might not consider me a legitimate Day Trader. But, my brokerage calls me a Day Trader, so I'm going to stick with that however naive it might seem to experienced Day Traders.
I am a nervous Day Trader.
No one ever knows what a stock is going to do, so you can buy it thinking it will go up and it can plunge in the next second.
Because of this, I get super nervous when making a trade because I don't want to give all my money to other traders. There are ways to minimize your chance of losing and make trading penny stocks less of a risk. There are some who will tell you that it's a risk no matter what, and they are right, but stocks follow consistent patterns. Learning to spot these patterns is key.
In this blog post, I'm going to walk you through a trade I made today so you will see my thought process throughout the entire trade.
I bought 50 shares of $ABIL (Ability) for $7.60 a share.
This is a "big" buy for me because I rarely buy anything over $3.00 a share, so this was out of my comfort zone from the start.
I got the tip for this stock from Benzinga, who gives a daily chart for the lowest and highest penny stocks for the day. It indicated that $ABIL was growing fast.
I went into my brokerage account at Robinhood and read articles about $ABIL to see what was up and why it was growing.
I discovered it had just announced entry into a stock purchase agreement in Tel Aviv, and this was driving the price up.
Of course it would!
As soon as I bought the shares, it began to go up and I was excited. I didn't buy it on a market share, I bought it on a limit buy. The difference is, a limit buy will buy it at the lowest price I'm willing to pay, which, in this case, I was $7.60 per share. When I set that limit order, it was selling for $7.74 per share.
But it had been going up and down for hours.
I gauged how far the dips were and they were generally 15 to 20 cents each.
I watched the stock for about half an hour, as it climbed. It climbed up to $7.98 while I was watching, but dipped back to $7.74, then dipped sharply to $7.55, then immediately to $7.65. I decided to buy if it dipped to $7.60 because it had shown it was going to dip and rise.
I set my limit buy and went about other business, keeping a close eye.
I was delighted to find my limit buy had been executed while I prepared creamy mashed potatoes for Thanksgiving dinner.
Once the limit buy executed, I was glued to the app on my phone.
It shot up to $7.90 out of nowhere!
Should i sell? Should I wait?
While I asked myself these questions, I dropped to $7.53!
Just that fast!
I've lost! Should I set a stop loss order? What if it goes back up?
It dropped to $7.44!!
Oh, no! It's tanking!
As fast as I could think that, it shot up to $7.60.
Whew! A break-even. I can do that if needed.
But it shot up to $7.84!
I should sell now! Don't get greedy, I told myself.
Before I could take any action, it fell to $7.65.
I didn't want to sell at $7.65, but decided I was willing to sell at $7.80.
So, I set a limit sell at $7.80 and put the mashed potatoes in the refrigerator.
When I came back to my phone, my shares had sold at the limit sell price of $7.80 and I was $10 richer!
This is a small profit but small profits add up.
As you can see from the picture above, the rise did not last and the stock ended up at $4.98. I bought on the dip and sold on the rise, keeping a close eye on how it was doing while I owned some of it. This one was a quick $10.
To learn Day Trading, I've been studying Timothy Sykes' trading courses, particularly this book, The Complete Penny Stock Course by Jamal Ben Alluch. Jamal is a student of Timothy Sykes and took his lessons and put them in this book, creating a comprehensive course that anyone can buy and learn from.
I highly recommend you get this book if you have any interest in trading penny stocks. Timothy Sykes is a multi-millionaire who made his money on penny stocks. It can be done and anyone can do it!
Happy Trading.
Trade cautiously.
Trade wisely.
~Tricia
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