As you may already know, specially if you’re a penny stocks trader, penny stocks are dangerous stocks that we choose to trade.
No one forces us to trade them, we trade them because we see their opportunities. At the same time, we do realize how quick things can turn around against us.
Which is the part that everyone does not like. Unfortunately, there’s nothing we can do to change that, it could happen any time with any trade.
It’s very risky but it can also generate lots of profits if you’re trading correctly. According to CNN Money, in 2013 Tim Grittani turns $1500 to more than 1 million in three years.
You may have also read about Timothy Sykes whom also transformed his small portfolio into millions. What does this tell us? There are money to be made in this market, but you should always acknowledge its downside.
In other words, stay very vigilant when you occupy some positions.
Grittani started trading with his life saving money, which I consider to be a very bold move. Although I would never encourage someone to do this move, sometimes the very worse idea does work if you’re lucky enough.
Still according to CNN Money, this guy traded a stock that was being pumped. From this stock, he made $8000 dollars before this stock crashed.
However, He had Timothy Sykes as his mentor whom provided to him all the necessary tools needed to trade like a guru. Fortunately, you too can make money from the pumps even if you cannot afford to hire a guru to help you with your trades.
Trading the pumps requires you to be very careful. You have to be very disciplined because sometimes a pumped stock can fool you without any notice, not that they ever given any notice.
But those stocks that are being pumped are far greater difficult to trade than the rest. From this post I will share with you some of the basic rules that can be used while trading the pumps.
What are pump and dump stocks?
It’s just like name states, they get pumped by news and promoters and then dumped a little bit later. As you know already, penny stocks are prone to those kind of manipulations.
They are not well regulated which gives con-artists the freedom to do almost anything they want with them. Nonetheless, they are still able to make you so much money in a very short period of time.
Unfortunately, you do have to always keep in mind that you can also lose a huge chunk of your portfolio if things don’t go your way.
How to spot the pump and dump stocks?
1- It’s so much easy to find them given that we do have them listed here on this site for traders like you every morning. Here is a link to the page where you will find a daily list of most of the penny stocks that are being pumped.
If you choose not to follow the list on this site, there are many websites out there you can look up for through Google search engine. You should be able to find them, although most of them may not update their information daily.
Contrary to many of them, in Penny Stocks Traders we try to keep it up to date. We post the list daily, sometimes even very early in the morning before the market actually opens.
It was a great initiation from our part because from the stats many people like you are benefiting from our list. Many traders check our list every morning to see if they can use any of the pump and dump stocks or to check out the stocks that they should not trade for the day.
Now that you’ve spotted some pump and dump stocks, how do you trade them?
2- Once you’ve spotted them do not just go and start trading them. Like you would do for any stock, more precisely the penny ones, make sure you conduct a quick research to see if either one of them worth your money.
Sometimes, the pump and dump stocks may have a news-released which causes people to start with the pump. In order for you to have an idea of such a stock’s destiny, you’ve got to look to its history.
Always remember that, HISTORY of a stock is very important. You should always check how a penny stock has been doing in the past in order for you to predict its fate.
Trading pump and dump stocks are different from how you would trade any other penny stock. The reason for this is because it’s being pumped and will be dumped right after the profits are made.
You have no idea as of where the dumping will start, you have to always be prepared. You need to be next to your computer at all time to watch the activities, such as your level II and so…
Making money trading pump and dump stocks long
Trading long means trading the stocks while their prices are going up in trend. Many penny stock traders use this opportunity to make profits while the con-artists are making their profits.
At the same time you will find many other traders who age against the idea of trading pump and dump stocks because they think they will always loose their money from them.
Although they did not program the pumps for you and I, we can all make a profit from them if we know how to trade them.
Making profit trading pump and dump stocks short
The way this works is like you borrow those shares from your broker and then you return them after your transactions are over.
Some brokers may not provide such a flexibility, but you should be able to find some of them that will enable you to trade penny stocks short or short selling.
Trading pump and dump stocks short would make you money as their prices are crashing, which should be easier than trading long since those stocks will crash most of the times.
We always hear about how bad pump and dump stocks are, but never about the possible good side of them. Pump and dump stocks are being done illegally, because those people who are behind them are doing it in their favor.
Nonetheless, we too can benefit from them if we spot the right one. Spotting the right one would mean spotting the one that will take action after being pumped.
Not all penny stocks move after a pump, for this reason you have to look for those that could actually change in price due to a pump.
Conduct your research, find a positive reason for trading it. It may be a big chance that you’re taking, after all we take chances with all penny stocks.
Good luck trading!
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