I'll begin this thread topic with the rider: Make no mention of individual stock codes, with their names, details and prices as it is wisely against ET policy. Penny stocks are the wild west of trading! Anything goes! Highly speculative. Under capitilized. No earnings most often. Run by minimum of directors often with little qualifications or experience. Frequently capital raisings therefore share dilution. Frequently have huge number of shares on issue the longer they trade, into the billions. Have little in the way of fixed assets. Pay no dividends. They often carry debt or just raise more capital year after year. Frequently tread water for months or years in share price. Very low turnover, low daily liquidity. Large spreads (at times). Huge % drawdowns. Frequently go bust, you lose 100% of your money. Frequently resurrect like a phoenix with name changes but keep their shitty directors. Often see turnover in directors. Frequently see director's are on multiple company boards. Definitely the playground of pump and dump rorts due to low turnover. Easily manipulated. The media (in Australia at least) love to promote and market these shitty penny stocks because like a media gossip column, the media likes to talk shit about shit. Every day there's a new bs story about some bs penny stock adventure. It's a media marketing paradise which never fails to suck in noobs. My opinion, frequently penny stocks is just a rorting business. The stock exchange give directors permission to list, who then milk the public for as long as possible. This is how the scam works; List on exchange, Prior, put out a propectus and glamour story about 'finding gold in the Himalayas', raise money, year after year for as long as you can hold out with this scam game, make presentations, publish pretty charts of gonnawouldashouldacoulda, talk shit every year, keep raising money and use that money to pay your salary, get yourself as a director on as many companies as possible so you get fatter quicker.
Ok, so in my first post I have laid out a compelling story why penny's are crap. Saying all that, there is a potential to make well off trading penny stocks, I will continue....
When the stock market rises or falls, "all ships rise and fall with the tide", so the story goes. My observation, on lousy stock days, often the lousy shitty penny stocks rise. Now this is kind of besides the story I wish to tell, but just an observation, if the mkt is falling - DO NOT jump to the false assumption that a rising stock in a falling market is a gem you've just discovered.
This post is about making money. If you do your homework, there's money to be made 'out of shit'. A bit like garbage collectors, there is money to be made in the business. Repeating.... do your homework. You need: A Experienced directors B Capitilized enough, you don't want to be scraping the barrel with minimim cap. Every country will be different in this regard but look at cap levels, the company needs funds to work effectively. C Turnover, if stock trading turnover is always very low you will highly likely run into trouble. D Depending on your trading style, some traders want in and out fast, others buy and hold, this is for you to determine, I pass no judgement, do what suits your style. E A trading plan, there is a method to the madness but trading with no plan is super dumb. F A good story, the company needs a good story which is kind of niche. G Company announcements, you need to go through them, do they have the gift of the gab and then come bleating for another capital raise frequently - avoid! H More announcements, are they physically active or just planning planning planning, talk talk talk. I Are they too spread - operating in Chile, USA, China, at the back of the moon. Forget companies which are here there and everywhere. J Diversified, are they jack of all trades, finger in every pie, jumping pillar to post. Work it out yourself. This is what frequently happens in real life. Company makes a spectacular announcement, share price rockets. Over next days, weeks months, share price crashes back down to Earth. You need to do your homework - keep your eye on the ball - keep focus - This is where you begin to make money. If the ducks line up re good directors, good story, reasonable liquidity, there is an easy 10 bagger ready for the pot when it begins a good long march. Conclusion: Focus, quality directors, place a small position, don't go stupid greedy on placing trades. Maybe I'll add more, will mull abit as I trade/hold penny's at times and have been through the treadmill. I wont be talking about individual stocks, just that this area can often work but it takes homework. Trading penny's purely off charts imo is a mugs game. You will lose your shirt.
PS: Talking penny stocks on ET can be a contentious subject, I prolly will not go too much into detail, but one needs experience imo, lots of it, and lots of patience, well capilized as a trader, only a small overall holding.
Garbage unless it is not, but very hard to research if not independently audited. I find the best legitimate penny stocks on non-US exchanges. I have a penny stock that has paid out $0.035 USD in the last 6 months on a stock I paid 0.071 SGD per share for. Still highly speculative, but worth it when it works. I have other examples of legitimate and not legit pennies. I enjoy the hunt and limit the selection universe. Do a lot of due diligence. Keep the bets small and you can do fine. Definitely a hobby for me.
This was highly profitable for me in like 2003-2006 I just couldn’t go big. So while the percentage gain was nice the actual money made was not that much. I posted something on this year’s ago. How to funtrun the stock promoters and which promoters moved the market. Peace.