Mr Flibble
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Hello all,
I've been trading penny stocks for kicks as well as Forex and the majors. Many people won't touch it with a bargepole but I just can't get enough of them. I've seen the highs and lows £3,000 becoming £20,000 within 2 days and the reverse is also true. The volatility excites me as a trader and makes Forex look quite dull at times.
Yes there are plenty of poor companies out there some of them are laughable but there is money to be made if you don't mind doing the leg work. Many will suggest you shouldn't deal with them at all but occasionally just now and then you find a real pearl that will rise through the ranks and eventually be uplisted first from the Grey sheets-Pinks Sheets-OTC-AMEX-NASDAQ. Its a bit like taking Burton Albion from the Blue Square Premier (non UK residents LEAGUE 5) to the Premiership, unlikely but possible.
So if you must play these heres a few tips I've learnt over the years.
1) History of a reverse split = don't go near it.
Many Pinkies and OTC stocks are there just to take your money. They have no revenue and no intention of generating revenue. All they do is issue shares, increasing the Authorised share amount every now and again until the price reaches .0001. Can you get any lower? Sure, now all they do is perform a reverse split. For an example a r/s of 500/1 would mean those 500 shares you used to earn become 1 share. Yes the value of that 1 shares is worth x500 now but just you wait as they, yet again ,release more shares and the stock drops all the way back down to .0001. Rinse and repeat. www.pinksheets.com has information regarding previous stock actions.
2) Pumped shares = Pump the sell button.
Many Pinkies (penny shares) approach a PR firm to pump their stock. As they usually have no money (no revenue) they offer the PR firm a wad of shares to get the word out about their "great" company.Unfortunately for you as soon as they have got the word out they then proceed to dump the free shares they received causing the massive price spikes you may have seen.
3) Forward splits = These are really great for a quick play usually right up until the actual FINRA date is announced. The opposite to a reverse split it usually indicates the company has been frugal in releasing shares and doesn't have enough of a float to go around.
4) SEC filings = A good sign (sometimes)
A non SEC reporting company can do pretty much whatever they like. They could raise the A/S amount and you wouldn't have a clue they have done so unless you called the Transfer agent.
Do your DD at all times before then proceeding to your TA. Be warned however that Pinkies don't care about any indicators. It is mostly PR driven. I hope my brief guide helped.
I've been trading penny stocks for kicks as well as Forex and the majors. Many people won't touch it with a bargepole but I just can't get enough of them. I've seen the highs and lows £3,000 becoming £20,000 within 2 days and the reverse is also true. The volatility excites me as a trader and makes Forex look quite dull at times.
Yes there are plenty of poor companies out there some of them are laughable but there is money to be made if you don't mind doing the leg work. Many will suggest you shouldn't deal with them at all but occasionally just now and then you find a real pearl that will rise through the ranks and eventually be uplisted first from the Grey sheets-Pinks Sheets-OTC-AMEX-NASDAQ. Its a bit like taking Burton Albion from the Blue Square Premier (non UK residents LEAGUE 5) to the Premiership, unlikely but possible.
So if you must play these heres a few tips I've learnt over the years.
1) History of a reverse split = don't go near it.
Many Pinkies and OTC stocks are there just to take your money. They have no revenue and no intention of generating revenue. All they do is issue shares, increasing the Authorised share amount every now and again until the price reaches .0001. Can you get any lower? Sure, now all they do is perform a reverse split. For an example a r/s of 500/1 would mean those 500 shares you used to earn become 1 share. Yes the value of that 1 shares is worth x500 now but just you wait as they, yet again ,release more shares and the stock drops all the way back down to .0001. Rinse and repeat. www.pinksheets.com has information regarding previous stock actions.
2) Pumped shares = Pump the sell button.
Many Pinkies (penny shares) approach a PR firm to pump their stock. As they usually have no money (no revenue) they offer the PR firm a wad of shares to get the word out about their "great" company.Unfortunately for you as soon as they have got the word out they then proceed to dump the free shares they received causing the massive price spikes you may have seen.
3) Forward splits = These are really great for a quick play usually right up until the actual FINRA date is announced. The opposite to a reverse split it usually indicates the company has been frugal in releasing shares and doesn't have enough of a float to go around.
4) SEC filings = A good sign (sometimes)
A non SEC reporting company can do pretty much whatever they like. They could raise the A/S amount and you wouldn't have a clue they have done so unless you called the Transfer agent.
Do your DD at all times before then proceeding to your TA. Be warned however that Pinkies don't care about any indicators. It is mostly PR driven. I hope my brief guide helped.
Its one I've been following for over a year. 30% is enough for one day.
