I have been trading stocks as a hobby for a long time. However, it was not until I started trading very cheap stocks that we made enough profit that we could briteklighting.com easily quit my primary income job and trade stocks for a living. I know what you’re think… how does he do it, right? Keep reading and I will tell you.
Not long ago i have read several online articles on various sites that produce the claim that trading very cheap stocks is like playing. As an active and extremely successful stock investor, these kinds of statements annoy me as they are not true for most traders who trade the otcbb and pinksheets. In fact, far from it, I don’t enjoy almost any playing because I quite like making money far more than losing it. I don’t even like doing casinos, although playing poker can be fun as there is at least some strategy to that.
Now this is not to say that there aren’t some traders out there that do indeed trade very cheap stocks with the same random pattern as pulling the lever on a slot machine game or running the chop while intoxicated in Nevada. However, these are usually newbies to the currency markets and they burn out very fast. Those investors that are set on making money with very cheap stocks soon learn techniques that permit them to do so and they soon learn they can bring in more money with stocks that trade for less than $5 per share than they can trading traditional stocks that trade at more than $5 per share and have a much wider market cap and total net worth. I know look for ones that are on the edge of breaking out and once I make a nice profit It’s my job to sell and freeze my profit. I am not a daytrader but I also don’t believe in being so carried away I miss out on locking in my profit when i have the chance to do so.
I also want to be totally honest with you. Very cheap stocks are infamous for being involved in scams where dishonest people change the price by promoting certain very cheap stocks in a less than truthful or honourable way. You might have heard of “pump and dump” scams and it is imperative that whatever method you employ to trade these stocks that you are able to avoid these types of scams.
There are many of us that produce a good profit on a consistent basis trading very cheap stocks. We have learned methods to minimize risk avoiding scams. We have also learned how to find the top 1% of these stocks and also when to trade these to maximize profit.
There are successful traders like Peter Leeds who analyze very cheap stocks using methods similar to the “fundamental analysis” used for stocks that trade at more achieable prices and have much wider market truck caps. For me personally though, I’ve found that this type of analysis doesn’t work well in most of very cheap stocks. However, it does work for some of them and for occasions when it does work, this method would certainly not be regarded playing by anyone who understands the currency markets.
I will say though that the “Leeds method” and similar strategies to finding good very cheap stocks is not my first method of choice for just two reasons. First, it simply doesn’t work on many kinds of very cheap stocks that we think show a great deal of promise. This includes ones that we have traded in and made a very nice cash in on! Second, it takes an enormous amount of time using each type methods just to analyze a few stocks and that is once you feel the very steep learning blackberry curve which can take months, in fact years to truly master.