3 Successful Online Penny Stock Trading Rules

No one can logically debate that penny stocks aren’t a source of great profit. Over the course of time many people, including myself, have made money trading penny stocks. And so can you. However, it’s first important to lay a proper foundation for the future. For starters, here are three successful online penny stock trading rules.

Rule 1: Staying Safe

The investing field has its fair share of fraud. Typically, the “pump n dump” scheme is seen in the penny stock arena. However, it’s possible to avoid becoming a victim 100%.

Your first rule is to ignore information that comes from unsolicited emails. This is one of the prime communication sources for these scam artists. The other thing you can do is qualify “hot penny stock picks” that you see in penny stock forums. Don’t just trade a stock because some unknown person says it’s going to hit tomorrow.

Always do research. Even top pros will tell you to research their stock picks. It’s just common sense.

Rule 2: Online Stock Broker

I’ll just assume you’ll be using an online penny stock broker. It is vital that you do your research and open an account with a well-known, reputable broker. Don’t sacrifice pennies on fees for capital security.

We’re talking about your money here. While low fees are great, knowing your money is safe and accessible at all times is better.

Rule 3: Penny Stock Software

While there might be software out there for penny stocks, typically the tools you have at your disposal from your broker and free online tools, like Google & Yahoo, will be enough.

If you’re looking for penny stock picks for inspiration or hints on where to look for your next great trade, think about subscribing to a newsletter. Remember, always research everything.

If you’re interested, I have four other success rules to share with you. Remember, trading penny stocks online is potentially very profitable, it’s also risky (like anything else). Take the right steps, make the right moves and trade with knowledge and you’ll be set.

Since the book “Fortune’s Formula” is published, many investors are turning to the Kelly Criterion for determining the size of the investment. Unfortunately, most of these investors have not walked through the underlying mathematical derivation or read Ed Thorp’s paper on how to apply the Kelly Criterion in the stock market.

There are many fallacies when using the Kelly Criterion directly in stock trading. Unlike most gambling games, the stock market is too complex and the underlying assumptions of the criterion do not hold.

For example, consider the following problem:

Company A is currently researching 3 different new products. In an upcoming convention, we know that A might announce the launch of one of the new products. We can also estimate the impact of different outcomes on the stock price:

30% increase in A’s stock price if Product 1 is launched. There are 20% chance for this to happen.
10% increase in A’s stock price if Product 2 is launched. There are 15% chance for this to happen.
12% increase in A’s stock price if Product 1 is launched. There are 25% chance for this to happen.
15% decrease in A’s stock price if no product is launched. There are 40% chance for this to happen.

Now you have $100 dollars in your bankroll, how much would you invest in A’s stock so that your bankroll can have maximum growth in the long term?

The Kelly Criterion cannot help you solve this problem because it assumes only two possible outcome: FAVORABLE or UNFAVORABLE. It also assumes that if the outcome is unfavorable, you will lose 100% of what you invested (the wager).

In the stock market, you often have multiple outcome scenarios, and you almost never lose 100% of your investment in a single trade. Therefore, the Kelly Criterion alone is not directly applicable to the stock market.

I have looked through the mathematical derivation of the Kelly Formula, and it can be used to derive the solution for the above problem.

Let’s define some variables:

F = % of your bankroll that you invest in A
W1 = ROI of Launching Product 1 = 30%
W2 = ROI of Launching Product 2 = 10%
W3 = ROI of Launching Product 3 = 12%
W4 = ROI of No Products Launching = -15%
P1 = Probability of Product 1 Launching = 20%
P2 = Probability of Product 2 Launching = 15%
P3 = Probability of Product 3 Launching = 25%
P4 = Probability of No Product Launching = 40%
B = Initial Bankroll
B’ = Future Bankroll after N such investments
M = The Geometric Mean of N such investments

Using the above information, we can formulate:

B’ = B * (1+W1*F)^(P1*N) * (1+W2*F)^(P2*N) * (1+W3*F)^(P3*N) * (1+W4*F)^(P4*N)

M^N = B’/B = (1+W1*F)^(P1*N) * (1+W2*F)^(P2*N) * (1+W3*F)^(P3*N) * (1+W4*F)^(P4*N)

M = [(1+W1*F)^(P1*N) * (1+W2*F)^(P2*N) * (1+W3*F)^(P3*N) * (1+W4*F)^(P4*N)]^(1/N)

M = (1+W1*F)^(P1) * (1+W2*F)^(P2) * (1+W3*F)^(P3) * (1+W4*F)^(P4)

We can find the maximum M by finding the maximum Ln(M):

Ln(M) = Ln[(1+W1*F)^(P1) * (1+W2*F)^(P2) * (1+W3*F)^(P3) * (1+W4*F)^(P4)]

Ln(M) = P1*Ln(1+W1*F) + P2*Ln(1+W2*F) + P3*Ln(1+W3*F) + P3*Ln(1+W3*F)

The above equation is what Ed Thorp stated in chapter 7 of his paper “THE KELLY CRITERION IN BLACKJACK, SPORTS BETTING, AND THE STOCK MARKET”, in which he discusses how to apply the Kelly Criterion in the stock market.

There is no clean solution to this optimization problem. However, with the aid of modern technology, a web application that finds the Kelly Percentage can be developed through simulation. For example, you can find such web application at:

http://www.cisiova.com/betsizing.asp

The web application takes possible outcomes (ROI and probability) as inputs and calculates the Kelly Percentage and the maximized mean growth rate for you. Since the Kelly Criterion is just a special case of this maximization problem, the web application works perfectly well with simple Kelly problems such as sports betting or gambling.

Micro-Cap Stock Trading

The most lucrative investment ever known online

Micro cap stock trading can be a way for a person with very little money to enter the stock market and make a lot of money fast. Micro cap stocks are simply stocks that have a market capitilization of under $250 million. Traders and investors are doubling or tripling their money by trading hot micro cap stocks. But before you open up your new trading account or use your present account to start trading micro caps there are some things you should know about these types of stocks.

Pro: Since 2000 the micro cap and small cap stocks have outperformed larger stocks in the market. In particular, micro cap stocks traditionally outperform large caps during a recession and early stages of a recovery.

Con: Micro cap stocks are usually listed on the Over-The-Counter Bulletin Boards (OTCBB) and do not have to meet minimum listing standards that the larger caps must in order to keep their listings on the major stock exchanges.

Pro: Micro cap stocks offer a way to make money fast without a major outlay of your hard earned capital. They sell for very little per share, usually under $0.0003 and even below. So if you have very little money to get started trading you get more bang for the buck and can lay the foundation for a good second income.

Con: These stocks can be thinly traded and volatile. If you have a fear of risk then micro-cap stocks are not for you.

Pro: Returns of 50%, 100% and 1000% and more in a day even an hour is a common occurrence.

Con: Researching penny stocks is difficult. Traditional technical analysis and fundamentals can provide very little clues to predict these huge gainers.

Pro: Research has proven that 7 out of 10 stocks that do gain 100% or more do so because of stock promotions. These are necessary to get the word out to the public about the company. Some micro cap stocks are simply small companies working hard to grow their business with an end goal of making it to the larger markets.

Con: It is difficult for the regular investor or trader to tell if the promotion is legitimate or not. Sometimes they involve companies that have a poor business plan, a product that has no demand, and some companies might even already be headed for bankruptcy.

Pro: There are many established e-mail newsletter services that provide the in-depth research that uncovers the hot micro-cap gainers for you and that give you all the information and support you need to make an intelligent micro cap trading decision.

Con: Without and advisory newsletter service finding the hottest micro-caps takes a lot of time for the average person to sort through all the information and confidently find the stocks with the potential to gain 100% and more.

For micro-cap stock trading to be successful it is advisable to seek out the inside advice of a professional e-mail newsletter service. These organizations help the traders and investors to eliminate some of the cons of micro-cap trading. They provide the critical in-depth research necessary to uncover the most promising micro-cap stocks and free the trader and investor to concentrate on intelligently trading the best stocks for their particular situation.

If you’re ready to read more about how a micro cap stock pick newsletter can help you do this while doubling or tripling your money and get three FREE stock picks too boot then visit Microcap Millionaires Join the thousands of traders and investors that are becoming wealthy each and every day.

Poker is a very popular casino game and its popularity is increasing all the more due to the advancements in technology and television. According to many players, poker is a game that holds a lot of appeal to their instincts and challenges their skills. There are many famous poker players who have earned a fortune with this game. The ten most famous players are:

Full tilt poker: Erick Lindgren: He makes constant efforts to play a better poker game by observing his opponents very closely. The first major tournament of poker won by Erick was at Bellagio and since then this famous poker player has been playing at Full Tilt poker exclusively.

Chris Ferguson: Due to the special appearance of this poker player, people nicknamed him aJesusa. For 18 straight years Chris Ferguson was enrolled at the UCLA, as a graduate for 5 years and as an undergraduate for 13 years. Even though he had to leave, he was given PhD in Computer science before leaving.

Howard Lederer: He is popular as the aprofessora of poker. Howard is also a world champion chess player. Besides Howard, his sister Annie Duke is also a professional poker player and Ultimate Bet sponsors her.

Eric Seidel: He is also a famous poker player who has been a fan of the game. He found out about the poker game when he was playing backgammon with players like Howard Lederer. This famous player even tried becoming a Wall Street broker, but after the market crashed in 1987 he chose poker.
John Juanda: John Juanda a famous poker player tried his hands at many jobs including that of a door-to-door salesman for the Bible. He wanted to be a medical doctor, but took to the world of poker.

Jennifer Harman: She is a poker player popular for her involvement in high stake cash games. She belongs to the category of female poker players who turned pros. In Doyle Brunson’s Super System 2, Jennifer has a section related to playing Texas hold’em with fixed limit.

Phil Gordon: He became a popular poker player when he was placed on the 4th rank in 2002 in the WSOP. He won 400,000 dollars in this game. He has also done Binion’s Horseshoe analysis and written many books too.

Mike Matusow: He is popular by the name of ‘The Moutha Matusow. He does not worry about creating a scene at the poker table while playing. He has also been imprisoned for some time due to drug involvement.

Ultimate bet: Antonio Esfandiari: He is primarily known as aThe Magiciana, a guy who loves to flare up to 8 chips in both his hands. When he plays poker he flaunts many chip and card tricks.

Annie Duke: She is Howard Lederer’s sister, well known for knocking her brother out in the multiple major multi table tournaments of poker, even in the World Series of Poker.

Wass pokeris one of the best and honest poker game now available. JoinWass pokerand be the next to enter in the top ten list!

So dont be shy, join Wass pokerand be a millionaire!

Stock Market Predictions > Stock Market Forecast – Hot Stocks to Buy in 2010

BY.- http://www.MomentumStockPick.com

In the stock market it’s not impossible to watch a stock move up dramatically in a matter of hours or days. Investors and traders can make great moneyand fatten their wallets every time this happens.

This seems great for every one that wants to try their fortune in the stock market, but the problem is that if you don’t know what stocks to look for and how to properly approach them you could end up wasting cash instead of making your profits grow. That’s why the most important aspect of stocktrading is the knowledge FILTER you employ to make your buy and sell decisions.

There are many “fantastic” stock systems and trading software out there, but you need to test them in order to discover which ones help you the most. That’s part of your homework as a stock trader. Test, test and test again.

Complicated stock trading strategies that rely on a “boat load” of technical analysis indicators can make you slow, and being slow when trading stocks can be as dangerous as not knowing what to do in the first place.

The worst thing that can happen to a beginner trader is to get information overload. It’s better to go step by step, and test a practical stock trading strategy that can show you how to focus on concrete ways to make moneywhile picking SOLID hot stock trading opportunities once at a time.

In essence, You can be sure that the trading method you employ to approach the stock market and pick stocks can make a big difference in your results as a trader.

Fortunately some sites on the web can show you how to take advantage of stocks in a practical way every week by minimizing risks. One of those sites isMomentumStockPickat

http://www.MomentumStockPick.com

They focus on picking certain stocks that can generate excellent gains on the same day.

Visit them today and learn how to take advantage of the market by picking the hottest opportunities this month.

Many people are searching for ideas on how to make money on the stock market.  The stock market provides a super opportunity for people who are looking for alternative investments to the banks general savings accounts, with low APR and returns very minute at the moment.

Getting a decent ROI on your money can be very hard right now, with interest rates at a low level, gold high and property falling, looking for ways to make money can prove even harder than normal.

Other investments include gold, commodities, gilts and of course the stock market.  There are certain styles and techniques being used for ways on how to make money on the stock market.  This includes value investing, this is the Warren Buffet type of company valuation, which works by assessing their figures of profit, turnover, return on investment and other statistics found in the accounting documents and identifying undervalued stocks that are prime for investing in.

hack the stockmarket trial offer at just .95 here

Other people are using techniques like the spin off style of stock market investing as per the Greenblatt rare book which is one of the most stolen American books from the libraries at present.  The spin off style looks at companies spinning off parts of their business such as the Motorola spin off and works in this area of stock market trading and stock spinoffs.

This can involve knowing how to find spinoff stocks and then knowing how to buy spinoff stocks.  You can learn the ropes on this yourself, or you can sign up to a system which will offer information on how to make money on the stock market with spinoff stocks, as well as providing spinoff stocks, so you know who to invest in, and this can be all automated to save you time, so you will know how to make more money on the stock market.

The system that is working for many people is the how to hack the stock market.  It is being marketed as a legal loophole for ways to make money trading on the stock market.  It utilises the spinoff loophole, and the creator, John Bell, has made a million dollars  in 4 years using this technique which he is now selling as the ebook training pdf and the hack the stock market tips.

Refunds on this how to hack the stock market are low, and there is also a trial offer for how to hack the stockmarket trial offer at just .95 here.

These days everybody wants to know how to make the money back that they lost in the stock market. Clearly the answer isn’t to trust a financial adviser because they are likely the person who lost your money to begin with. Seventy-percent of mutual funds under perform the S&P 500 and over the last two years most of them are down double digits. So you may have considered learning to invest your money on your own. Surely you couldn’t do any worse than the so called expert advice that you’ve already received you think to yourself. Amidst all the doom and gloom it’s easy to forget that there are a handful of savvy people who make money in the markets whether they are going up, down or sideways.

The Power of Compounding

The first thing you need to understand is how the stock markets can make you rich and why your job, unless you are the CEO, or have lots of stock options, almost certainly never will. Einstein called compounding the eight wonder of the world. Everybody has heard this riddle. Which one would you rather have ,000 or a penny that doubled everyday for thirty days? Most people choose the ,000 never stopping to do the math on the doubling penny. Because for the first twenty days the growth is slow and you only have just over ,000, but by the end of the thirtieth day you have just over ,000,000 and that is the power of compounding. So unless you are getting some very large pay raises the chances are that you’re pay check grows linearly, while your earnings in the stock market, if you are doing it correctly can grow exponentially.

Find the Trend

One of the most important lessons to know about the stock market is to not trade against the trend. The question is how to determine the trend. One of the simplest ways is to use a 200 day moving average (DMA) . If the market is trading above the 200 DMA the market is in an uptrend, if it’s below the market is in a downtrend. So you first want to find the overall trend of the S&P. If it is in an uptrend you want to look for stocks that are also in an uptrend to purchase. If the S&P is in a downtrend you want to look for stocks that are in a downtrend to short sell.

Buy Strong Stocks, Sell Weak Stocks

Obviously you want to buy strong stocks in an uptrend, and short sell weak stocks in a downtrend. The question is how do you determine if the stock is weak or strong. One of the easiest ways is to go to the Investors Business Daily website and use their stock grader. When you type in a ticker symbol the site will give you a letter grade from A-E. You want to buy stocks that are a B+ or above and short sell stocks that are a C+ or lower.

Buy Stocks When They Drop, Short Sell Stocks When They Rally

Most times even a strong stock that is an uptrend will pull back and take a breather, likewise a weak stock in a downtrend will usually have a few days when it rallies. This is when you want to enter the stock at either a support or resistance level. You can find some handy tools at a website called Trading Markets that will help you to determine when to enter a stock. Putting it All Together So how does one make money in the stock markets? 1. Determine the trend of the S&P index 2. If the stock market is in an uptrend buy stocks, if it’s in a downtrend short sell stocks 3. If you are buying stocks, buy the strong ones with a grade of B+ or better. If you are short selling, sell weak stocks with a grade of C+ or lower. 4. Buy weak stocks on a pullback, short sell weak stocks on a rally.

Making Money in Sideways Markets

So the only question left is how does one make money in sideways markets? Well the simplest answer is to use options. Most people think that options are very risky and complex, but the truth is that if you don’t know how to use options you are ignoring one of the most useful tools there is in the financial markets. By using a combination of easy to learn trading techniques such as covered call writing, credit spreads and iron condors it is easy to make money whether the markets go up, down or sideways. If you want to find out more about how to make money in the stock markets, credit spreads, iron condors, or covered calls, please click on the link below.

Video – Stock Market Exit Strategy —- Do you understand yours? Great poker players use them. Strategies like money management and selection of where to be aggressive with your plays. The combination of them both can make for great or terrible results. Many gamblers in poker, sports, blackjack, stocks have been known to win or lose a lot of money. That is because the winners are skilled enough where they can overcome the odds and make profits. Unskilled players will be on the short end of the stick due to being under skilled and poor risk management. Therefore do the best research you can on the internet and try to attempt to find people you can trust from any and all the sources you encounter. This way you are able to find the right books, videos, people and web pages you need. This is why my personal guess for best classes are real commodities that can hold value over a reasonable period of time. Silver has long term holding value as it can be held like money and passed on through several generations. Sometimes, playing at a casino can be very fun and that is why it is great these financial institutions let us play. The sad truth is many people are putting up a majority amount of their money into this casino and they do not even realize that it is there. The worst part is that the casino you go to or play online contains bet sizes that are much lower with higher short term risk. What is smarter however? Putting most of your money into these equity accounts, or taking a certain percentage of that money and having a wild weekend in Vegas. If you lose money, its like losing a dozen percent on stocks (or much less). If you are playing stocks and winning, that would mean you are better than the average player and good enough to beat the rake (spreads and commission fees). This means you still need an exit strategy for the game of getting out of this dollar. Time is lower each day and anyone that has dollars in paper and computer databases will be in trouble.

Financial advisers use equities to trade stocks. Because they have done a terrific job of not letting people know that this type of trading is in fact casino trading. The proof is in the many people whom have lost their shirts on poor equity trading and pension funds being hammered. Many sold for losses or received gains that did not surpass inflation. Remember for every winner there always has to be a loser and the house always wins in the casino.

Technically speaking the long term strategy on chart patterns is for the 50 day moving average to be declining for two days and a close below it. This means if you decide to use this method for selling longs it would be smart to be active trading the following day and at any point you see that it will close below the 50 then sell by 3:59pm EST as this pattern could result in a 2% gap down type of day or worse.

Duration : 0:4:35

[youtube lHjTpgMrOr4]

Penny Rich Stock Picks provides FREE stock picks for the day trader and long term invester alike. Our picks are undervalued and overperforming microcap stocks. Get into the stock market today! This is not a get rich quick shceme but you will make money! Sign up for our newsletter to get the daily picks!

Sign up for my newsletter here:

http://finance.groups.yahoo.com/group/Penny-Rich-Stock-Picks/

Duration : 0:0:49

[youtube ljaNlMYrO2s]

Duration : 0:10:10

[youtube 6YkRDmw3iGg]