Welcome back to Penny Stock Land.

The family is packed up and headed to Sunny Orlando for the RagingBull Trader’s Summit… along with some theme park fun.

I’m really excited for this event. I love being a part of this great community where people work hard and care about their members, and have fun doing it.

At the airport, my wife and I are representing RagingBull ready for the fun to get started…

 

 

And the kids are keeping an eye on the stock charts for me. They told me I work hard every day so they wanted to give me a little break… that’s just too sweet.

 

 

You gotta start ‘em young. Before I know it, they will be better traders than I ever was.

It’s great to have the freedom that comes from making a living trading. And when you add in the opportunity to help people do the same, I can’t think of a better way to roll.

With the travels ahead, let’s get right to it.

Here’s a detailed account of how I pulled in 30% this morning on an overnight trade in TBLT… and how I do this in my chat room every day.

 

ToughBuilt Industries, Inc. (TBLT)

 

With penny stocks, it’s always in the chart.

There are specific things I am looking for and I don’t have to be scouring for breaking news to find these trades.

I use scanners that put the best stocks right in front of me.

Then I just use a specific set of criteria to find the best setups and it’s off to the races.

Take a look at the TBLT chart below.

 

 

This is the setup I found yesterday.

The key components of this specific setup are as follows:

  1. Gap down
  2. Consolidation period
  3. Break above the consolidation range
  4. Volume spike on breakout

Here’s how I put them all together to make 30% overnight on this trade.

The first piece of the setup is the consolidation. The stock is trading in a tight range building up steam, so when it breaks above that range, it’s ready to explode.

Yesterday we got a break above consolidation, and this is where the volume spike becomes key.

I want to see volume spike significantly on a breakout. This tells me the move is backed with buyers and is more likely to continue into the next morning.

And that’s exactly what we got in TBLT yesterday afternoon when I bought at .19 and as always, alerted my members.

 

 

The higher volume also gives us the ability to get in and out of the stock on the momentum.

While we are buying into the momentum, we are also getting out on the momentum. This lets us grab quick profits without getting caught in a fake move.

And just because the profits are quick, doesn’t mean they aren’t big.

Remember… This was a 30% return overnight.

When’s the last time your mutual fund did that for you? Answer = Never

The last piece of the puzzle… my profit target.

This is where the gap down before the consolidation comes into play.

When a stock trades into the gap, there is a good chance it can fill most or all of it. As you can see in the chart, I measured a 40%+ move from the breakout to fill the gap.

Taking profits going into that resistance is a great way to lock it in with less risk of holding the bag if it gets stuck there.

Looking at the chart below, you can see TBLT gapped up this morning and I pulled in a whopping 30% for about 15 minutes of my time.

 

 

But I wasn’t alone in this trade… As always, my members and I trade as a team. Here are some of the profits they pulled in right alongside me.

Feb 21, 8:54 AM

TBLT: Crushed this one. All out. (+35%)Andrew B.

Feb 21, 8:48 AM

Out TBLT at .275 for $1300 Zac J.

Feb 21, 8:45 AM

I am out TBLT +650  — William E.

Feb 21, 8:34 AM

Out TBLT @.275 + 700Lyndon B.

 

And I find trades like this all the time. Well, that’s an understatement, I find trades like this every day.

If you want to fully understand and learn to trade my system, there’s nothing holding you back from profits like this… in fact… just Grab Your Own Small Account Starter Pack for FREE… 

This will put you well on your way with no risk to you.

Click here for your Free Offer

Author: Jeff Williams

Jeff Williams is a full-time day trader with over 15 years experience. Thousands of entry-level and experienced traders alike – day-traders and swing-trade small cap stock traders – credit Jeff with guiding them to turning small accounts into big accounts.

Jeff’s "Small Account Challenge" shows people how to transform accounts from a few thousand dollars into $25k, $50k or even $100k.

If you don’t already know me… I am the master of growing small accounts.

The strategy I use is legit. And with my help, you can grow a small account extremely fast.

Just look at this.

My current small account challenge is up 500% in less than 5 weeks. I started with just $500 on Jan 21st and my account is currently sitting at $3,000.

 

 

That’s fast growth, but you’re here to create a large account… and $3k isn’t going to cut it… I feel you.

So how do we get you to the next level from here?

More of the same… In my last small account challenge from November 11th To January 11th, I turned a $3k account into over $21k in just 2 months…

By stacking your gains and sizing up, you will be making massive returns on a bigger amount.

This allows you to grow that 3k into something real… like the 21k I got to, in just  2 months of trading.

Take a second to think about how fast that is… I turned $500 into $3k in less than 5 weeks and in a separate challenge I turned $3k into $21k in 2 months.

Keep reading because this is where it gets interesting…

Once you get your account up to bigger values like 20-30k+

Just keep stacking and one day you will be taking bigger trades like Greg… 

Greg B.Out of SPOM at .487 avg. from .156 +$16,550

Greg B. — Out of ABML at .133 avg. from .061 +$7,200

Greg B. — Out HENC at .31 avg. from .183 +$6,350

Over the course of a few days Greg cashed in on $30k of profits.

If you want to grow your small account fast, this strategy works

And to show you how easy it is… I’m going to walk you through the trades, as well as the strategy that will have you stacking up the gains in your small account in no time.

 

Holloman Energy Corp. (HENC)

In the chart below you can see where HENC broke through resistance (black line) for a nice move up.

We got interested in this trade after it pulled back and held above the breakout point. Once it made a strong move up from there, I jumped in and alerted my members.

 

 

The very next day, we got a rocket move up and grabbed our profits. With his bigger account, Greg grabbed a cool $6,350 on this one trade.

And with Profit Prism Platinum, you can too.

 

 

American Battery Metals Corp. (ABML)

 

Now look at the chart of ABML.

We get a classic cup and handle formation here… and once we get a break above the high of the cup, we jump in.

 

 

And this is where it gets sweet… often times in penny stocks you will see a stock just blast right past your original target handing you more gains than you even expected.

That’s exactly what ABML did for us on Wednesday with a 120% move on the breakout.

 

 

And what about our friend Greg?

Well he grabbed $7,200 in just one day on ABML. With the Profit Prism Platinum system and chat room, it doesn’t take long to grow your account.

And once you get to Greg’s size, you too can pull in overnight gains that you never thought possible.

 

SPO Global Inc. (SPOM)

 

And the best for last.

Check out this chart… talk about liftoff.

 

 

Greg entered this trade at .156 and exited at a .487 avg for a profit of +$16,550. Wow!

SPOM is a trade I actually didn’t take, but shows the value of the Profit Prism Platinum system and chat room…

We talk about all of these trades in my live chat room, so everyone is alerted not just to my trades, but to others as well. It’s just part of the added value.

And this trade was a testament to my system and education. We got the classic breakout on high volume followed by a pause. Giving us ample time to sniff this out and talk about it.

Once it broke above the previous high, there was a great opportunity to buy… and it was off to the races the next day. At the high it was up nearly 350%.

 

Don’t Be Afraid To Start Small

 

I have shown my members over and over that you CAN take a small account and grow it into a fat account in no time at all.

And not only that, I show them how. In my live chat room, you don’t just get alerts, you get my coaching and teaching… and live trading. I walk you through every trade in detail.

I can promise you this, you won’t be lost with me.

Get access today… and start growing your account.

 

Join Profit Prism Platinum Platinum

Author: Jeff Williams

Jeff Williams is a full-time day trader with over 15 years experience. Thousands of entry-level and experienced traders alike – day-traders and swing-trade small cap stock traders – credit Jeff with guiding them to turning small accounts into big accounts.

Jeff’s "Small Account Challenge" shows people how to transform accounts from a few thousand dollars into $25k, $50k or even $100k.

What is a small cap stock? In general, companies that have market capitalization ranging from $300 million to $2 billion dollars are considered small cap. This number refers to the value of the company’s outstanding shares on the market.  Large cap companies such as Boeing and General Electric usually have a market cap that exceeds $10 billion.

You can find market capitalization for a company by multiplying its share price by the number of current shares outstanding and then adding the market value of any market-traded bonds. Brokers may have their own definitions of small cap stocks, and the parameters of this category may evolve over time.

Market Capitalization Categories

As mentioned above, market capitalization categories vary by broker and over time. However, companies at the edge of one category or another pay close attention because their categorization impacts investment by mutual funds. In general, categories are as follows:

  • Market cap of $200 billion or more: Mega cap
  • Market cap of $10 billion or more: Big cap
  • Market cap of $2 billion to $10 billion: Mid cap
  • Market cap of $300 million to $2 billion: Small cap
  • Market cap of $50 million to $300 million: Micro cap
  • Market cap of less than $50 million: Nano cap

Market cap tells us more about the size of a company than stock price alone. A company with a higher stock price can still have a smaller market cap than its competitor with a lower stock price.

The categories have also evolved since the 1980s, when $1 billion was the common market cap for a large company. Remember that these sizes are flexible, and adjust your research and perspective accordingly.

Even today, mega cap stocks are relatively rare. Fewer than five companies fell into this category after the financial crash in the mortgage industry in 2008. Major tech firms such as Apple, however, are creating a resurgence of huge market caps.

Advantages of Small Cap Stocks

Have you dreamed of investing in the next Netflix or Amazon when it’s just out of the venture capital stage? Both of these huge global corporations were once small cap stocks.

Small cap stocks give individual investors a chance to win out over institutional investors. That’s because small caps do not have meaningful positions in mutual funds due to restrictions that prevent these funds from purchasing a majority of a company’s outstanding shares. Although mutual funds can bypass these limitations through a request with the Securities and Exchange Commission, doing so may inflate the low price of the small cap stock and make it less attractive.

Because these stocks often fly under the radar, they pose unique opportunities for investors who have the time to do their research and look for a diamond in the rough. This is in direct contrast to large cap companies, which make international headlines with every financial move.

It is a common misconception that small cap equates to small company. In fact, most of these firms have exceptional financial records and established histories. On the other hand, while large cap stocks are often considered stable, they also have the potential to result in significant losses for their investors, with Enron as the most notable historic example.

When reviewing historic data, small cap stocks typically do better than large cap stocks, but this depends on the economic climate over the time period in question. For example, during the 1990s tech boom, large cap companies such as AOL Time Warner, Cisco, and Microsoft were more attractive to investors than small cap companies. After the tech crash at the end of the decade and into the 2000s, small cap companies saw better returns as large cap companies lost value to the industry bubble.

The lack of red tape in smaller companies means they can pivot and expand quickly. The cycle from research and development to having a product out on the market is much shorter than for large cap companies. When a company is small, major successes can be quite lucrative for investors who get in on the bottom floor.

Disadvantages of Small Cap Stocks

Small cap stocks are typically more volatile and thus substantially riskier than large cap stocks, which are known for providing stability and long-term growth. However, they are still less risky than investing in a company that has not yet gone public. Small cap companies are more likely to file for bankruptcy and may be supported by just a handful of major clients.

Because these stocks have a lower trading volume, it can take time to finalize trades. This results in limited liquidity that can be frustrating for some investors. It may take longer to buy the shares you want or sell shares you want to offload.

In addition, limited market data can make it difficult to sufficiently research small cap stocks. In comparison, large cap stocks are subject to extensive tracking and analysis.

Small cap companies are also at risk for issues with corporate governance. That’s because a small group of executives, usually the chief financial officer (CFO), chief executive officer (CEO), and chief operating officer (COO), holds most of the decision-making power for the organization with limited checks and balances. This can result in errors that can severely impact a company’s future.

Small cap stocks rarely pay shareholder dividends. Most of their profits go back into the company to foster growth. If you want to build a portfolio that provides dependable quarterly income, it’s more advantageous to focus the lion’s share of your holdings in large cap stocks.

Exploring Midcap Stocks

If you’re looking for a compromise between small cap and large cap stocks, consider investing in shares of a midcap company. These firms are usually defined as those with a market cap falling between $2 billion and $10 billion and offer the growth potential of small cap companies with the stability of large cap companies. In fact, over the past 10 years, stocks in this category have performed better than both small and large cap stocks.

They are large enough to ride out downturns in the market without going out of business, a common fate of small cap stocks. At the same time, midcap stocks grow quickly when the economy is expanding as investors feel comfortable taking on more risk and turn away from stalwart large cap companies.

Diversifying Your Portfolio

Incorporating a mix of different size stocks in your portfolio can help you take advantage of the growth potential of small cap stocks while mitigating the risk. If you are not averse to a bit of risk, you can include a higher percentage of small cap and midcap stocks along with just a few large cap stocks. Conversely, if you want more stability, add just a few smaller cap stocks to a portfolio primarily holding investments in companies with larger market cap.

Economic Impact of Small Cap Companies

More than 65% of all new job growth in the United States comes from small-cap companies, which explains why firms in this category often find support from federal loans and grant programs designed to help small businesses. However, small cap companies have to be profitable enough to release an initial public offering (IPO), which occurs after significant private equity growth and the ability to demonstrate its stability and profitability to investors. At this point, these companies can be traded on the NASDAQ and New York Stock Exchange.

Trading Small Cap Stocks

The best place to get started with small cap stocks is the Russell 2000 index. This resource lists 2,000 of the small stocks trading on the public market. These stocks are also tracked by an exchange-traded fund (ETF) known as the iShares Russell 2000 ETF.

When deciding whether to invest in a small cap stock, look at these factors along with charts for each stock to conduct a detailed technical analysis:

  • Growth in earnings, which usually predicts future growth in stock prices. As sales growth occurs, make sure losses are decreasing each year as well.
  • Growth in revenue, which should be higher for a small cap company than it is for a large cap company. Declining revenue in a fledging firm can signal serious trouble with its business model.
  • The ratio of price to book (P/B), which looks at the book value of a stock compared to its actual costs. A low P/B ratio is a favorable indicator for a small cap stock.
  • The ratio of price to earnings (P/E), which can signify an undervalued company with a low ratio or an overvalued company with a high ratio. Compare P/E over time for the same company or among competitors in a target industry.
  • The ratio of price to sales (P/S), which is useful to learn more about companies without earnings. To find this number, divide the firm’s market cap by its revenue.

To learn more about trading small cap stocks, take advantage of the experts at Raging Bull. Sign up today as an insider to access free resources like e-books, webinars, and more from some of the most knowledgeable traders in the industry.

Author: Jeff Williams

Jeff Williams is a full-time day trader with over 15 years experience. Thousands of entry-level and experienced traders alike – day-traders and swing-trade small cap stock traders – credit Jeff with guiding them to turning small accounts into big accounts.

Jeff’s "Small Account Challenge" shows people how to transform accounts from a few thousand dollars into $25k, $50k or even $100k.

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