Of course, there are so-called penny stocks. Unfortunately, for years, these have acquired the reputation of being high risk, speculative instruments, not far removed from the Wild West days of unregulated capitalism.
Images of greedy fraudsters come to mind. Unscrupulous promoters who have swindled naive investors into buying shares in phantom companies, which somehow never seemed to strike the gold, oil, or whatever big payoff they were promoting.
Fortunately, nowadays, we have more regulations to help protect investors from these schemes. Nevertheless, there are still cases in which traders in search of a quick and easy buck have taken serious losses in this sector of the market.
In spite of these alarming stories, there are still solid reasons for small-account traders, even novices, to consider trading penny stocks.
First of all, the term “penny stocks” doesn’t just mean stocks that are priced in pennies (although it certainly includes them). Nowadays, “penny stocks” generally include stocks costing $5.00 or less.
Most people would agree that five dollars is a price point, which makes trading these shares a viable possibility, even for the smallest of accounts. Moreover, there are many respectable yet mostly obscure companies whose shares consistently trade in this price range.
Cara Boardwine, a 51-year-old former sales professional from Gastonia NC, is thoroughly enjoying her new career as a stock trader. Focusing mostly on penny stocks, she has already posted some very satisfying wins since joining Jeff Williams’ SuperNova service. Her current focus is on learning as much as possible, as fast as possible, in hopes of achieving the greatest possible financial freedom during retirement.
Gastonia, North Carolina
Almost by definition, though, shares found within the penny stock sector tend to be smaller, perhaps newer companies that don’t have well-known brands or highly-innovative products. Those which typically attract the attention of the media or the general public.
They’re also unlikely to have posted sufficient earnings for inclusion in the portfolios of The Warren Buffett School of Value Investors, nor are they generally considered worth trading by the bigger players on Wall Street.
The good news is the lack of interest from big investors means that these often overlooked minnows can provide a steady stream of attractive profit opportunities for the well-prepared individual trader who knows where to find these low-priced stocks, and how to play them.
Penny stocks have certainly worked out for RagingBull student, Cara Boardwine, a North Carolina sales professional turned full-time trader.
Although Cara is a member of several RagingBull programs, she’s currently enjoying the results she’s getting with Jeff Williams’ SuperNova service, which focuses mostly on lower-priced stocks.
One of several recent wins Cara recalls was on NF Energy Saving Corporation (BIMI). She freely admits that she would have overlooked this profitable setup without Jeff’s guidance.
By trading BIMI several times during the same day, Cara finished the session having banked $900.00 in additional profits. Not too bad for a day of simple, enjoyable trading from home!
“I like to trade penny stocks which Jeff Williams does a lot of. After talking to him at the mastermind, I was really impressed. I wanted the chance to learn more from him.”
Currently trading around the $5.00 mark, BIMI still counts as a penny stock, and by providing Cara with such a spectacular win, it clearly demonstrates the volatility that makes this class of stocks so potentially profitable.
Perhaps more importantly, though, Cara is quick to recognize the vital role Jeff Williams is playing in her success. Not just by pointing out possible trades, but by explaining in detail what is happening in the market and what his students need to do to take advantage of emerging opportunities.
Cara admits that, at times, stock trading can be a lonely business. That’s why the supportive environment provided by Jeff’s chat room has been crucial in building her confidence. “You need a good mentor to show you the ropes, she says, “… it’s so much less painful to follow a good teacher than to try to do it all yourself.”
Fortunately, unlike so many unsuccessful traders, Cara has fallen in love with the process of learning and freely admits to getting “hooked” by the realization that she had so much to learn when she first started experimenting with just a few dollars in her trading account.
Now, Cara says that she misses the trading room when she’s not there, and she’s delighted rather than deterred by this advice from a highly-successful trader who said:
“To succeed where most fail or underperform, you must rid yourself of any assumptions and misconceptions, and you must study harder than you’ve ever studied before. You’ll also need patience and perseverance along the way, because making six and seven figures takes several years, not just a few days, weeks or months like most wish for.”
That’s why most successful traders maintain a section in their trading journal dedicated to the analysis of how every trade, win or loss, played out. Exceptional traders do this to discover what, if anything, they might have done differently in terms of entries, exits, and risk management.
The help Cara receives in this analysis is a key benefit of Jeff’s program, but perhaps even more important, and what many traders find much harder than the acquisition of technical knowledge, is learning to accept that losses may occur even when the most rigorous analysis shows that the trader did nothing wrong (the so-called “good loss”).
“It was Jeff that got my attention. He listened to my questions and concerns, so he could understand where I was at. It made me feel like I would be right at home in SuperNova.”
For most highly-successful traders, one overarching and inviolable rule is to cut losses quickly. Although this sounds absurdly simple, the problem is that it’s hard to do unless you fully accept that losses may occur no matter how skilled or experienced you may be and in spite of anything you do or don’t do.
So it’s vital to not hang on to losing trades in the stubborn belief or desperate hope that they will eventually turn in your direction just because you saw a “perfect” set up. Nor should you trade less than optimal set-ups to try to recover “unfair” losses.
Although these principles are easy-to-understand intellectually, they’re much harder to accept emotionally; and their consistent application is arguably the single most important difference between profitable traders and the ones who blow up their accounts.
Fortunately, with Jeff’s example to follow, Cara is rapidly acquiring this essential emotional skill for traders.
“Every trader loses money,” she acknowledges. “Knowing that even a pro with his own room has a down day lets me know that I will get past my own down day (which I had right after that great $900 day I mentioned before).”
“I traded BIMI (NF Energy Saving Corporation) multiple times in one day, increasing my account by over $900 that day.”
With this knowledge, Cara has already become more confident in her new career. Now she’s comfortable with describing herself without hesitation as a “stock trader/day trader.”
She fully expects to be funding both her own and her husband’s retirement accounts and vacations within the next year.
In the longer-term, she aims to increase her family’s net worth substantially and to enjoy that most precious of commodities, more free time and financial freedom.
Penny stocks are one of the instruments that will make this possible. However, it’s Cara’s positive attitude toward learning and dealing with occasional losses that will ensure her success in the long term.
Do you have a Raging Bull success story to share?