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| December 2008 |
| Dec. 8, 2008 |
If you ever find yourself needing to exit a position that has become very lightly traded, it is important to give the Market Makers plenty of time to execute your before the close, only to watch a mere 5000 shares get executed immediately, followed by the MM lowering his/her bid. A good rule of thumb is to expect no more than a thousand dollars worth of stock to be executed per Market Maker, per fifteen minutes. In other words, with three MM's left at the bid and 45 minutes remaining in the trading day, you can expect your $3000 order to be executed. This is by no means a guarantee, but even the most lightly traded issues with at least a few MM's should be executable, after all, thats what their there for. When using stop losses for penny stocks, it is often difficult, and unwise to leave such an order in the system. Keep these kinds of sell conditions to yourself, and only execute when necessary. Use the stocks liquidity as a guide and give yourself enough of a cushion to get out comfortably. Also, when trying to determine the right price, keep in mind that a simple support level is not a good spot. This practice will lead to you consistently selling on the dips. Instead, find a happy medium, and plan on buying shares back at the support level. PSD Mon. Dec 8, 2008 |
| Sink those Four Footers Harvey Pennick's little red book on golf unwittingly provides one of the best investing analogies we have ever seen. He is talking to a young married couple playing golf with their son. "Our boy made his first birdie today" they proclaim. "Thats great, how long was the put?" asks Harvey. "Well, it was only four feet, so we gave him a gimmie." Mr. Pennick says, "I'm sorry, but I'm afraid your son has yet to make a birdie." Don't count on profits until they are in the bottom of the cup, and stop dwelling on stocks you are out of, that move up. Do, however, continue to watch them and use your knowledge and experience to make a better trade the next time around. There is nothing we hate more than hearing someone say "I just saved my self $3,000 by getting out of a stock before it went down," or "I just got fluctuated out of $6,000 because a stock I sold for a $1,000 loss immediately doubled." Focus on what is real and use your mistakes to your advantage, and before you know it, you'll be sinking those four footers. PSD Mon. Dec 8, 2008 |
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| Allocation Techniques When trying to allocate your stock portfolios assets properly, try keeping separate sections for low, medium and high-risk vehicles. Penny stocks would obviously fall into the high-risk portion, and it is important not to take cash out of other sections simply because you need it, and do not want to sell anything that is there already. This is why we allocate a small portion for penny stocks, if you need more cash for an opportunity, break your current issues down until they are allocated properly. Also, be sure to shuffle all of your sections periodically to maintain a balanced portfolio. The best advice for adding money to the high risk portion is to do it when you don’t need it, rather than risking letting your emotions getting the better of you. Try and always have a good chunk of cash available to take advantage of the major market swings, by way of the QQQQ or other highly liquid ETF’s. This will allow you hedge your bets considerably, should things not go quite as planned. PSD Fri. Dec 5, 2008 |
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