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"Penny Stocks" - securities of small companies trading below $7, (mostly under $5) and above $0.20 per share AND with the average trading Volume >1,000,000 shares
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NYSE, AMEX and NASDAQ
What we DO NOT trade:
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Pink Sheets or the Over the Counter Bulletin Board (OTCBB) symbols
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If Volume and/or Price of a stock is outside the range specified earlier
Strategy Theme:
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Long: Buy and hold intraday
Market Setup Description:
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Overall market is generally Bullish OR market is ready to change the trend from Bearish to Bullish OR market stays in prolonged Bullish rally
Stock pre-selection: (After stock market closure, after 4pm)
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Today's Close price exceeds Today's Open price and Yesterday's Close price
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Today's trading Volume significantly higher than the Average trading volume for the last 30 days and Previous day
- Out of All pre-selected symbols, no more than 20-30% are selected for the actual trading next day based on chart visual/ technical analysis
Execution tactics: (Alerts are published after 4pm for the next trading day)
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Buy at Market open between 9:30am and 10:00am
Use trailing stop-loss order (from 3 to 5% recommended) to limit losses and control profit taking. -
Sell between 3pm – 4pm of the same trading day (if stop-loss order has not been triggered earlier)
Position Sizing
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Each trade is no more than 20% of the total portfolio to ensure max loss per trade is <1% (with trailing 3-5% stop-loss order). For example: Total portfolio = $50,000. Each trade size = $50,000 * 20% => $10,000. Max loss = $10,000 * 5% => $500 (and this is just 1% of our Total $50,000 portfolio)
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Size of the position depends on the overall market condition as well (see Market Setup Description). For example, Weak Bearish market – up to 10%, Strong Bullish market – up to 20%
Trades Statistics:
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2 trades per day on average annual basis
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Number of trades range from 0 (no trades, Bearish market) to 9 (Strong Bullish market)
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For the strategy performance statistics check Pennystocks @ Covestor data
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