Welcome!   

PennyStocks100 is a private stock trader and investor. We actively manage highly diversified portfolio of speculative "penny stocks" - securities of small companies trading under 5$ per share, (most under $1 per share). We believe that low price stock when selected and traded properly has tremendous potential to outperform the market and consistently deliver higher returns. 

 

We buy stock when it is close to its' 52 week low and at the same time is experiencing some positive uptrend for several days in price and/or volume. To find optimal entry/exit points we backtest several strategies.  We don’t limit our tools to just chart technical analysis. Before opening a position we watch the symbol: analyze the company's fundamental data, such as balance sheet, income statement, cash flow, financial ratios; we review the company business model and risks of bankruptcy. We don't have specific holding period targets. Holding period may range from few hours to several months.

 

We avoid Pink Sheets or the Over the Counter Bulletin Board (OTCBB) stock trading (with only few and irregular exceptions from this rule) as objective valuation and even technical analysis of such stock is very difficult.

 

However we set targets for gains. It is normal to sell 30% of the position after 30%-50% gains. We may try to buy shares back close to the initial entry point if market gives us such an opportunity and if we believe that stock can resume the upward movement. After 100% run up we tend to close at least one half of the total position and keep the second half essentially "for free". This free stock is our premium for patience and hard work. We keep holding stock if believe that it has potential to grow further, otherwise we completely liquidate the position and book healthy profits.

 

Our Portfolio is very diversified. Currently there are more than 100 holdings in our combined portfolio. No more than 2% weight per each stock (average 0.5% - 1% per stock). Today’s market is unique in number of opportunities to invest in strong penny stocks deserving much better price. So, we try to invest in as many as possible symbols. In a strong bull, or in other words "overvalued" market, don't expect to have so many good penny plays. But today we can afford this luxury. Plus, plenty of stocks gives us perfect protection through diversification.

 

We believe that risk sharing in penny stock trading is extremely important. Diversification is the key element of our strategy. Traditionally penny stock trading is considered extremely risky. We would not fully agree with this statement. Volatile - yes; Risky - it depends... In fact, any trading without necessary experience and knowledge is risky. PennyStocks100 knows how to minimize risks while preserve great advantage of penny stock trading - double or even triple digit returns.

 

We don't use stop losses or trailing stops. For penny stocks when movement could be so strong and volatile in any direction, stop loss orders doesn't make much sense. Only if the company files for bankruptcy protection we immideately liquidate the position, take losses as they are. We don't wait for a miracle comeback. Instead of stop-loss orders we use diversification, mentioned above, and overall market hedging with bear ETFs, for example SDS. Diversification protects us from individual stock risks - even huge down moves should not effect the overall portfolio returns. Bear ETF hedging protects us from a broad market sell-offs and at least partially compensates losses. We allocate no more than 30% of our total portfolio to bear ETF (SDS).

Third protection we use - we never buy full positions. Enter a trade with increments of 0.5% of your total portfolio value, but no more than 1%. For example, if your total portfolio is $25,000 and you are considering buying a penny stock symbol, your first purchase should be 0.5% of 25,000 = $125 (only!) We buy the second 1/2 of this symbol depending on how the price develops. We may add if it goes up, down, or stays flat. There are no universal rules, but at point of time X in the future we believe we will have more data points to make our second more informed decision regarding a position sizing.

 

You may think that with so broad diversification, total portfolio value should be too high to keep cost per trade (brokerage fees) relatively low. This is true. It is always a good idea to use low cost brokerage company, regardless of your portfolio size. We think that the optimal brokerage solution to maintain such diversified portfolio of penny stocks up to $100,000 is Interactive Brokers. Their min $1/trade commission for any stock is a good price even for a $100-$200 trade and 100-3000 shares. Beyond $100,000 you may try other fixed per trade brokers. For example, TD Ameritrade is a very good option, especially if you are able to reduce their $9.99/trade fees down to just $5/trade which is possible to do through different promotions they run from time to time. One we are aware of now is for Cool-Trade automated trading robot customers ($5/trade for 1 year).

In any case, we believe that minimal value of a diversified penny stock portfolio should be $15,000 and recommended $25,000 also because of SEC day trading rules. We trade actively (could be up to 10 trades per day) and some of our trades may be even within a day, so it's a good idea to have at least $25,000 on the account. Plus, we have much more flexibility to diversify.

 

Finally, PennyStocks100 is a FREE real time trader. We started tracking our portfolio on covestor.com since September 2009. Our account is called 'PennyStocks'. If you are interested in our trading and investing strategy, please create your account at covestor.com and track our trades and performance in real time. You may subscribe to RSS alerts /notifications and follow our steps if you wish. We post alerts within a seconds after trade is done. And it's all FREE!

 

We also publish short daily updates on our blog to give you quick summary of what we are doing and why, what the rationale of buying or selling is.

  

Summarizing PennyStocks100 strategy and how we are different from many other penny stock traders:

 

• Strong Diversification (more than 100 plays) 1% per stock on average
• Technical AND Fundamental reasoning
• Very few .PK (Pink) and .OB (Over-The-Counter) stock picks
• Enter by 1/2 of a position, Exit by 1/3 of a position
• Use 2xBear ETF SDS (max 30%) hedging
• 30%-50% gain -> exit 30%; 50%-100% gain -> exit 50%, ride the rest for free!
• NO stop losses (liquidate position completely and immediately IF a company files for bankruptcy)
• 0-10 trades on average per day
• $15,000-$25,000 Minimal portfolio value recommended
• FREE instant trading alerts through powerful Covestor platform (Portfolio name "PennyStocks")

So, briefly, that's our strategy, our game plan... feel free to contact us via our blog here

 

Good Luck in Trading to All !!!