Are Penny Stocks for Losers?
(What it really looks like when you buy penny stocks)
Are penny stocks for losers?
For the new/novice trader the answer might be no, because if you are new and have no experience it might even seem smart. For someone who has experience (Trading Experts) we wouldn't touch them or advise our worst enemy to buy them.
But why? Why are they so bad/dangerous?
Let's pretend a Wall St Genie just appeared and offered you whatever amount you think you need to be successful trader. Just for fun let's say it's $1,000,000 however you have to invest it in 1 of 2 things.
Expensive Stock $100 per share
Can only buy 10,0000 shares (boo)
Cheap Stock $1 per share
Can buy 1,000,000 shares!!! (we're gonna be rich!)
Now If you are new, your probably thinking B right? Shit with 1 million shares of that cheap stock you could make a killing! You could also lose your shirt overnight, risk management what's that?
Overnight is that $100 stock going to double? Probably not (.01%), could that $1 stock double? Sure it could. We see this all the time with penny stocks.
They can double, however they can get also get cut in half immediately, day 1. Which happens farrrr more often than penny stock traders believe.
If it's so easy to become a millionaire from penny stocks, why is there only 1 guy on the planet who is?
The same guy who admits that even though he is in fact a millionaire, can only make around $100,00 a year from said shit stocks?
So sure these dogs can double and they do all the time. So now ask yourself that question again, with your million dollars, are you going to gamble and either make $1mil (if you don't get greedy and can actually sell it) while potentially risking losing that $1milion in your first trade?
Could you stomach losing $1 million dollars day 1 or 2?
We tried to help this loser, who turned $25,000 in $2,500 in 48 hours. He bought at $.70 next day opened at $.07. A 90% loss overnight, but you would have used a sell stop right?
Sell stops don't do shit, when a stock opens down 90%, your bust end of story. This is the reality and the sad part was we told him exactly what was going to happen when it was $.70 a share. But he was a guru, and told us it was going to $2
Why $2? You might be thinking, at $2 he would make back all of his losses from, can you guess it? Penny stocks.....
Did we have a Crystal ball and know the company was going drop 90% the next day?
Yes we did.
He was the crystal ball, his reason for investing what was left of his life savings was I shit you not "the company just filed for Chapter 11 (bankruptcy) and is going to Bankruptcy court on Friday! There gonna beat it, and the stocks going pop!"
If anyone knows anything about companions filing for Chapter 11, they don't win, they sell off their assets to their creditors and the stock goes to $0. It even happens with real companies like GM is 2008 that went from $40 to $0 (it took 2 years for that slide to happen) this one only took 12 hours.
So if you're not willing to risk 50-100% of your million dollars what about investing in a much safer company that you might only lose 1-5% and could make 5-25% if you know what you're doing?
By the way it doesn't take $1,000,000 or $10,000 to learn what to do, it takes $0 to learn.
If you picked option A this is what your life could look like, if you learn first.
If you picked option B, this is what is realistic, if I knew even 1 profitable penny stock trader over the last decade. I would show you, however I only know losers who blew up.
We would love to hear which option you picked and why!