How To Use Penny Stock Prophet To Make More Money – Part 3 of 3
How to use Penny Stock Prophet Part III – Introduction
In the previous two parts of this article, I covered information that I believe you need to be aware of in order to successfully understand how the Penny Stock Prophet by James Connelly can help you make more money. In Part I, I talked about how penny stocks (microcap stocks) are different than small cap stock and large cap stocks.
In Part II I covered why penny stocks get a bad rap. Especially important is the fact that all stocks are risky, not just penny stocks, and you can lose some or all of your money in any investment. I emphasized that the way you offset the the two primary issues associated with penny stock trading is good research.
Why I Am Convinced That Penny Stock Prophet Is NOT A Pump And Dump Operation
After I made the decision to promote the Penny Stock Prophet by James Connelly, I approached a couple of larger firms about partnering with me because I was totally convinced that the Penny Stock Prophet is a good deal… And, I still am…
… You can review the results of an actual study where I reviewed almost 5 months of recommendations made by the Penny Stock Prophet alert service by [clicking here].
Now, on with my story.
Anyway, the first time I approached a financial advisor, I explained to him what I wanted to do and how he could help us and my visitors make a lot of money. He said he’d think about it and I should call him the next day.
Well, the next day rolled around and I called him. One of the first things out of his mouth was “it’s a pump and dump.” Because of his tone (he was arrogant, almost mocking), I knew there was no point in pursuing the matter further with him. So, I thanked him for his time and hung up.
But, I thought what if he is right? So, I eventually analyzed what I knew about James Connelly’s Penny Stock Prophet operation and I decided to my satisfaction that he doesn’t pump and dump.
Here’s why I decided that:
- He provides solid, factual information about the companies that he is recommending that you trade. Initially, I cross-checked his information but I generally don’t anymore… However, I do occasionally check up on his recommendation. I have found that sometimes he will provide information on a company that I can’t verify but not often enough to be a concern to me. For instance at the timeof this writing Aug. 28, 2011, James Connelly is recommending Lone Star Gold. While I have not found a balance sheet or a P&L for the company, I have found at least one article on Yahoo News that supports the pick.
- He doesn’t “hype” the stock. He sends you an e-mail the day before he is recommending that his subscribers buy the penny stock. The e-mail contains the pertinate information as to why he thinks you should buy it and appropriate factual information about the company. There is no hard sell whatsoever.
- He’s been around for years. Typically, a pump and dumper will pump, dump and split with the take from the scheme. The earliest reference to James Connelly that I can find is 2009, almost 4 years ago.
- I check with the highly respected http://www.pennystockresearch.com/category/pump-dump-alerts/ and they had no complaints that I could find about James Connelly’s Penny Stock Prophet alert service.
- Some of his recommendations don’t make money or don’t make enough to have been worthwhile trading.
Those 5 reasons summarize my take on the question…
… Still want to know more?
Do you want more information about penny stocks from a regulatory perspective and specifically what a pump and dump operation is? Here’s a link to a penny stock guide put out by the SEC (the United States Securities And Exchange Comission; the part of the United States Government that is tasked with the responsibility of regulating publicly traded companies).
Here’s the link to the SEC Guide (If you don’t trust my link, by all means manually type it into your browser’s URL box):
http://www.sec.gov/investor/pubs/microcapstock.htm
The SEC’s Pump and Dump Schemes webpage says this; and I quote:
Pump and Dump Schemes
“Pump and dump” schemes, also known as “hype and dump manipulation,” involve the touting of a company’s stock (typically microcap companies) through false and misleading statements to the marketplace. After pumping the stock, fraudsters make huge profits by selling their cheap stock into the market.
Pump and dump schemes often occur on the Internet where it is common to see messages posted that urge readers to buy a stock quickly or to sell before the price goes down, or a telemarketer will call using the same sort of pitch. Often the promoters will claim to have “inside” information about an impending development or to use an “infallible” combination of economic and stock market data to pick stocks. In reality, they may be company insiders or paid promoters who stand to gain by selling their shares after the stock price is “pumped” up by the buying frenzy they create. Once these fraudsters “dump” their shares and stop hyping the stock, the price typically falls, and investors lose their money.
**************** End of Quotation *****************
The only thing that James Connelly does that is listed in the above quotation from the SEC webpage is that he has a “secret” method that he uses to determine when a penny stock is going to move. However, the issues that he recommends usually have solid fundamentals from what I’ve seen. In a pump and dump scheme, there is little or no information about the company being promoted and often the company is a total fiction.
My thinking on that is that all alert services (of which I categorize the Penny Stock Prophet as one) have a methodology that they use to select their recommendations and they don’t usually tell you exactly how they do it. Yet no one says that they are “Pump and Dump” operations.
Here’s what you can do…
… Sign up for the Penny Stock Prophet’s trial subscription at the top of the right-hand column of this page or [click here to sign up] and compare what the Penny Stock Prophet recommends and how James Connelly does that and compare what you observe to the guide’s description of how a Pump and Dump operation works. Then, decide for yourself.
Or, if you prefer, read what Wikipedia has to say. Heck, they say Enron was a pump and dump. Here’s the link to the subject on Wikipedia:
http://en.wikipedia.org/wiki/Pump_and_dump
What Research Does For You As A Penny Stock Trader
Ultimately, your protection against fraud, bad trades/investments and poor timing is Research. Most people, especially stock market beginners don’t really know how to research properly. I know how to do my own research but I just plain don’t have the time to research everything that I’m interested in.
So, what I did was to get a penny stock alert service to tell me what to buy and when. Getting out of (selling) a position is my problem.
I used a free stock picking service (stock alert service) for quite a while and there are some really good ones out there that work OK. But, I wanted something better (you know what they say: “You get what you pay for!”)…
… Anyway, when I found James Connelly’s Penny Stock Prophet I knew that I had found a service that I could both promote and use myself. He charges a modest up front membership fee and because of the promotion that was running at the time I have a lifetime membership. I snapped it up and I am quite content that I did.
How I Want To Trade The Penny Stock Prophet’s Recommendations
First, let me say that most of the time I don’t trade all of James Connelly’s Penny Stock Prophet penny stock picks. He gives me enough information about the company that he is recommending that I can quickly make a decision to buy in, find more info if I think it’s needed or to decide that I don’t want to participate.
Then, I need to speculate as to where I’m going to get out; i.e. I decide at what price I’m going to sell the penny stock. Once that decision is made there is nothing else for me to do until the stock markets open the next morning. I really like a 30% to 50% price increase objective after I buy in, by the way, because I can get in and out fast when something I’m in moves up quickly like a penny stock often will.
I like to buy Penny Stock Prophet’s picks as close to the open as possible. That’s because I know that there will probably be a “POP” as soon as trading begins. When you have as many people as James Connelly has subscribed to a service, the issue will probably have a considerable “POP.”
If the issue does pop after it opens and it makes my initial profit object, I like to get out. It’s very easy to “Overstay your welcome” in a penny stock trade just like with an option trade which is my preferred trading vehicle.
I think that it is best to get out when your profit objective is met or when you see the momentum on the issue drop off. Momentum is a measure of how strongly a stock is moving. I’ll write a post on momentum trading someday.
Although I don’t follow all my rules religiously, I think that any time a penny stock loses more that 1% or at most 3% from the current price, it’s time to sell the stock. They turn around fast and sometimes drop like rocks!
Note: There is a thing call “Pattern Day Trading” that you need to watch out for. Most people won’t run into the situation but you should find the rules about it and make sure that you avoid it.
What To Do Now…
This article is really getting long, so, if you want to find out more information just [click here].
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