Stock Station

June 30, 2014

Do you enjoy trading on the go? Trading via mobile has become the latest trend and many apps have appeared to fill a trader’s need. My repertoire includes almost 100 stock trading apps. One of my most utilized iPhone trading apps is Stock Station.

What follows are screenshots and short descriptions of each. Stock Station offers stock charting, watch lists, portfolio tracking, ticker news, pre-populated and custom screeners, stock/ETF option chains and light graphs, company research, and a ticker alert feature.  Stock Station is a powerful tool to add to a trading arsenal for $40. 

The opening screen brings a user to most areas of the app: Watchlist, alerts, screeners, daily hotlist, market movers, unusual volume and more. Note the four icons on the bottom. For quick ticker specific research click the Research magnify glass icon. You can also quickly check your portfolio via the Portfolio pie chart icon.

  

The Screen feature allows a user to create custom ticker screeners via many popular indicators such as RSI, MAs, patterns, and etc. a user can also screen by fundamental statistics.

  

The Hotlist is pre-populated scans that are technical, candlestick pattern, and options oriented. These scans are comparable to many other trading apps that specialize in on of these scan types only.

  

The Market Mover screener is great for day traders looking for tickers with volume and price momentum. I find these scans to be better than free scans on brokerage free apps and desktop software. 

A user’s first view of a ticker in Stock Station starts with the quote and stock chart that can be customized for pps line, candle, or bar.   

  

The features available at the initial ticker research screen are greatly larger than most trading apps. Charting, custom charting, news, company info, company filings, insider holdings, short interest, analyst ratings, institutional and ETF holdings, competitors, earnings and dividend info with dates, option chains and graphs, and alerts allow quick ticker research in one place to become a reality. 

    

The first Stock Chart option allows up to two indicators to be added. This chart feature is a basic start but allows quicker analysis and set up for other tickets viewed in the future. I like to use a different period and indicator mix here than in the Advance Chart feature shown next. 

The Advanced Chart feature allows up to four indicators , four moving averages, and four overlays to be applied in one chart. This feature alone is tough to find in most mobile charting apps. Charts are clear given the number of analysis points shown at one time.   

  
    

Ticker News is a quick way to view recent company news. I’ve found the news sources to be pretty varied and at times I find an article in Stock Station not shown in other trading apps or with my brokerage basic company news feature. 

  

Basic Information provide company stats in one quick viewing point. Unlike Yahoo! Finance and NASDAQ.com, this view is in text format that doesn’t require multiple tabs or links to be navigated. 

  
    

Company Profile gives a quick company synopsis to get a basic idea of what a company does.

  

Company Filings can be found at SEC.gov but how about within your trading app? I find Stock Station’s filing format to allow quick identification of forms for the current year. 

  

Officers and managers of a company who hold shares are shown in the Insider Transaction section. Many traders watch whether more insiders are buying or selling to gauge management’s sentiment of its company.

  

Institutional Holding is an important metric to consider when trading blue chip to small cap companies. Trading professionals In hedge funds, mutual funds, pension funds, and other large financial organizations that manage large holdings, possibly in your target company, can point to a direction you’ve been predicting via your own research.

  

Exchange traded funds (ETF) are like mutual funds except can be traded multiple times in a day and can be possibly optionable. Many call ETFs mutual funds 2.0 because the benefits and tradibility are better than with traditional mutual funds. Stock Station provides a handy section to show what percentage of holdings an ETF has in your target ticker. 

  

How are competitors doing in contrast to a target ticker? Competitor analysis is important because it can show how a target company is performing versus industry leaders or how competition might be changing in the future for a market leader. The simple comparisons of P/E and market cap are a start. 

  

Earnings are a metric of performance for a company. Earning release (ER) lets investors/traders know how the company is doing and what management perceives the future to hold. Many tickers’ pps move with ER announcement. 

  

Options are contracts that give holders the right to exercise for shares (10 for mini and 100 for regular option contracts) by a set future date called expiration. Options can be traded for speculation or as a hedge to a current long-term stock/ETF hold. 

Stock Station offers option volume and open interest bar graphing visual metrics to aid a trader’s gauge of option interest. 

    

The Max Pain option bar chart tells a trader the point where the maximum pain can be felt via money loss from option trading. This Benzinga 2014 article can help with quick education on the Max Pain theory. 

  

Implied Volatilty is one aspect of option pricing. Being on the right side of implied volatility is important to not loss gains or initial investment. This Investopedia article offers insights into option pricing and implied volatility.

  

Our final Stock Station image is of an Option Chain. Stock Station’s presentation is unique in that it shows volume, open interest, and option pps change in the same screen. 

 

I hope this Stock Station review shows the power of this single iPhone app and provides increased trading knowledge to you the reader. Feel free to post your thoughts! 

OTC QBs and Scanning

  
May 12, 2015

StocksLive (by Cinnamon Mobile) and OTCMarkets.com is how I scan for OTC QB slow uptrends. 

StocksLive iPhone app

 
StocksLive is an iPhone app that has “activities.” These activities have catered scans for specific market types, billionaire portfolios, industries, and more. I use the PINK activities by technical scan and search by chart for an uptrend of 3 days plus and make sure it is an OTC QB status (the ticker profiles on StocksLive show this). I’ll then look at QB prospects through iHub and more in-depth chatting platforms, building a watch list over time. 

  
A second scanner I use is the Current Market and Closing Summary on OTCMarkets.com. These two scanners are for scanning during the current day or after market closes. I filter by OTC QB by clicking the OTCQB icon. Each of these two scanners shows four views of active, advancers, etc. I generally focus on advancers because I can sort by highest % gain and see $ volume as well. I look for QBs with $50,000+ trading $ volume and a 10%+ gain for the day. Over time I build a watch list from daily usage of the OTCMarket scans. You start to see patterns of tickers that will continue a slow uptrend when watching over several days because the same tickers start appearing on daily scans.

  
#pennystocks #pennytrader #pennystockscans #stocks #stockchat #stockmarket #stocktrading #stockscans #stockslive #otcmarkets #otc #OTCQB #watchlist #pennywatch #otcqbscans #traders #trading #traderchat #tradethechart #tradethenews #tradingresource #tradingstrategy 

OTC QB UPtrend & TA Cheat Sheet

  
May 2, 2015

The OTC (over the counter) exchange is like the Wild West of stock trading. It’s below the big U.S. NYSE and NASDAQ markets and companies on the OTC have more lenient reporting standards. 

After penny trading for a year with a start in April 2013, and practicing paper and virtual trading a year before that, I’ve developed a penny stock trading strategy called UPtrend. It means I trade upward price movements to garner gains while not short selling. The ultimate goal is to capture 20-50% gains, called the greed line, each trade.

This strategy suits those with cash trading accounts. The idea is to find tickers that will have an uptrend for a week+ allowing the trader to meet T+3 clearing. 

This doesn’t mean you can’t use the UPtrend strategy to day trade. Charting analysis in the 5min/1day and 15min/5 day become critical as a day trader tries to garner quick gains. Criteria listed below would just need to change to shorter periods and more recent or rumor based hype. 

UPtrend Strategy:

+ 2-3 day uptrend minimum

+ Recent PRs from company

+ TA with PSAR of buy signal, 30+ ADX with +DM above -DM, and CCI above 0 or oversold below -100.

+ Positive ticker board presence on social trading mediums like iHub.

QBs are generally audited and have recent financial filings. I find QBs to have less risk of loss versus Pink Sheet tickers while still seeing quick results. I’ll want to hold an OTC ticker no longer than a month, because OTC ticker’ time moves faster than with ANN penny stock tickers.

I feel trading tickers with these minimum requirements hedges my trading risk for losses. Towards the end I discuss additional DD I may perform to feel better about my trade.

Strategy In-Depth

UPtrend Chart

Here’s an example of possible UPtrend charts:

 Charts are from 5/1/15

News and PRs

A great resource for PR search is Quote Media. We’ll use $MNTR as an example ticker to research. MNTR was an OTC QB ticker I traded in 2013 during my winning streak. I saved my notes and will use in analysis here. Do a ticker search and get: $MNTR news.

Because no Revenue has been filed yet we want to read PRs for indications of Revenue in the future. The PRs issued in 2014 indicate 60% of Bhang Chocolate was acquired for $39 million value and $5 million was acquired as a line of credit. An Internet search on Bhang Chocolate reveals Revenue being generated through chocolate sales. MNTR also announced MMJ industry funding will be had by issuing preferred shares at $7/share, and naked short selling issues as an explanation for the pps correction.

The news is very rosy for Mentor Capital.

TA Cheat Sheet

I’m going to add a quick cheat sheet of momentum and other indicators and the values I expect. First, you need to know what oversold and overbought mean. Oversold means chart indicators are pointing to too many traders have sold and the trend will reverse soon. Overbought means the opposite with too many buyers having bought making the pps uptrend unsustainable with correction expected soon. Some use only 1 or 2 indicators solely, while I like to use many for a “stars align” feeling.

I mainly utilize PSAR, DMI with ADX, and CCI TA indicators to save time.

Candlestick pps presentation shows the opening and closing pps info as well as the day’s pps range.

Volume. It is said volume proceeds price, unless everyone is selling…

MA = Moving average. You want a smaller day MA to be crossing or over a larger day MA. Such as the 8MA over the 32MA.

BBs = Bollinger Bands. The tighter the bands the more it is expected a pps uptrend will occur. Pps candles trading above the dotted neutral line is bullish (buy) while riding below is bearish (sell). Pps candles riding above the upper BB means overbought. Pps candles riding below the lower BB means oversold.

PSAR = Parabolic SAR. A PSAR dot below a pps candle signals buy while a dot above signals sell.

Ichimoku Cloud = pps estimated movement. Pps candles above clouds signals buy, below clouds signals sell, and riding in clouds signal flat trading estimation. Green clouds are based on 26 and 9 MAs and move faster than red clouds which are based on 52 week MAs. Cloud movements of green (support) and red (resistance) can note trend reversals. This is a complex overlay that a trader could devote trades solely off of.

ADX/DMI = Average Directional Index with Directional Movement Indicator. A more sophisticated indicator, ADX tells a chartist if a trend is weak (below 30) or strong (above 30) while making sure the +DM is on an uptrend and above the -DM to signal a buy trend.

CCI = Commodity Channel Index. Values above 0 signal buy. Oversold is a value below -100 while overbought is signaled with values above +100.

RSI = Relative Strength Index. Values above 50 mean buy. Values above 70 mean overbought while values below 30 signal oversold.

CMF = Chaiken Money Flow. Bars above the neutral line signal buyer pressure while bars below signal seller pressure.

MACD = Moving Average Divergence/Convergence. Looking for the MACD line to be above the MA line and rising above the threshold bars signals a strong ow Index. Values above 50 mean buy. Values above 80 mean overbought while values below 20 signal oversold.

OBV = On Balance Volume. Said to indicate large buying volume. This indicator should be uptrending to signal many buyers are holding versus selling occurring. Similar to Acc/Dist.

ROC = Rate of change. Basically, an uptrend above 0% signals buyer pressure.

The general rule I use with all of these indicators is to see an UPtrend in the lines or trend lines, except PSAR. You will want to look at charts from 3-Month and 6-Month to see how strong the trends have been in the past with a chart to isolate those indicators that haven’t been reliable in the past periods.

I recommend becoming very familiar with each chart indicator one at a time. As you become familiar with each you can utilize more or less according to historical trends, your comfort level, and various situations such as news springing from the company. A few situations will render chart reading obsolete for a day or week: A large group is alerted to enter a ticker; the company issues positive business news; a major contract is signed; a large shareholder decides to exit; and etc.

Here are a series of 6-Month charts on MNTR with my TA from the cheat sheet above.

This first chart shows a 200 and 50 MA with PSAR overlay over a candlestick chart. RSI, MACD, CMF, and volume are included. On 1/21/14 you can see the 50 MA crossed above the 200 MA, and the pps went on a strong uptrend.

The PSAR has been a good indicator of buy over the mid-term despite mini pps corrections along the uptrend from 1/21 to 3/14/14. The PSAR can lag a day or two as evidenced by the PSAR dots above the candles 3/14 when the downtrend really started 3/17, but when PSAR moved up the candles the sell signal was right.

Note how the candles were just touching the 200 MA on 4/10/14, and this bounce off the 200 MA on 4/11 is a very bullish indicator.

The RSI signaled oversold with a value below 30 on 4/10/14. Notice the large candle on 4/11 with RSI uptrend starting. Historically, the RSI has been a good indicator of oversold as the pps corrects temporarily each time it hits 70 along the pps uptrend from 1/21 to 3/14.

MACD came alive 1/21/14 with a large pps spike shown in the large candle body. You can see MACD was signaling overbought around the time the pps corrected on 3/14 as the MACD line hit 1.5. Note the sharp MACD line dip below the red MA line on 3/17 which indicated a strong sell signal. MACD just starts to spike upward on 4/11 but caution of a sustained pps uptrend until MACD is above the threshold bars.

CMF has been below the neutral line since 3/17/14. Notice how CMF is starting to return to the 0 line on 4/11. A cross above the 0 line would be bullish.

<a href=”http://tinypic.com?ref=33k8zgi&#8221; target=”_blank”><img src=”http://i61.tinypic.com/33k8zgi.jpg&#8221; border=”0″ alt=”Image and video hosting by TinyPic”></a>

The second chart keeps the 200 and 50 MA overlay but BBs, Acc/Dist, MFI, and OBV have been added.

The BBs have been wide mainly, even before the pps jumped above $1. A switch to the Nov 13′ through mid Jan 14′ would show BBs wider than including in a chart with large change in pps. Between 2/10-2/24 you can see the BBs were at the tightest and the result was a nice pps breakout from 2/24-3/17. The candles never dropped below the lower BB to signal oversold before the 4/11 pop.

Acc/Dist has been following the pps trend. Notice the sharp decline on 3/17/14 however. This could have been telling in regards to the pps downtrend from 3/17 to 4/10.

OBV has followed the pps trend as well, though not as sharply. This is inherent in the averaging used in the OBV line plotting. Large volume changes would effect OBV more drastically such as on 2/24 and 4/11. Notice how Acc/Dist predicted the pps correction before OBV, but both predict the downtrend nonetheless.

MFI has been a good predictor of overbought on this 6-Month chart, but not of oversold. Notice on 4/1 and 4/7 how the MFI was below 20 yet the pps just traded sideways instead of uptrending. This is one reason I check the historical trending of an indicator before relying heavily on it.

<a href=”http://tinypic.com?ref=205pk78&#8243; target=”_blank”><img src=”http://i61.tinypic.com/205pk78.jpg&#8221; border=”0″ alt=”Image and video hosting by TinyPic”></a>

The third chart adds the 8 and 32 MA as well as the Ochimoku Cloud overlay, ADX/DMI, CCI, and more clear volume bar set.

Notice how the pps candles cross below the 8 MA on 3/17/14 before majorly correcting for a few weeks. This was a major bearish signal. It’s not until 3/30 that the 8 MA drops below the 32 MA, and if a trader wasn’t out by then it was definately signaling get out then. Like the 50 and 200 MA, the 8 and 32 MA signaled buy on 1/20.

The Ochimoku Cloud was predicting support between 4/4-4/7, but the candles break below the cloud triggered a sell signal. I feel in this chart the Ochimoku Cloud loses it’s estimation ability until the next correction on 4/11 plays out longer.

The ADX/DMI had signaled buy on 1/21 when the ADX began a strong uptrend and the +DM crossed above the -DM. Between 1/21 to 3/17 the +DM stays above the -DM with a pretty consistent 30 ADX line signaling a strong trend. By 3/17 the +DM dips below the -DM and the ADX line dips signaling trend reversal (sell). On 4/11 the ADX/DMI signal are attempting to become clearer but it is too soon to read exactly what signal will prevail- buy or sell is confused due to lines meeting.

The CCI has been a fairly good indicator of overbought and oversold. Notice more extreme values past 100 and -100 have predicted pps changes. CCI has followed closely with pps movements. Between 4/9 to 4/11 the CCI signaled oversold and the 4/11 bounce wasn’t surprising.

The clearer volume bars show what was described earlier- strong interest has been in this ticker since the $1 crossing.

<a href=”http://tinypic.com?ref=26ubl&#8221; target=”_blank”><img src=”http://i61.tinypic.com/26ubl.jpg&#8221; border=”0″ alt=”Image and video hosting by TinyPic”></a>

The final fourth chart adds the 10 and 50 MAs, price change, ROC, and Williams R.

Just like the other MAs noted before, the 10 MA crossed above the 50 MA on 1/21/14 and fell below on 3/17. The candles fell below both MAs 4/1 which was a very bearish signal.

ROC was sporadic in the first pps spike around 1/21/14. Since, it has moved slightly with the pps uptrend, downtrend, and then spike on 4/11. You generally want to see ROC above 0% for a buy signal.

The other two indicators I place as filler indicators.

<a href=”http://tinypic.com?ref=28bwiux&#8221; target=”_blank”><img src=”http://i58.tinypic.com/28bwiux.jpg&#8221; border=”0″ alt=”Image and video hosting by TinyPic”></a>

I haven’t touch on support and resistance yet, so here it is quickly. Support is the general pps where a downtrend can be halted, as chart history or MAs show. Resistance is the pps needed to be broken to allow an uptrend to continue. MNTR’s support appears to be $1.40-$1.50 and resistance at $3.91. Breaking above MAs at this point would be other resistances.

If you’re short on time to create and analyze charts there are two other options I have tested to be fairly accurate in the short-term: Barchart and American Bulls.

Barchart offers free trader resources, TA, financial analysis (FA) and other features and scanners. A mobile app is also available. Here’s MNTR’s analysis:

<a href=”http://www.barchart.com/opinions/stocks/MNTR”>16% Buy overall; 0% hold short-term; 25% buy mid-term; and 67% buy long-term</a>.

American Bulls use strictly candlestick analysis and offers free candlestick training. Here’s MNTR’s analysis:

<a href=”http://americanbulls.com/members/SearchList.aspx?lang=en&amp;SearchText=MNTR&amp;PageChoice=Confirmation”>Not available</a>. 

Unfortunately, not all tickers are analyzed.

iHub Ticker Board Positive Sentiment

I like to read the iHub ticker board and search for top board status to see how much positive or negative buzz surrounds my prospect ticker. Sure many lie in anonymous posts online but many show their motivation.

<br /><br /><a href=”https://pennymann.files.wordpress.com/2014/04/20140413-211855.jpg”><img src=”https://pennymann.files.wordpress.com/2014/04/20140413-211855.jpg&#8221; alt=”20140413-211855.jpg” class=”alignnone size-full” /></a>

The MNTR ticker board on iHub shows a general long-term sentiment. DD is in the intro box and stickies. iHub also offers news related to MNTR it has captured:

<br /><br /><a href=”https://pennymann.files.wordpress.com/2014/04/20140413-212000.jpg”><img src=”https://pennymann.files.wordpress.com/2014/04/20140413-212000.jpg&#8221; alt=”20140413-212000.jpg” class=”alignnone size-full” /></a>

Summary

These criteria generally reduce my loss risk. A chart uptrend of 2-3 days allows more optimism of a continued uptrend. Company news keeps traders motivated for a successful future, so regular PRs are a must. TA showing buy signals helps show buyer sentiment and allow estimation of the better entry and exit. A positive trader sentiment on the ticker board aids me in knowing if enough traders are interested in a continued buying behavior.

Here are additional DD and analysis I may perform to feel better about a trade:

Current OTC/SEC Filings With Revenue

Search OTC Markets for your target ticker’s OTC filings:

<a href=”http://www.otcmarkets.com/stock/MNTR/filings”>MNTR OTC Filings</a>

Note MNTR hasn’t filed SEC filings since 1998. If SEC filings were filed you could search here:

<a href=”https://www.sec.gov/edgar/searchedgar/companysearch.html”>SEC Company search</a>

Does MNTR show Revenue in the 2/28/14 filing? You have to look in the Income Statement here:

<a href=”https://www.otciq.com/otciq/ajax/showFinancialReportById.pdf?id=117601″>MNTR 2/28/14 Interim Financials</a>

MNTR doesn’t have Revenue yet, despite showing $40 million in assets and liabilities with a ($500)k deficit! At this point I would watch this target or search news for hints of Revenue occurring or about to occur through contract announcements, product/service offerings, or company updates that state Revenue is occuring and the filing is coming soon to verify. Filings take months to be available and the OTC/SEC has set windows to report quarterly info for the company to be in compliance for financial reporting.

MRIB is an example ticker I’ve traded that didn’t show Revenue in the filings. However, company PRs and CEO interviews showed multiple contracts signed pointing to Revenue to occur with their vodka sales at the time.

Momentum and other TA Indicators Pointing To Buy

TA stands for chart technical analysis. Chart reading can aid you in seeing whether buyers or sellers are more interested in your target ticker over a set time frame. Please see my stockcharts.com blog post for this free great resource to learn and do charting.

High Trending Volume

Note on the chart above the high volume trend. I want to make sure enough interest has been shown for my shares purchased to be exited in the future without the need for selling over several days. If a company is issuing PRs regularly this volume check shouldn’t be as important.

Dilution

To search for dilution you first start with the company share structure (SS). OTC Markets or the state a company is incorporated in will have this info.

<a href=”http://www.otcmarkets.com/stock/MNTR/profile”>OTC Markets MNTR Company Profile</a>

SS shows as: 400 million a/s a/o 9/30/13; 10.1 million o/s a/o 2/28/14; and 2.2 million float a/o 2/28/14.

Note: The Balance Sheet or Statement of Owners Equity sometimes shows the SS info also.

MNTR’s company shows the company incorporated in CA. The fins will discuss this also.

<a href=”http://kepler.sos.ca.gov”>CA SOS (Secretary of State) Company Search”</a>. The CA SOS has other corporate info besides legal name, address, and officers in another search. Shareholder info isn’t required to be filed in CA.

The next step is to contact the transfer agent (TA), MC Transfer, shown at OTC Markets in the Company Profile. MC Transfer will probably disclose the a/s and o/s unless Mentor Capital has gagged, to not disclose info, the TA. If the TA is gagged then the company would have to be reached for this info.

Once the current float, o/s, and a/s are known then dilution can be investigated in the volume in charts or by viewing the L2 over a few days to see which market makers (MMs) are leading the Ask with 10k shares consistently. MNTR’s volume has been 1 million shares traded on highest volume days since 1/21’s pps spike above $1. The high volume days have been about 4 with about 10 days above .5 million traded. Total is about 11 million shares traded and pin pointing exact sells versus buys is almost impossible. At 11 million total trades shares my opinion would be the 10.1 million o/s displayed a/o 2/28/14 hasn’t increased much. Dilution would have to be viewed on the 1-year chart via volume overall.

This company had added free L2 viewing at OTC Markets, a rarity for a Pink Current status:

<a href=”http://www.otcmarkets.com/stock/MNTR/quote”>MNTR L2</a>

If you wanted to have decent looking basic DD posts to spread the word then DDNotesMaker might inspire you. DDNotesMaker also offers a buzz board to see if your target ticker is being viewed a lot there. Here’s a link to see the buzz board and to ticker search:

<a href=”http://www.ddnotesmaker.com”>DDNotesMaker</a&gt;

DD can take a much deep look and time investment. Further DD can include contacting the company, visiting the company, researching the company website and social media points, industry analysis, company comparisons, financial statement ratio analysis, and etc. most penny stocks aren’t worth this effort IMO.

Many TA techniques exist. I have chosen overlays and indicators I’ve studied, tested, and am comfortable using. Other blog posts I write, and to be written, will be focused on other TA techniques and individual traders with specific TA skills I’ve grown to trust.

Promo History

StockPromoters.com is the best free database of paid and unpaid promotions for penny stocks I’ve found so far. Here’s 1 unpaid promo shown on 2/7/14:

<a href=”http://stockpromoters.com/View-Stock-Promotions-By-Symbol.aspx?symbol=MNTR&amp;ctl00%24ContentPlaceHolderyy%24Footer1%24Image2.x=-344&amp;ctl00%24ContentPlaceHolderyy%24Footer1%24Image2.y=-199″>MNTR Promo History</a>

Promos don’t always show in general capture. Sometimes a trader who has many followers will alert a ticker and cause short-term interest. It can be difficult to know when a group of traders has been alerted to buy or sell.

I like to use Hotstocked.com as another source of free database search for paid or unpaid promotions. The researchers there also like to write articles that can offer a start to DD for your research. Here’s a recent article:

<a href=”http://www.hotstocked.com/article/79672/mentor-capital-inc-otcmkts-mntr-continues-to.html”>3/24/14 MNTR Hotstocked article</a>.

Hotstocked paints a suspect picture for MNTR, in their usual style, citing low fins for such large acquisitions and a low pps to be issuing preferred shares at $7/share.

8/6/14 Update

This update will show the results of MNTR since my 4/14′ UPtrend analysis. I never really gave an opinion to buy or sell as I wanted readers/traders to learn and make decisions on their own. 

The elements of my UPtrend strategy were being met around 4/14′:

+ 2 day uptrend: met

+ Recent PRs from company: met

+ TA with PSAR of buy signal (below candles): met , 30+ ADX with +DM above -DM, and CCI above 0 or oversold below -100: wasn’t met.

+ Positive ticker board presence on iHub: met 

However, there was one blaring red flag- dilution. The chart below shows the large increase in trading volume as company PRs and promises kicked on high gear. What remains is a pump and dump type chart, as explained in my other blog posts. The effects of dilution are powerful because as issued shares are sold buyer momentum slows and buyers begin to realize they aren’t winning the battle. 

That’s my basic and comprehensive look into my UPtrend strategy and obtaining DD. I hope it helps you.

Happy trading!

Please note: This page is not an offer or solicitation to buy or sell securities or to provide my TA and FA ability. My hope is to give traders a free starting point to teach “how to fish” to improve trading skills for research, analysis, ticker selection, and entry and exit with risk estimations.

Stock Rules/Axioms



March 8, 2015

I‘m attaching 25 stock rules from the popular stock trader Cramer from TheStreet, as well as 25 OTC axioms and 10 advance axioms from vantillian on iHub. These basic rules or axioms can aid a trader in avoiding common mistakes trading big board or OTC penny stocks.

General Stock Rules

Rule 1: Bulls, Bears Make Money, Pigs Get Slaughtered

It’s essential for all traders to know when to take some off the table. More

 

Rule 2: It’s OK to Pay the Taxes

Stop fearing the tax man and start fearing the loss man because gains can be fleeting. More

 

Rule 3: Don’t Buy All at Once

To maximize your profits, stage your buys, work your orders and try to get the best price over time. More

 

Rule 4: Buy Damaged Stocks, Not Damaged Companies

There are no refunds on Wall Street, so do your research and focus your trades on damaged stocks rather than companies.More

 

Rule 5: Diversify to Control Risk

If you control the downside and diversify your holdings, the upside will take care of itself. More

 

Rule 6: Do Your Stock Homework

Before you buy any stock, it’s important to research all aspects of the company. More

 

Rule 7: No One Made a Dime by Panicking

There will always be a better time to leave the table, so it is best to avoid the fleeing masses. More

 

Rule 8: Buy Best-of-Breed Companies

Investing in the more expensive stock is invariably worth it because you get piece of mind. More

 

Rule 9: Defend Some Stocks, Not All

When trading gets tough, pick your favorite stocks and defend only those. More

 

Rule 10: Bad Buys Won’t Become Takeovers

Bad companies never get bids, so it’s the good fundamentals you need to focus on. More

 

Rule 11: Don’t Own Too Many Names

It can be constraining, but it’s better to have a few positions you know well and like. More

 

Rule 12: Cash Is for Winners

If you don’t like the market or have anything compelling to buy, it’s never wrong to go with cash. More

 

Rule 13: No Woulda, Shoulda, Couldas

This damaging emotion is destructive to the positive mindset needed to make investment decisions. More

 

Rule 14: Expect, Don’t Fear Corrections

It is not always clear when a correction will strike, so expect and be prepared for one at all times. More

 

Rule 15: Don’t Forget Bonds

It’s important to watch more than stocks, and bonds are stocks’ direct competition. More

 

Rule 16: Never Subsidize Losers With Winners

Any trader stuck in this position would do well to sell sinking stocks and wait a day. More

 

Rule 17: Check Hope at the Door

Hope is emotion, pure and simple, and trading is not a game of emotion. More

 

Rule 18: Be Flexible

Recognize and be open to the unexpected shifts in the market because business, by nature, is dynamic, not static. More

 

Rule 19: When the Chiefs Retreat, So Should You

High-level executives don’t quit a company for personal reasons, so that is a sign something is wrong. More

 

Rule 20: Giving Up on Value Is a Sin

If you don’t have patience, think about letting someone who does run your money. More

 

Rule 21: Be a TV Critic

Accept that what you hear on television is probably right, but no more than that. More

 

Rule 22: Wait 30 Days After Preannouncements

Preannouncements signal ongoing weakness, wait 30 days to see if anything has gotten better before you pull the trigger to buy. More

 

Rule 23: Beware of Wall Street Hype

Never underestimate the promotion machine because analysts get behind stocks and can keep them propelled in an up direction well beyond reason. More

 

Rule 24: Explain Your Picks

Buying stocks is a solitary event, too solitary in fact, so always make sure you can articulate your reasoning to someone else.More

 

Rule 25: There’s Always a Bull Market

It’s OK if you have to work hard to find it, just don’t default to what’s in bear mode because you are time-constrained or intellectually lazy. More

Source: TheStreet Cramer’s 25 Rules of Investing

Top 25 Axioms Of OTC Investing 

Understand These And You Might Have A Shot At Surviving The OTC Marketplace 

Author: vantillian

INTRO 
I am calling these 25 points “axioms” in that they are propositions that are not necessarily proved or demonstrated but rather are self-evident to those who trade/invest on the OTC. In other words, these truths should be taken for granted and serve as a starting point or a foundation when deducing or inferring other propositions about OTC investing. I will not seek to prove these axioms to you…they just simply ARE. An axiom appeals to no other authority for verification…it stands on its own as the truth. Therefore, with these axioms we are dealing more with beliefs and less with facts. But without fundamental beliefs, you will have nothing whereby to interpret the facts. So sit up and pay attention because the following are very important ideas that could keep you from losing your shirt and help you to win nicely at playing the OTC market. 

1. The Center Stage Axiom 
The longer an issue stays in the spotlight…the worse. There’s always one or more good reasons as to WHY a company is trading on the OTC…especially if it is a sub-penny company. There have been many times in the past couple years I thought I had found that “true gem” that was going to be another Yahoo. I believed in it big time. I bought into it big time! But after the initial run and a dead-cat bounce or two…things began surfacing that were completely damaging to the demand for the stock. Simply put, the higher a stock climbs in the investing world, the more its rear end shows…and OTC butts ain’t pretty. Are there the occasional rule breakers here? Yes (usually they are reverse merger plays). But those stocks are few and far between and they generally uplist very quickly to a higher exchange. As a general rule, the longer a company stays in the limelight, the more enemies it will attract. Bashers. Shorters. Bidwhackers. Apathy. New shares from various and sundry places (especially DILUTION and restricted shares coming off restriction). It’s always a war to make the PPS (read: Price Per Share) go up on any issue. Don’t stay too long at the war. Fight as long as you are advancing and retreat the moment you see the enemy reinforcements gathering. Or possibly better yet…retreat before you think you even heard the enemy reinforcements. Remember, it’s not your job to make a stock PPS go up, it’s your job to make your portfolio grow. OTC valor is much different than armed forces valor. 

2. The Carpe Diem Axiom 
Always take *some* profit when you’re sitting on significant gains 50% or higher. Unless you are already independently wealthy and view OTC investing *only* as gambling for FUN (which isn’t an altogether bad thing to view it as), take profit. The way to accumulate wealth playing OTC issues is to always exit too soon. Furthermore, it leaves one feeling pretty dern good when he left some on the table for the next guy and was not the chucklehead that singlehandedly killed the run. If it does make you feel good that you were the chucklehead that killed the run, shame on you. Always remember…you do not know the next time buying pressure will allow you to leak out of shares without injuring a stock and/or your portfolio! Seize the day. Seize the opportunity strong buying pressure provides. 

3. The Itchy Trigger-Finger Axiom 
Someone always has shares to sell to ruin a run. Read it again: Someone ALWAYS has shares to sell to ruin a run. Make this statement your computer desktop and/or screensaver. Say it to yourself ten times whenever you start your trading day. Paint it on the ceiling above your bed so it’s the first thing you see in the morning. Please understand that someone owns a whole lot of whatever stock you’re jazzed about at much lower average than you — and often times they own it for NUTHIN’ (i.e. compensated promoters, debtors, relatives of CEO, etc.). Also, if you think that YOU are the ONE that is holding all the shares that could potentially ruin a run…think again. Only God knows where all the shares are or will be coming from…because who knows what kind of shorts will attach themselves to your play and sell you nothing but VAPOR. 

4. The Domino Effect Axiom 
Almost everyone that loses money playing the OTC looks to point a finger somewhere. They want someone or some entity to blame for their loss. Forget that the CEO sold 100M shares into the open market, they’d rather lash out at the popular poster that promoted, endorsed, and otherwise “pumped” the stock. Here’s what folks like that should understand…there is a domino effect of people getting screwed. Here’s an illustration: the CEO legitimately plans NOT to sell shares but some emergency comes up…and believe me…”emergencies” almost always come up for these guys! Selling shares is the easiest way for him to raise the money and “After all,” the CEO justifies to himself, “the reason I went public in the first place was to raise money.” The problem here is that the CEO failed to tell his promoters and/or closest investors about his need to raise funds and that group of people is living under the assumption that the share structure is stable (i.e the supply will remain the same). So the CEO got screwed by somebody and had to pay up. He screws the promoters and his closest investors and they had to pay up. Now the promoters and close investors will probably screw another batch of investors. Scenarios like this have happened more times than I can count! When something goes wrong and you’re holding several thousand dollars worth of stock, you’re not going to be looking to inform the world about things that will negatively affect the stock’s PPS! You’re looking for ways to bring in buying pressure, not decrease it! Folks love pumpers/promoters when they are helping the stock they are in go up. Folks hate those same pumpers/promoters when their stock is going down. Heroes and zeroes in the microcap world are one and the same…it just depends on the day. Remember this though…if the guy at the top decides to take advantage of people…he most certainly will succeed. What you need to know is your place in the food chain. And friends, if you’re a rookie to the OTC world…you are a bottom feeder that gets caught eating the crap of all the other fish in the ocean when the “Domino Effect Axiom” kicks into high gear. 

5. The Vapor Shares Axiom 
If you see a poster battling the idea of shorting OTC issues with determination and vigil, sit up and pay attention…that poster is either a short himself or working on behalf of the shorts. People and/or groups with the right connections can and do short OTC issues…many times they short stock into oblivion with the full approval and consent of the leadership of the company. Contrary to popular belief, many OTC CEOs don’t give a flying fig newton what their stock price does…what they care about is getting their hands on YOUR MONEY. There is alot of money to be made when a stock goes up. There is even more money to be made when a stock goes down if you were selling vapor all the way down to .0001 and cover there. Microocap hedge funds exist. Microcap hedge funds manipulate stocks and steal the money of good people. Unless you are a microcap hedge fund yourself, you can almost never win a battle against a powerful microcap hedgie that is shorting the snot out of your beloved stock. Remember, this is an “axiom” that stands on its own. I will not seek to prove the validity of this point to you. You must simply either accept it or reject it. 

6. The Glass-Half-Empty Axiom 
Bashers on message boards are a very real force to contend with and it’s not a coincidence that I’ve put this axiom after the “Vapor Shares Axiom.” It is easier to get a person to sell a stock than it is to buy a stock…and they know this very well. If your stock’s message board becomes infested with bashers…be careful! Unless you believe the company has some incredible news that may force these guys to cover or unless you know of a group with mega-bank that is going to push the stock and perhaps force a cover…be careful when playing with shorty. Many of these bashers will try and convince you that they are there out of the kindness of their heart to try and rescue other investors from the perils of a diluting CEO or worse. Nope. Their motives are to bring the PPS down down down. Bashers, in the end, are almost always right eventually because they are bashing OTC issues. They know axioms like “The Center Stage Axiom” too!!! 

7. The Supply IS Demand Axiom 
I have seen several runs simply because a stock has a low share structure. A low supply creates demand. Know the share structure. On plays where the TA is gagged, plan to exit within hours of entering and play the momentum only unless you have STRONG and SOLID reason to believe the stock will go up. Call transfer agents. Learn what authorized shares, outstanding shares, and float mean. The share structure is the first thing I look for when making a new investment…it should be the first thing you look for too. If a company is not willing to be transparent in this area, you can bet there’s a hundred other areas they’re not willing to be transparent about. I have and continue to invest in plays where the transfer agents are gagged (unable to report to you what the current share structure is) but I don’t plan to stay invested for long. 

8. The Don’t Click The Mouse Yet Axiom 
Never buy a stock at the high of day after a significant run (good rule of thumb here may be 70-80%). Wait for a pullback. And while you’re waiting, do some due diligence. Check the company’s filings on pinksheets.com or otcbb.com. Read a few of their PRs. Check the history of the leadership there. Call the transfer agent (T/A) and ask for the share structure. And on stocks that are pulling back, buy at the bid. Remember that it takes both bid buyers and ask buyers to make a stock PPS go up. 

9. The Morning Patience Axiom 
The first hour of the market is “amateur hour.” With most first-hours on hot issues, it’ll either be extreme bid whackage which will cause some panic selling which will create some excellent buying opportunities later in the morning OR it will be extreme ask slappage which will lead to a pullback around lunchtime. I hardly ever buy during the first hour of the trading day, and I’d venture to say 80-90% of the time that decision has paid off. I’d rather watch a few missed opportunities than be stuck in a bunch of “apparent” ones. 

10. The Bruised Knee Axiom 
There are too many enemies against an OTC issue’s PPS going up to NEVER lose a battle. Know how to take a defeat. You lost. YOU made a mistake. Evaluate what went wrong. Evaluate why YOU lost money. It’s okay to lose money occasionally but it’s not okay to be just as dumb after as you were before! Think, think, THINK! Don’t make the error again. Get smarter. Listen, school is expensive…tuition rates are high! If you want to make money trading the OTC you had better plan to spend the first year in school. 

11. The Show-Me-The-Money Axiom 
I once asked a poster that was complaining about getting lied to on a message board: “Are you stupid in any other areas?” Seriously folks, everyone on a stock message board has an agenda…including ME. Including YOU. Consider how often your posts are seasoned with fiction and/or things that you simply DO NOT KNOW TO BE CERTAIN. Consider that you have most likely served up a poo-poo platter covered thickly with powdered sugar. Trusting stock message boards for accurate due diligence is like trusting the National Enquirer for accurate UFO sightings. 

12. The I’m-Rubber-And-You’re-Glue Axiom 
Develop thick skin if you plan to post on stock message boards much. ‘Nuff said. 

13. The Know-Your-Anthropology Axiom 
Understand the nature of man! For this axiom, you need to be somewhat of a Christian theologian. The Bible clearly teaches us that mankind is not naturally good…he is naturally evil (Psalm 14 is a good place to start). The word Christian theologians use to describe our condition is “depravity.” Because of the fall of man, we are morally corrupt in every part of our being and tend toward wickedness (i.e. greed, theft, lying). We stand in need of redemption from a Savior. So understand that you are playing amongst people (including yourself) that are not naturally good…they are naturally bad. In other words, you’re playing with fire. Lies, half-truths, and misrepresentations abound in the OTC world. You better take EVERYTHING with a grain-of-salt the size of Texas. Some posters require more salt than others to digest. Be an evaluator of people. Learn how to ask the right questions. Make sure your yellow flags and red flags are ALWAYS working. 

14. The Early-To-The-Party Axiom 
Be willing to buy lower what you bought higher. I have often arrived to a party early. By “party” I mean a gathering of people and people’s money that will result in a stock’s PPS going much higher. By “early” I mean I got there before the stock was sitting at a low. I am always somewhat discouraged when a purchase I made continues to go down. But if I have done solid due diligence in the company, I often take it as an opportunity to add more shares cheaper and lower my average. In other words, don’t look at your initial investment as dead money and hope that it goes back up again so you can get out. Average down, do the due, and then promote your stock to others and help jumpstart the party. Be a spark plug. 

15. The Next! Axiom 
Be looking to get out of an issue the moment you get in. Have an exit strategy in place. By buying a stock you are not entering into any kind of formal arrangement like matrimony. You are an investor and as such your goal is to make money. If your investment should go up within the first 20-30 minutes of purchase why is it any different taking some profit then as if it took 20-30 days for it to go up? Get in. Lock in profits. Ride freebies. 

16. The Grow-Up Axiom 
Somebody once said: “If somebody screws you once, shame on them. But if somebody screws you twice, shame on you.” In the OTC world I would modify it a bit to say: “If somebody screws you once, shame on you. If somebody screws you twice, you really are a moron.” Take responsibility for ALL your investment decisions. Almost nothing ever happens as planned or hoped here on the OTC. There are too many enemies against making a stock’s PPS go up. If you’re going to play the game down here…you better be ready to accept FULL and COMPLETE responsibility for EVERYTHING YOU DO IN THIS INVESTING REALM. Point the finger of blame at only one place: yourself. 

17. The Ask-Yourself-Why Axiom 
Understand that many of the people encouraging you to buy an issue are compensated promoters whether they disclaim it or not. Most times they do not have your best interest in mind, they have their best interest in mind cause they’re sitting on a mountain of stock and can’t wait to turn paper into cash. It has been said that “the man that can answer the question ‘what’ will always have a job but the man that can answer the question ‘why’ will always be his boss.” Be continually evaluating EVERYTHING by asking questions that begin with “WHY.” 

18. The What-Was-That-Again? Axiom 
Understand you are almost NEVER getting the whole story. The only way optimists will survive in the OTC is if they become compensated promoters. Pessimists can either become paid bashers or fast flippers. The OTC calls for realism. Be a realist. To be a true OTC realist you need to know and understand all that you are up against to make a stock’s PPS go up. 

19. The Public-Versus-Private Posts Axiom 
Many of the people pumping stocks are stuck in them and want to inspire a whole new wave of bagholders to come take their place. Often times what is being said on the public message boards is completely different than what those same posters are saying behind closed doors. Realize this. Digest this. Embrace this. Don’t be naive. 

20. The Buy-The-Story-Not-The-Company Axiom 
So you bought a stock because of a solid PR that came out. Cool. Why did you buy? Because of the story. Do you really know anything else about the company? Is it real? Do they have a big building? Do they have equipment? Are they producing? Forget all that. In many ways it is irrelevant. If you are going to invest in the OTC you had better learn to invest in STORIES. Now, ironically, one of the dictionary definitions for “story” is “a lie or fabrication.” Do you really think that you are investing in the same caliber of companies on the OTC as you would on the NASDAQ or NYSE? Don’t be naive! Do you think what your company outlined in that lovely PR is really going to happen? Two words for you my friend: SAFE HARBOR. In the OTC you are investing in POTENTIAL ALONE; therefore, be a discerner of the POTENTIAL OF THAT COMPANY’S STORY. What has great potential? Water to China? American Idol in a 3-D world? Gasoline replacement in a weed? Oh yeah baby! All those STORIES have great POTENTIAL. But there’s a monster “IF” involved in every one of those. After some time, the reality that the “IF” is gonna stay a big “IF” sinks in and the stock PPS encounters a slow death. Sadly, some of the really real OTC companies go unnoticed because they do not have a great story with potential. The term many investors use to refer to the story is “kool aid.” Does your stock have good “kool aid?” Well, does the potential of your company make you want to buy it? Does it make other want to buy it? I try to avoid investing in OTC issues that do not have good kool aid flowage or the potential for good kool aid flowage. Wow. What a concept. On the OTC sometimes you have to invest in the POTENTIAL POTENTIAL of a company. (That last sentence wasn’t a misprint. Read it twice if you need to.) 

21. The Don’t-Gamble-Away-The-Mortgage Axiom 
You *should* expect to lose your entire investment. You *should* expect to lose more money than you make playing OTC issues until you wise up, learn these axioms, and behave according to them. If you are playing the OTC to try and make some quick money to pay off a debt, good luck with that. Unless you are an experienced OTC Jedi Master that does this for a living (and I’m by no means saying that I am one or that I have arrived!), you better ONLY USE MONEY YOU CAN AFFORD TO LOSE. 

22. The Dingleberry Axiom 
This is the term I save for bidwhackers. Realize that the OTC market is unfortunately full of people that don’t understand the concept of selling at the offer. They are more than happy to whack out the bids on an issue for their lunch money. Realize that usually the longer an issue stays in the spotlight, the more problem it is gonna have with dingleberries, er, whackers.

23. The Bid And Offer Axiom 
Level 2 is often the truest of truths in the OTC. It tells a very accurate story. If you cannot afford to spend your day glued to L2 watching the issues you’re trading…you shouldn’t expect winning trades on the OTC. I simply cannot stress enough the importance of having LIVE Level 2 and understanding it. Spend some time paper trading which watching L2s. Practice. Practice. Learn. You just gotta understand what the Level 2s are telling you. Some of my friends would also come in here at this point and say it is not only L2 it is also the chart. I would argue that it is MORE L2 and LESS the chart. By understanding and watching L2 I feel like I can identify dilution much faster than by simply looking at a chart and all its indicators. 

24. The CEO Is A Scumbag Axiom 
Now I know we’re all quick to defend our favorite CEO…but the truth is he or she is a scumbag. Now what level of scumbag she or he is I cannot say…but with confidence I can say that every OTC CEO is a scumbag. Deal with it. 

25. The Know Your Friends And Enemies Axiom 
You will have a hard time succeeding down here without friends. Any amount of public success will bring you more friends and new enemies. Understand which is which. Keep your nose clean. Loose lips sink ships. Know when its time to sever a relationship. Know when its time to repair a relationship. Know your associates. 

Now, I must ask you, knowing all of the above, do you REALLY want to mess around with penny stocks? I mean…really??? 

Okay. 

Those of you that have never traded in the OTC or are just beginning to trade down here and are right now shaking your head and thinking that you somehow transcend these axioms…you will have to learn the hard way. Traders like me will end up with your money. I want to thank you in advance for helping build my portfolio. 

Those of you scared out of your gourd right now…GOOD. You should be. You should realize that you’re absolutely nuts to be risking money down here (and I use the term “down here” on purpose) in the OTC!!! 

Investing in the OTC is very risky. It’s riskier than Alaskan King Crab fishing! But the rewards often outweigh the risk. The lure of monster profits is too much for many of us to say “no” to. The idea of finding that one true gem in a million that becomes the next Yahoo is too strong a draw for many of us to avoid. The surge of adrenalin that comes when profiting 100% on your money within the same hour you made the trade is addicting. The fun that comes from finding friends and having a successful trade with them is indeed AWESOME. 

The OTC is a crazy world that attracts some pretty crazy people…and yet I have chosen to live in this world…I have accepted the consequences of investing in the OTC. I feel safer putting my money in an OTC issue than a NASDAQ or NYSE issue because I understand the OTC. 

I have written all of the above as a student, not a teacher. I will always be a student of the OTC…ever learning. I do believe that is a good attitude to have if you want to truly be a successful OTC trader/investor. I do hope that some of what I have said above will help you retain and/or build your bank! 

If you want to quibble about something I’ve stated above or you’d like to tweak something to make it a little more accurate…please feel free to come and engage me on my Van Scan board here.

10 Advanced OTC Axioms (a work in progress) 

by Vantillian 

These new “advanced” axioms are another humble attempt to help folks that are crazy/daring/reckless/stupid enough to buy penny stocks. Why God made so many of us I’ll not know this side of heaven. wink 

I still consider myself an OTC “student” as opposed to “master”. But I’ve got several years of OTC (think “penny stock” whenever you see “OTC”) experience under my belt, some scars, a few trophies, and I’ve diligently and consistently sought to approach OTC trading and investing philosophically where using fundamental, bedrock, axiomatic truth results in the best market decisions. 

(I would exhort you to take a break if you think you’ve arrived.) 

Remember, an “axiom” is a principle or truth that stands alone without the need for proof. They just are. Abraham Lincoln might use the phrase “self-evident” to describe axiomatic truth. So, I don’t seek to present a case with well-structured arguments to “prove” these axioms…they are designed to stand alone and to either be accepted or rejected. And, if accepted, to serve as the foundation of one’s thinking and decision making on the OTC. Build your structures upon the solid ground of correct and accurate truth! Consider these axioms as sunglasses with colored lenses that will filter/color/define everything you see across the OTC landscape. We all work from mostly the same pool of facts and data…how we interpret it all makes the crucial difference. 

There will be some overlap between these axioms and the other axioms, but that’s okay.

1. The Pigs Can Fly Axiom. Anything can run! I have basically stopped “warning” people about scammy, scummy, crummy companies because there have been several times when my warnings inadvertently kept people from making dough as the stock went through the roof. Anything can fly! The nastiest wart-covered, fat, sloppy mess-of-a-hog can grow wings if some hedge fund or some promo or some inexplicable force gets behind it. This is part of the allure of the OTC, I guess. Sometimes things happen in pennyland that leave even the most seasoned veterans slack jawed. You will never master the OTC for this reason! The law of gravity sometimes vanishes for an indeterminate amount of time but it always returns with vigor at some point. Sometimes, the really scammy companies run like the wind because you’ve got a fearless, no-conscience CEO tossing out insane revenue projections and/or fictitious buyout offers and/or anything that keeps the shiny object attractive just a little bit longer. (Also, understand that many times those posters yelling the loudest against scammy companies are trading the stock too! Perhaps it makes them feel better about their profits. Who knows. Where there is volatility, there is money to be made.)

2. The Horse Apples Axiom. This axiom is closely related to the Pigs-Can-Fly Axiom. Realize that penny stocks are like dung. All of them. If you have chosen to buy a penny stock then you have chosen to purchase poo-poo. Now, sometimes crap can make people a lot of money (think fertilizer companies and/or Mad Max Beyond the Thunderdome), but when you position yourself to defend or support your favorite penny stock company what you have essentially chosen is to become an advocate for doo-doo. I know this is a troubling mental image but it is accurate. “Hey, it’s crap! Don’t buy it!” insists the do-good crusader. Yeah, we know. They *all* are. What matters is if it will MOVE. What matters is if there is POTENTIAL for gains/volatility there. What matters is what the masses BELIEVE. What are you going to do Captain-Save-The-Planet? Tell them how bad that poop smells compared to that not-so-bad smelling dung over yonder?

3. The Socrates Axiom. You can’t really be sure of anything. You will become a savvier trader when you embrace this. In the perception-driven world of the OTC, I would have to agree with Socrates that purported that: “the only true wisdom is in knowing you know nothing.” (Debating whether or not you can really know for sure that you know nothing is another matter. Just work with me on this.) You can’t be sure of the share structure. You can’t be sure of that large European holder that you just *know* is waiting to sell his eleven million shares until after the stock hits a dollar. You can’t be sure of the guy/gal that gave you the tip. You can’t be sure that the numbers in the press release are correct. You can’t be sure how much stock is going to hit the street next week. Understand that non-dilutive contracts often mean absolutely nothing to these penny CEOs. Should a marketplace like this actually exist? That’s a good question, too. But for now, it does, and there is money to be made on it for those that understand it by never understanding it.

4. The Share Swelling Axiom. Every stock gets diluted, period. If it’s not the company diluting, it’s ancient restricted shares coming off restriction. Or maybe it’s an escrow account that managed to stay hidden from the latest NOBO. Or maybe it’s an old cert some funder or accredited investor forgot about in his filing cabinet and he just found it. If it’s not one thing then it is another. There are many clever and creative means whereby the float on your cherished stock can GROW QUICKLY. Trusting that the stock’s float will remain stable is like having a tailgate party on a small lake that has quickly frozen over, inviting the entire town to come out, and trusting that the ice will hold up under the weight. Ain’t gonna happen. Sure, you’ll have a great time on the ice for awhile but something’s gonna give. When a stock is trading at a high price per share and there is liquidity at higher price ranges, the temptation is overwhelming for someone who has the power and ability to add shares to the float to do so. Oftentimes, stocks can and do go up when there is responsible dilution. And sometimes they even go up with irresponsible dilution (see Advanced Axiom #1). Penny stocks *all* dilute folks. Why would they be putting out press releases and hiring IR firms and shucking rumors if there wasn’t money to be made. And how do these companies make money? After all, they went public to raise money…and the way making money is done is through the *sale of more shares.* All of them dilute…even the ones that proclaim loudly that they are doing a share buyback. Think: how much of a buyback is it if they dilute twice as many as they buy? Maybe you’re a noobie to OTC investing and you’re thinking: “People would actually do that?” Yes, yes, YES they would do that (and they DO)! In fact, the louder the company and/or posters insist that the float is stable the more leery I become. Recently I got my butt handed to me because I neglected this axiom and boldly challenged a poster about the share structure of a stock I persisted remained unchanged. The very next day the transfer agent was called and we discovered that the scumbag CEO had diluted by about 5% of the outstanding. There’s always a reason why your favorite stock is getting buzzed about. Even if a stock’s run starts out as purely organic (which I believe can and does happen at times), understand there are forces out there that can add supply in amounts that will utterly cripple demand.

5. The Friends and Family Axiom. Sometimes the pre-promo *IS* the promo. Do you understand what I mean by “pre-promo?” Here’s an example of what I mean: “Hey bud, head’s up on XYZX. Hearing massive push coming next week with loads of overseas money coming into it.” If you’ve been online for any amount of time you’ve likely received a private or public message similar to this! Understand that sometimes the friends and family (i.e. “pre-promo” or “pre-push”) program IS the program. In other words, sometimes YOU are the promo without knowing that you are the promo. Your dollars. Your money. Your stupidity. You bought in on the hype and hope of a promo but you were the promo. The push that is coming is happening right now. Today! By YOU. When some friendly tipster tells you they know a push is coming on some ticker, it’s time to start asking A LOT of questions before you buy unless the rumor originates from a semi-trustworthy source. Which, when considered carefully, the idea of a semi-trustworthy source is a misnomer because he/she is likely trusting an altogether un-proven, un-trustworthy source for their information. Remember, the information you receive is likely two or three steps removed from the origin. And many times the people that are the origins of information would make the devil blush. Digest this. I’m trying to help you here. This is not a friendly world.

6. The Profit Axiom. If you’re not selling, you’re not making money. This axiom is not original with me but it is so good and true! Evaluate your trading activity over the last 2-3 months. How many bags are you holding because you were holding out for more profit? If you are holding bags that could’ve been sold for a profit, shame on you. Seriously, that’s just not good investing. The future is now. What are you waiting for? If the stock went up 300% over a period of years what would you do at the end of that time? Take profits. So why is it different for you to take profits a few days (or perhaps even hours) after you purchase a stock? Think in percentages. All pigs eventually get slaughtered. Good rule of thumb is to take some profit at 50% and some at 100% and then ride freebies. Be a disciplined person in an undisciplined world. You will win.

7. The Matrix Axiom. Discipline your mind to think *reality* though you invest in a realm almost exclusively dominated by *perception.* Why? Because “perception” can only take you so far. It’s Wonderland! But it sure seems real for a time! It’s like the guy that married a beauty queen. His perception of her was that she was staggeringly gorgeous! But the morning after his wedding night he woke up to reality in his bed. She didn’t wake up a beauty queen! It took a lot of work! Think of the OTC as “The Matrix.” Remember when Neo would get plugged in to the Matrix and visit a world that was total perception? You need to discipline yourself to view OTC life through that mindset. It’s. Not. Real. But it feels so real to so many that perception does impact aspects of reality. What is real? Money. Numbers. People. The OTC is a world of perception that greatly impacts the real world of money and numbers. Understand which is which. Don’t confuse the two. Don’t lose yourself. Swallow the blue pill. Remember, perception eventually comes crashing down and reality wins every time.

8. The Ebb and Flow Axiom. Think of each stock, each trend, each fad as having a window of time. Once the hub is seriously buzzing with the latest trend (such as “Q” stocks or “D” stocks) it’s time to start looking for the next “hot” thing. The essence of life is motion and change. Without motion and change there is no excitement, no buzz. Novelty rules the world. Most of these things tend to cycle.

9. The Hero to Zero Axiom. Nobody stays hot forever (or for very long). If you think that you have found that guy who never makes a mistake, that guru, that golden goose…you have deceived yourself. If your “big gun” is currently blazing hot…ride the wave but don’t be left holding the bag. The most undisciplined investors stay dumb on purpose. Most investors are lazy. They are some of the laziest people I’ve ever met. They want to turn $1,000 into $10,000 by doing nothing but waiting a bit. And they want to find the next Jim Cramer to tell them where to put their initial $1,000. That’s lazy. But it’s not going to change. Some of the truths of these axioms rub me the wrong way as I type it, but I can’t change reality. The more that I can embrace these truths, remember them, and act by them…the better investor I will be.

10. The Teamwork Shmeamwork Axiom. Teamwork on the OTC only works when there are positive vibes and the stock is uptrending. Why? Because those smart enough to realize the value of networking with other investors are also smart enough to realize those very same investors cannot be trusted. Private Ryan never gets searched for in the OTC war. Anyone that is pitching ideas of “nobody gets left behind” or “I will be the last one out” or “none of us are selling until $X amount” should not be trusted for long. I know this is harsh and will step on some toes. You, like me, have probably bought stock based on claims like this. But sometimes the truth hurts. I do not trade and invest to make buddies and friends. I trade and invest to make money. And as such, looking out for my own portfolio is the most significant factor when buying and selling securities. What is your most significant factor? Some of you may recoil a bit at this axiom and look for friendlier words from more cheery places. That’s okay, but please know this: The OTC is a battleground. People are fighting for money. Some people *kill* for money…so, deceiving you through kindness, notions of teamwork, or guilt-for-selling is STANDARD OPERATING PROCEDURE for more “leaders” here than you ever dared dream. Bottom line: Don’t get your need-to-belong and relational itch scratched here. Instead, find a good Bible teaching local church.

My Trading Journey

February 19, 2015 

The Start 

Thank you for reading about my trading journey! This blog is dedicated to documenting my experiences and what I’ve learned trading many high risk trading vehicles, such as OTC penny stocks and options.

I started trading seriously in April 2013. Like many who have just earned their master degree, I was searching for an alternate source of cash flows. I had been in an investor mindset prior to that start trading big board tickers for 5-20% gains by holding at least over a year. An idea popped into my mind in regards to turning $1,500 into $1 million. Investing for 5-20% profit a year wasn’t going to turn $1,500 into $1 million quickly. 

The OTC markets appealed to me at that point because I could see tickers rising 10-1,000% daily. The OTC offered high risk and reward opportunities, and options were just a distant trading vehicle to me at my start.

I’m not advocating OTC pump and dump techniques in any way with this post. Traders buy when they think a ticker will go up or short (if possible) when they think it will go down. Some traders “buy ahead” with more knowledge than others on the OTC or big boards. Stock/ETF options are related to big board tickers that are the underlying asset to the option being traded. Calls are traded when a ticker is perceived to go up and Puts are traded when down is the predicted trend. 

I watched OTC QBs and paper traded for six months before I started trading them in April 2013. The pump and dump and accumulation was much easier to see in my trading start. It was like pink sheet trading in slow motion. I traded two to three tickers at a time with my starting funds of $1,500. That’s 33-50% per trade, which is not a safe way to reduce trading risk but a high risk versus reward way to increase a small amount quickly. 

But I was focused on those 2-3 tickers. I lived and breathed those 2-3 tickers. I took my gains when the chart showed me the uptrend was weakening. Maybe my start in April 2013 was a special time that allowed me to take advantage of uptrends and lock in gains within 2-20 days. The medicinal marijuana (MMJ) craze occurred in January 2014 after a couple states implemented MMJ legislation. 

I started listening to so many different traders. I had made a decent sized OTC trading network on Investor Hub (iHub) and was full of trading ideas. I forgot about my OTC QB strategy.

I had made this paradigm in my mind that I could apply the OTC QB strategy I had perfected to pink sheet trading.

Here it was in a nutshell: 

+ 6-month chart showed a new uptrend with high volume recently. 

+ The company issued news the past month and was consistently issuing daily or weekly. 

+ The iHub board had increased message volume.

+ I used chart reading, with indicators such as CCI, ADX/DMI, and MACD and overlays Bollinger Bands, PSAR, and moving averages (MAs) to gauge exit- is uptrend weakening? 

The Hot Streak and Realization 

I was very wrong. I had turned $1,500 into $30,000 by March 2014 and heavily purchased MMJ related tickers with my gains. My mind was on the $1 million goal instead of realizing I had just earned 1,900% in a year. 

All MMJ tickers started to fall that March 2014. I watched $7k get locked in $PRPM. I watched my other four positions fall 90%. I was left with a few thousand.

I grasped at new trading ideas and became unfocused. I saw the OTC liquidity had dropped by June 2014. I was ethically torn about trading any OTC ticker at that point due to my knowledge of dilution and promotions.

I knew so much about OTC trading but couldn’t grab the 10-50% on momentum trades consistently any longer. By July 2014 I was serious about trading stock/etf options. My OTC trading friends started to part ways and make their own groups. Many migrated to option or forex trading.

Some of my trading friends started to tell me they couldn’t work with me if I continued trading and discussing OTC tickers. My family and friends didn’t support my trading aspirations and likened what I was doing to gambling. 

The OTC Trading Dilemma

The issue that I think most OTC traders would agree with is when a single trader, toxic financier, or trading group buys/receives a substantial amount of shares, and then sells of them in a day to a week ruining the pps upward trend knowing forward looking promotions (or simple grand embellishment) were used to deceive buyers.

Less then 10% of the outstanding shares can be substantial. Say there’s 100m o/s and tradable float is 10m. If 9.9m shares are issued then the OTC filing requirement is avoided for the 10% rule of o/s and the float will substantially be increased.

Mutual funds and other large entities buy large amounts of big board stocks. The trading big media or news outlets aid in advertising stocks, industries, sectors, etc and then large blocks of stock are sold. Is the art of trading stock really much different between markets and exchanges? Or are the monopoly rules just a little different?

In the end single traders have to know what “trading game” is being played and try to take advantage of it with whatever trading vehicle is chosen. Is it fair that I start with $2,000 and pay $10 a trade ($20 to complete a trade)? Yep, and I have to know I need to make 20% on a $100 trade, 10% on a $200 trade, to break even from fees. I used to migrate between brokerages and trading vehicles trying to find a way to lower fees and make decent gains.

OTC QBs were my best source of gains. Even over options. That’s because I made a simple strategy, stuck to it, and fit the strategy to my trading needs and resource constraints. I had failed to place my gains into less risk averse trading vehicles. 

My Trading Journey Continued

My background in finance has aided me in any type of Trading. I can read financials, understand business news, perform chart analysis, and do due diligence. What I lack is time to day trade.

The OTC and big boards each have their games to be learned. The monopoly rules as I call them. Big boards are more appealing because most think there is less manipulation, more liquidity, disclosure, and transparency of tickers and company info.

I spend more time trying to manage 5-10 positions now.

I’m a little ahead at this point trading options. $100-$200 trades help mitigate risk of loss. But the option trading fees are a huge hinderance to my gain accumulation and account growth. Options decrease in value quickly. If I hold two+ days then I can see 10-50% option pps movements. Those ticker moves of 1-5% each day translate to big option pps swings. I realize now that I lack time to day trade. I can make more quickly at stockbattle.com at this point competing by trading big board stocks for the daily 1-5% gains and trading a max 25% of my account in any trade.

I’m happy to share my experiences and knowledge via e-mail or chat. Let me know your thoughts or questions :).

90/90/90 Rule

December 13, 2014

The 90/90/90 rule is a basic rule of trading. It means 90% of new traders loss 90% in 90 days, generally. Can a trader avoid become a part of this statistic? Of course! By creating a trading strategy, testing it via virtual trading, researching ticker and option targets, and trading with a loss minimizing mindset a trader can avoid the common pitfall for new traders.

I’ve included a loss and gains table to place losses into perspective. A trader can see that between 10-20% loss it would take a little bit more gains to recover. If 90% was seen, like what occurred with $GTATQ a few months ago in A DAY, then a 900% pps increase would be required to get that 90% back.

Setting a stop loss is what I mean by limiting losses. A stop loss is a specific trade type that a trader can set for a certain time period. It allows a sell to occur at a set amount so the trader can limit losses.

My focus of trading are stocks less than $10 and options. A trader trading an OTC penny stock needs to be mindful that market makers (MM) on the OTC like to bring a ticker’s pps down to popular stop loss points such as 20-30% to trigger the selling of shares. This allows the MMs to buy at a lower point should they think a catalyst will make the pps jump in the future. This type of MM behavior isn’t prevalent in the NYSE and NASDAQ where options are traded.

Limiting losses is just as key as getting consistent gains. The main goal is to have a net profit to allow a trader’s account value to grow for future goal achievement.