1. Do you pay attention to the overall market and does that affect the stocks you trade?
2. How does the amount of shares a stock pumper is compensated relate to and affect the volume in a pumped stock?
Video #2:
1. How do you find pumped stocks and stock promoters?
2. What is the general learning curve for trading stocks as you do?
Disclosure: No positions in any stock mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.
#1 by MarketMonk on February 20, 2010 - 12:42 pm
Reaper, another good series of videos, thanks.
I would say that in my observation it takes folks a lot longer to become profitable than most believe. Allow me to define the term profitable – it is where you are consistently in the black with little draw downs (that don’t wipe out days or weeks worth of profits).
There is so much to learn (what stocks are, what is the market, how it all works, the broker platform, how to read charts, understanding price action, learning a methodology, understanding and learning how to handle ones emotions, etc). All of this takes a lot of time and effort and because there is no structure provided (outline of what to learn) so most waste time.
Folks jump in and try to make money instead of learning the things they need to in order to be successful. Bottom line, most fail because of this lack of proper education. Those that do survive have probably been at it for many years. A few will get lucky and find a decent chatroom, a service, or a mentor that will provide some guidance.
In my humble opinion (after doing this for 6 years) here are my estimates:
60% quit trying to trade in the 1st year. They typically suffer a few big losses and realize that trading requires a lot more effort than they are willing to put into it.
Of those remaining, half quit in the second year because of a number of reasons, but usually it is that they “finally” realize that it is almost impossible to earn a living off of a sub $25K account.
Those are the 2 big reasons imho that folks walk away from trading for.
You are lucky you came across a methodoly that suites your personality, that has a positive expectancy, and you got some great coaching/mentoring early on.
I tip my hat to you for all of your efforts to help traders (especially newbies) learn how to trade. I do my best to refer folks to your site. Keep up the great work.
MM
#2 by Reaper on February 20, 2010 - 2:26 pm
Awesome comment, MM.
I should point out that I had 2.5 years very intensely studying markets and trading and investing before I found a strategy that worked. And people that think they can put just a little effort into learning are deluding themselves. It really takes practice. These idiots who ask basic questions and don’t want to work to look things up themselves will lose money … trading is very very hard, just like most other endeavors. The thing is, in most vocations one can do okay by being average … in trading you have to be way above average just to be barely profitable.
#3 by Preston on February 20, 2010 - 1:35 pm
Great vids Michael, thanks.
#4 by alex on February 20, 2010 - 2:27 pm
I too was wondering how you find your “pumps” that you buy in the afternoon and then sell the following morning. Is it really as easy as subcribing to these promoters mailing list? I don’t believe it. It would seem to me that the people willing to buy your shares the following morning are the ones who are following the advice in the emails they recieve after market close (and hence the gap up). I would imagine you need to use an intraday volume scan or otherwise technical tool to pick up on volume coming in out of nowhere in an otherwise illiquid/inactive penny stock…which is the signal that the pump “insiders” are accumulating before they send out emails to run the stock up.
#5 by MarketMonk on February 20, 2010 - 6:17 pm
“in trading you have to be way above average just to be barely profitable” so well stated. The odds of being profitable are so stacked against folks.
There are the PDT rules, the wash sale rule, the SHO list of hard to borrow stocks (not shortable), and the chance that they will implement the “uptick” rule just as a few examples of the regulatory challenges traders face.
There are the games market makers play, the “talking of their books” by folks wishing to push up the share price of their holdings, or to generate demand to unload those shares, the endless parade of shills on TV selling old concepts that don’t work anymore, ….
I could go on but the bottom line is we all need to find a methodology that allows us to consistently take money from the market. There are a number of methods that work in all time frames (long and short). Find one that fits and learn how to become an expert at it.
#6 by MarketMonk on February 20, 2010 - 6:19 pm
Alex, I am no expert in the penny stocks but have been under the impression that the pumpers don’t have to buy the stock in order to accumulate it. It typically is awarded to them.
I could be wrong and would be glad to stand corrected.
#7 by Kumar (vkp) on April 23, 2010 - 8:56 pm
Nice Stuff Mr.Reaper…Thanks a lot!