DAY TRADING vs. SWING TRADING
A lot of people get caught up in the idea that because these stocks can be really cheap, they can make money with them. But fact is these are difficult stocks to day trade. Unless you can get in on the morning rush and buy on the way up and sell on the way up, you will find it best to swing your trade over the course of a week or more. Sure, it is possible to buy and sell the same day. Some of these stocks will get caught up by the masses and run in volitile swings for 3-5 days. But trying to time a top or bottom is an effort in futility. One can loose not only their money but can also loose their sanity.
We take the position of swing trading the stock. We like to buy after the first run up has sold off and then depending on the reason for the run up, take our postion. If the run up in stock price is because of a news release we wait to see what the news was about. If the press release says the company has aquired property or has drilling results or good assays from drill results, each announcement will effect the stock price. In most cases the drilling of the property in question is of course surrounded by peoprty that is owned by other junior miners. It is a good theory to check on their price action also. This is a gmae like any other where everyone is watching the next guy. All these miners have their ear to ground. If you follow a stock long enough and know the story, you can sense how the stock will react to news. This plays well for those who swing trade their positions.
One thing that many have difficulty dealing with is press releases. Like any industry, whether it be tech and the term is SAP Integration Server, insurance and term life insurance rates, agriculture or anything in between, mining and exploration has their own lingo. Terms and terminlogy, values, abbreviations etc. are used in press releases. One has to learn what values are good, great, lousy, etc. It doesn't take long though. A press release to you may sound great. They found gold. But the stock sells off like crazy. Obviously 2 things come into play.
- The results were bad or not satisfactory to the some of the shareholders or...
- The results weren't that bad after all. Market makers or larger holders dump the stock just to clean out some shares from the folks who may run scared and sell out. This enables the pros to grab a few more shares cheaply before the next run up.
Because so few exploration companies actually will see their property go into a mine of any kind, the buy and hold strategy doesn't really work here. Most properties will get tons of dollars spent on being explored but very few claims will see a mine. There are however those penny miners like Diamond Fields that was looking for diamonds and instead stumbled onto Voisey Bay. Having shares in a stock like that from the beginning is just shear luck so that is why we wait out till something sparks interest in the investing public. Right now there is press releases almost daily about some penny miner finding something.
Technical Analysis
We see the term technical analysis used a lot. What is it? Well it's the analyzing of charts, data and other information. When working with large cap stocks that have developed trends of trading over a certain time period, you can see the highs and lows and go back over time and see that at certain times of the year the stock does certain things. But with penny stocks, especially penny mining stocks the technical analyzing of the stock really does do much good until the stock becomes an active trader or has the public interest. One look at some of the historical charts we have will show that for a large percentage of time the stock did absolutely nothing. It wasn't until something happened that caused the stock to become active. For these very reasons we try not to hold onto a stock for any length of time.
A Penny Mining Stocks Special Invitation
We are offering you the opportunity to learn first hand some trading techniques by Adam Hewison. Adam contacted us and is offering this to Penny Mining Stock readers for a free limited time offer. Below is Adam Hewison's bio.
My name is Adam Hewison. You might want to Google Me to confirm what I am about to share with you.
There are plenty of people out there that create “exclusive email courses” with little or no credentials to actually backup their teachings. So, I think it’s right that I share a little bit about myself with you before we even start.
I was a former floor trader on the IMM, IOM, NYFE and LIFFE as well as a risk manager of a large, multinational corporation in Geneva, Switzerland. I also have written books on forex trading and trend following. In 1995, I founded INO.com and later co-founded MarketClub. I’ve been in the trading biz for over three decades and have seen it all. I created this course as a way to give back and share trading tips and techniques that I still use in my trading today.
In my Free Mini Email Course, I will show and explain the tools and strategies you need to increase your success rate in the marketplace.
(1) The importance of psychology in price movement
(2) How to spot mega trends
(3) Understanding of technical price objectives
(4) How to picture price objectives
(5) How to trade with moving averages
(6) How to use point and figure trading techniques
(7) How to use the RSI indicator
(8) How to correctly use stochastics in your trading
(9) How to use the ADX indicator to capture trends
(10) How to capitalize on natural market cycles.
Plus, you will you will learn all about fibonacci retracements, MACD, Bollinger Bands and much more.
Trading Software
Professional traders that work out the larger trading houses today use various types of software along with black boxes that run on set mathimatical algorithms. These black boxes have trigger points set so when a stock rises or falls the bids or asks will correspond with the real time data that is being fed to the black box. This kind of gives them the upper hand as traders trade stock to make money. Most are short term traders. Long gone are the old buy and hold stock traders who will buy and 10 cent stock and ride it for a few years to sell at a few dollars.
A lot of smaller at home online traders are starting to use various kinds of trading software that will help them with both entry points and exit points based on various factors. We have tried a few different platforms and found that most do work. Once data is plugged into the software itself takes over. You set your variables and parameters based on volumes, macd, velocity etc. It does take a lot of guess work out of trading. It also helps with not becoming sentimental in the stock you just bought.
We have been asked here at penny mining stocks if we use any type of trading software. One of the softwares we used was Stock Assault 2.0. It is not so much a software like the rest. It is more like a robot that does stock analysis for you. It works in the background on your PC. It works quite well like the promoters of the software say. We would use it for trading more but we are more inclined to be following specific plays and try extremely hard to stay in mining plays. But it does work and you can make money with it. Just like the advertisement says. Worth a look and give it a try. It it's not for you just quit.
Another piece of software bu Trading Solutions work well also. This is also a download version. Once agin if it's not for you, just opt out.
