What to look for
Please Note ! .. The Cheap Stock Addict is not a day-trading site nor a "get-rich-quick" free stock pick of the day hype site!
If that's what you're looking for you should look elsewhere.
Fact: 90% of all "wanna-be" day traders lose 90% of their money 90% of the time!
That is not what we want for you.
We believe in doing strong fundamental company analysis combined with patience, proven methods, sensible strategies, realistic hold times, and achievable target prices, to extract the maximum gains possible from the stocks we feature.
Here's What I Look For: Fundamentally sound small companies with great financials, products, management, and good trading volume that have bottomed out (at, near, or under) their 52 week lows.
My members love trading cheap stocks like these that also exhibit a repetitive and predictive pattern of cycling up and down between 52 week highs and lows; and, they've made a lot of money doing it. As such, they tend to stay with The Cheap Stock Addict a very long time.
Stocks With Repetitive Predictive Traits Are Special. We run multiple technical and historical tick-by-tick scans on thousands of cheap small cap penny stocks looking for these special stocks. This includes familiar companies that we have followed for many years.
These Scans Have Produced A Special Basket Of 400-500 Stocks that all move through their high to low trading cycles at different times. This means that there is always a steady supply of good quality stocks to feature. We follow these stocks through every cycle and wait for them to meet our requirements. As the pattern unfolds we sit back, wait, and watch!
The Waiting Process Is Deliberate because our analysis of most small-cap, micro-cap, and penny stocks, has turned up some re-occurring trading patterns that involve timing and psychology. No, this is not about astrology and palm reading! We use this information to help us identify share-price bottoms and investor sentiment. We won't tell you what the two traits are because correctly picking a bottom is crucial to limiting downside risk. Maximizing upside profit potential is a crucial part of what makes The Cheap Stock Addict the best site on the net.
Averaging Down or buying more shares if the price falls further on some stocks is part of our trading strategy. We view this as an opportunity to purchase ourselves more leverage on what we think will very soon be a profitable investment or trade.
Patience Is A Virtue and it is required if you wish to be successful. Average hold time can run 1 week to 6 months or 12 months. Our stocks will sometimes move immediately, but most often within a 2-10 week period. You should be willing to commit to a holding period of at least 6 months to be successful. This too is a crucial factor. Again, there will be opportunities to make some quick short-term profits using simplified quick trade strategies, but those investors who can commit to a short 6 month or longer hold time will make the really big money.
The Risk-Reward Ratio of trading low price small-cap stocks is very favorable. We recommend you buy in even number blocks of say 100, 500, 1000, 2000, 5000, 10,000, 20,000, or more, shares at a time. The low share price of small stocks allows you to control thousands of shares. Controlling numerous shares provides the leverage you need.
Let's Say You Have 5000 Bucks. You can buy 100 shares of a $50.00 stock. You can buy 5000 shares of a one-dollar stock, or you can buy 10,000 shares of a fifty-cent stock. It's obvious where you'll make the most money on a $1.00 up-tick.
Example: A one-day 1/8th pt. (12.5 cents) up-tick on 10,000 shares of penny stocks gets you a $1250.00 gross profit. Deduct $25.00 for a round-trip trade and you net $1225.00. A 3/4-point move gets you $7500.00. A $1.50 up-tick is $15,000.00 and a $3.00 move is good for a $30,000 pop. Yes, they do go higher. Trading penny stocks with limited downside risk and very good fundamentals is the best way to go.
