This post is partially a look back at my first 6 months with this strategy and partially a compilation of some things I wish I knew earlier.
I started trading penny stocks in June 2016, but had traded large cap blue chip stocks for a few years before that. Penny stocks are crazy and very rewarding if you're disciplined. If I could go back to June, there are many things I wish I had known that would have saved me a fair amount of money. I will cover things I've learned about brokers, commissions, trading strategies, lessons/content, the chatroom, scanning, and finding stocks.
I started a $2,000 etrade account in June, would follow Tim's trades, and always lose. I also bought momentum stocks on my own, but I'll explain in a moment why I still lost money. My account faded to $1200 by August (even during a crazy bull market: $MGT $PRGN) then I refunded my account and made major changes to my strategy.
As far as my own trading strategy goes, I like buying breakouts, scalping dips on fast momentum stocks, and shorting the backside of a big move. I do my very best to abide by 7 pretty simple rules:
1. Cut Losses quickly/intelligently if your thesis is false.
2. If your thesis is still correct, be patient, let your position work for you.
3. Don't chase, wait for the first dip on a fast mover, even if its only a few cents, it gives you a precise risk level.
4. Take high odds trades only, wait for setups to come to you.
5. Use clearly defined risk levels (ie. if it falls below $1.30, I'm out)
6. Absolutely no Guru trades
7. Don't fight a trend. If something looks like a dip buy but is still making lower lows, I won't buy.
Following Tim's trades is the worst thing you can do for both your account and your learning process for several reasons: 1) you don't learn anything because you wouldn't have taken the trade if he didn't. Nowadays, even if I'm in a trade and he buys, I usually get out shortly thereafter because even though he won't admit it, his buy alert affects volume and price, especially of low float plays. I'm not faulting him for this, but do the math: 1500 people in chat, if 15% of them blindly follow the alert that's 225 buyers, 225 buyers at 1000-3000 shares each= 225,000-750,000 shares within minutes which definitely affects the price. When he issues the sell alert, you see a panic to the same degree and its impossible to sell into weakness effectively. This is all on top of the fact that you're not LEARNING. Now, when Tim issues an alert, I look at the chart to see what he's sees then read his reasoning in his post to confirm, that is how you learn.
As far as brokers go, I use Etrade, ThinkorSwim, and Schwab (because I already had Schwab from old account). Pro's and con's for these brokers:
Etrade: nice interface with Etrade Pro, good short locates, great intraday scans/alerts. $10 commissions each way, although I have never tried to negotiate commissions.
ThinkorSwim: another good interface, great charting, great night or premarket scans/filters/alerts. Terrible short locates, I have actually never shorted in ToS because they never have shares of what I'm trying to short. $7.99 commissions each way (if you contact them and request lower commissions, just tell them you trade a lot and have more $ you plan to deposit).
Schwab: streetsmartedge is actually a pretty cool application, $8 commissions. I'm just starting to use for penny stocks, this is the account I've had for 10 years and used to play large caps with.
If you're under the PDT rule, I highly recommend using your capital to open 2-3 accounts, even if its only $2,000 in each.
I hate to say this, but even with a small account, position size is everything, and I know Tim wouldn't like me saying this, but I think a minimum of $2,000 position size is necessary. With $2,000 position size, you only need to make 1% to cover commissions. I used to trade $700-800 positions and would have small gains, but commissions would wreck me. You're better off saving up some money and studying, than trading any position under $2,000 in my opinion.
Speaking of studying, nothing, nothing, nothing, is more valuable than screen time. Even if your not trading, watch the hottest stocks and how they behave for several days, even the boring days when they are consolidating, it is essential to understand the motion they go through with buyers and sellers and volume. I wish I would have paper traded some at the beginning, but its not the same as being emotionally invested with money on the line. For beginners, I would recommend paper trading, but advise you to realize that its a different ballgame without your emotions and money on the line.
How to Make Millions DVD is a must, and for $297, its the best bang for your buck, all encompassing DVD. I also highly recommend Trading Tickers by Tim Grittani for incredible live trading videos. Pennystocking and Pennystocking part 2 are also good. But HTMM is critical. (And by the way, the "deals" on content are perpetually running so study study study). The chatroom is helpful, but you need to realize that 80% of the people in there are very green and new. Notice the screen names of people who give good alerts, and put more weight into their opinions and alerts. OsirusTwits, Arussell, and Palmer, are pretty good guys fwiw.
I run nightly, premarket, and intraday scans every day. I always trade from 9:30-11 and 2:30-4 EST even though I have a full-time job (I live on the west coast). Don't think you're going to get rich quick in here. I try to just be green on the week, even if only by a penny. Staying in the game and constantly learning is how you get rich in this trade. Don't let losses get you down, they happen to everyone, and if you stick to your rules, you won't lose much.
This was basically a rant of things I wish I knew just starting out, I hope it helps you, feel free to ask me questions: twitter: @trailrparktradr or just message me on here.