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Registered User
Joined: 7/8/2006
Posts: 20
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hello,as young trader i started off trading penny shares in AIM and OTC and I have to say since then I am having harsh time.
Perhaps I am not the only one here to have experienced this stage that i do frankly accept as part of the game. I usually rely on RSI and STOCS as indicators along with volume and I use 20MA 50MA and 200MA. I do think that I must hone my skills and knowledge overall but I am having clear results that my approach might be wrong. Is anyone against penny share as good vehicle for capital growth? ARe blue chips better performers for long positions or they can be used for gearing?
Thanks
V
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Registered User
Joined: 1/28/2005
Posts: 6,049
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Rather then "blue chip" I would say earnings/growth.
Think of the relationship between price and earnings.
A stock that typically has a PE (price to earnings ratio) of 15
and earns 2$ a share would be valued at 30$. (2*15)
If its earnings grow to 4$ a share it can be valued at 60$
and still have the same value. (4*15)
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Its typically easier for a small company to grow.
Its easier for 250 million to become 500 million. Than
10 billion to become 20 billion.
(think of how many stores Wal-Mart would have to open to double in size)
That's why "bluechips" can be viewed as somewhat past their prime.
(lower growth)
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As for the pennies they tend to be speculation. There will be many dogs
before you can find a diamond in the ruff.
Thanks
diceman
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Registered User
Joined: 8/27/2006
Posts: 74
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Good Educational Advice. Diceman..
Thanks so much..
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Registered User
Joined: 7/8/2006
Posts: 20
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hi dice. we having a bad day in uk. ftse 100 is down 49 points and all other indeces are following that through. Thanks for your opinion and valueble experience. I will definetely take on board your suggestions.
So defining a winning strategy...fundamentals are key on evaluating a stock before even looking at charts if i understood your point.
Thanks again for the tutorial
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Registered User
Joined: 7/8/2006
Posts: 20
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so..
a)how do i minimize losses offloading shitty penny share
b)how about if i have not yet any negative divergent signal between indicators and prices are still "within the rules"
c)originally i waited to buy those stocks (3)when had good buy surge and strong volume support.Since last friday the stocks have been going through a seemingly medium long term consolidation pattern. my aim was to buy at breakout and sell at highest point.for several reasons did not work out.
Shall i sell those stocks anyway accepting the losses even though my original plan was different?
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Registered User
Joined: 1/28/2005
Posts: 6,049
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Quote:"So defining a winning strategy...fundamentals are key on evaluating a stock before even looking at charts if i understood your point."
Realize that my point was: a stock that has growing earnings can have
its price grow and still maintain the same value.
Obviously there will always be exceptions to the rule. If you look at any stock
that been up strongly over many years. Its a good bet that its earnings
have also been strong.
I was mainly trying to illustrate why pennies may not be a good deal.
Typically the strongest stocks are somewhere in between penny and blue chip.
Quote:"
so..
a)how do i minimize losses offloading shitty penny share
b)how about if i have not yet any negative divergent signal between indicators and prices are still "within the rules"
c)originally i waited to buy those stocks (3)when had good buy surge and strong volume support.Since last friday the stocks have been going through a seemingly medium long term consolidation pattern. my aim was to buy at breakout and sell at highest point.for several reasons did not work out.
Shall i sell those stocks anyway accepting the losses even though my original plan was different?"
These are questions only you can answer. I am merely trying to maybe
open your eyes to ideas you may have not considered and give you
ideas to look into.
The trader must always determine his own risk.
Thanks
diceman
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