hey what's going on traders thanks for checking out this video my name is Travis from master the
market and in this one we're going to talk about five day trading penny stocks rules
that i believe you need to follow in order to successfully profit from the penny stock market
so without wasting any time rule number one is going to be to start small
so to ask you a very simple question would you rather lose fifty percent of one thousand dollars
or fifty percent of twenty thousand dollars now obviously losing five hundred dollars is a lot
less than losing ten thousand dollars so starting off with an account value of a thousand dollars
is probably going to be a better decision than starting off with an account
of ten thousand twenty thousand or fifty thousand dollars because as a new trader you ultimately
have to expect to take a lot of pretty consistent losses until you really start to understand the
penny stock market and until you start to put some strategies to use with your trading
however the nice thing about this is if you start small and you start with maybe a few hundred
or even up to a few thousand dollars depending on your financial situation
you can still learn the same lessons that you would learn if you were starting with ten thousand
twenty thousand fifty thousand dollars but those lessons are going to be a lot more affordable
and you're not going to lose a ton of money by doing so in other words when you start trading
it's actually going to be much more important to think about how much you stand to lose
rather than how much you can actually profit and this is a problem with a lot of new traders
they think you know if i put ten thousand dollars into this new trading account
and i make fifty percent in the next month i can make a five thousand dollar profit
but unfortunately as a new trader that is very unlikely and you have to kind of think a little
bit more about how much you stand to lose rather than how much you stand to profit so rule number
two is going to be to look left now what i mean by this is the left side of your chart is going
to be that chart's history and believe it or not just like many other things in the world
history often repeats itself in the stock market as well and if you think about it that's exactly
how levels of support and levels of resistance actually form on our charts for example by
definition a level of support is a price level where historically the stock has a difficult
time breaking below due to a larger amount of demand than there is supply at that price level
and it may sound pretty obvious but by looking left and looking at your chart's history
you can find out a lot about how that stock typically performs in certain situations
so for example if we take a look at this chart for pstv this was a stock that i recently made
a profit of a little over a thousand dollars on with a quick day trade and believe it or not the
way that i did that was by simply looking left and looking at how this stock typically performs when
it has a gap up from the previous day's close so this is the day that i made the profit on
and as you can see it had a pretty big gap up from the previous day's close um it closed at about a
dollar ninety cents and gapped up to about two dollars and thirty cents the following day and
by simply looking at the past five or six months you can see that just about every single time this
stock has a big gap up it ends up closing well below the price that it opened at for that day
so we can see that happening right here another time right here in another time right here so by
seeing that that's what gave me the confidence to look to actually short sell this stock
to profit from it coming back down after it had that gap up on this day that short position
ended up making me a little bit over a thousand dollar profit and really all i had to do to make
that money was look to the left of the chart and see that this stock has a history of gapping up
and then coming straight back down okay so rule number three is going to be to keep it simple
at the end of the day the price action itself is going to be a lot more beneficial and a lot
more useful than all these different lagging indicators that you may have on your charts
for example a lot of new traders are going to have charts that look something like what we see on the
right side of the screen here now this chart has a ton of different indicators on it we see multiple
different moving averages we see bollinger bands we see the macd the vwap and so on and so forth
and this is not to say that these indicators are not useful and can't be used to successfully day
trade the penny stock market but at the end of the day having all of these together on one chart
is really just clouding up the things that matter the most when it comes to day trading
and that's the price action itself and what's actually going on in real time
all of these indicators are kind of lagging behind the real-time price action
and they're simply making things a lot more complicated than they need to be
instead of having all of these different crazy indicators on your charts i personally like to
keep it simple maybe have a few lines of support and resistance drawn on my charts i'll draw
different trend lines when i see them i'll use maybe the v web and a few other simple indicators
but then i focus a lot also on the level two and the time and sales which are something that are
completely separate from the chart itself but by doing this i can very clearly see the chart
itself i can see the real-time price action as it's going on and i'm just keeping it as
simple as possible without having a ton of different studies or indicators on my charts
okay so rule number four is going to be to avoid pump and dumps pump and dumps are actually a great
way to make money if you are an experienced trader you can find them early on many times and ride the
momentum to the upside or you can wait for that momentum to die down and you can actually look
to short sell them to profit from them coming back down but again that is for more experienced
traders and if you're a new trader it's best to avoid pumping dumps because many times what
happens is you're going to end up getting caught in the dump and taking a loss as the stock is
coming back down so these pumping ups are becoming a lot more common nowadays because there are
many different twitter accounts with twenty thousand fifty thousand even a hundred thousand
or more followers that actually tend to pump and dump stocks and what this may look like is they're
going to buy a ton of xyz for example um and what they're going to do is continuously over the next
few days talk about xyz telling all of their followers how much potential it has and how high
it can potentially go and as the stock is then spiking they're going to sell for a large profit
and a few days later they're going to be posting about how much money they made on xyz
they're going to be sharing pictures of their lamborghini and ultimately they're never going to
be talking about xyz again meanwhile all of their followers that bought xyz because of their tweets
are now taking a loss because it's dumping back down to lower prices
okay so just know if you see somebody on twitter that is continuously talking about one
single stock for a few days and then a few days later moving on to a completely different stock
never talking about that past stock again most likely all they're doing is pumping and dumping
and for the most part you probably should avoid their recommendations
so just for a quick example this is kind of generally what a pump and dump chart is going
to look like we can see that for the most part up until this day this is pretty much a dead stock um
it's down trending a little bit it's trading with very low volume and this is when the person that
is leading this pump and dump would be loading up on shares they'd be buying small amounts at a time
and then they would start to pump the stock and that's what's going to cause this spike here
and while this stock is spiking and while all of these people are following this pumper
that's exactly when they're going to be selling and locking in their profits so once the price
does dump back down they've already made their money and they're already out of the trade
meanwhile there's going to be a lot of people that followed the lead of this pumper that bought at
three dollars 340 350 and so on and so forth and now the next couple of days they're going
to be holding on to a big loss as the stock got dumped back down to under two dollars per share
so this is a classic pump and dump chart and you can usually spot them pretty easily
because they are going to be generally very low volume stocks that all of a sudden have
a massive spike in volume and a massive spike in the stock and of course nine times out of
ten when it is a pump and dump that spike is going to not have any kind of news or any kind
of press release put out by the company to actually justify that move to the upside
all right so that's going to lead us to rule number five and that's going to be to sell your
day trades now what i mean by this is if you enter into a trade as a day trade do not let it become a
swing trade this is something that everyone is pretty much guilty of at one point or another
in their trading career um you get into a day trade you think it's gonna work out great you're
gonna make a bunch of money however maybe the stock trades sideways for a while it takes a lot
longer than you expect and the end of market hours creeps up on you and now it's time to either hold
the position overnight in hopes that it's going to work out the following day or stick to your
plan and sell your shares because the reason that you bought the shares in the first place
was because you were expecting to be a day trader in my opinion it is very important to sell your
day trades uh because if you're in the position where you're thinking about whether or not you
should hold it overnight that already most likely means that the trade is not necessarily going to
plan because when you planned it out in the first place it was already going to be a day trade
and now you're in the trade for much longer than you anticipated and you're put in the position
where you now may want to hold it overnight at the end of the day holding a trade overnight that was
initially going to just be a day trade is simply adding a lot of unnecessary risk into your trading
and is going to cause a lot of unnecessary losses that you can easily avoid by simply
cutting your losses or locking in your profits on that day trade while it is still a day trade
all right and those are the five rules that i believe every penny stock day trader needs
to follow in order to successfully start trading the penny stock market
hopefully you found some value in these rules and hopefully you enjoyed this video if you did please
make sure to like the video and subscribe to the channel so you don't miss out on future videos
and if you like this type of educational content and you want to learn more about day
trading swing trading and long-term investing um as well as have access to our trading chat
room that has over a thousand active traders in it every single day all of that can be found on
my website master the market which is going to be linked down below in the description
but anyway thank you again for watching i hope you enjoyed and good luck with your trading