The ultimate step by step guide to day trading penny stocks

Over view of Day Tr ading Penny St ocks Get A Bir d's Eye View of The Pr ofit Making Pr ocess 2.. What Dr ives Penny St ocks Up I dent ify These and Wat ch Your Pr ofit s Sky Rocket 4.

The Ult im at e St ep- by- St ep Guide

t o Day Tr ading Penny St ocks

© Jason T Br ook All Right s Reser ved

Copy r igh t , Le ga l N ot ice a n d D iscla im e r :

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t his eBook t o anyone else

Please not e t hat m uch of t his publicat ion is based on per sonal exper ience Alt hough t he aut hor has m ade ever y r easonable at t em pt t o achieve com plet e accur acy of t he cont ent in t his eBook, t he aut hor assum es no

r esponsibilit y for er r or s or om issions This eBook is for infor m at ional

infor m at ion, t echniques, m et hods and dat a cont ained in t he " The Ult im at e

St ep- by- St ep Guide t o Day Tr ading Penny St ocks" should not be int er pr et ed as invest m ent advice, or as a r ecom m endat ion t o buy or sell

secur it ies

Fur t her m or e, by view ing t his eBook, you agr ee t o hold t he aut hor har m less and t o com plet ely r elease t he aut hor fr om any and all liabilit y due t o any and all loss ( m onet ar y or ot her w ise) , dam age ( m onet ar y or

ot her w ise) or inj ur y ( m onet ar y or ot her w ise) t hat you m ay incur

consequences, financial losses or ot her dam ages r esult ing fr om r eliance upon t he cont ent , infor m at ion, t echniques, m et hods or dat a cont ained in

" The Ult im at e St ep- by- St ep Guide t o Day Tr ading Penny St ocks" The

r eader assum es t he ent ir e cost and r isk of any invest ing and/ or st ock

t r ading he/ she chooses t o under t ake Day t r ading penny st ocks involves

high r isk

You should use t his infor m at ion as you see fit , and at your ow n r isk

Any t r adem ar ks, ser vice m ar ks, pr oduct nam es or nam ed feat ur es ar e assum ed t o be t he pr oper t y of t heir r espect ive ow ner s, and ar e used only

for r efer ence

D e dica t ion

This eBook is dedicat ed t o all t hose w ho w ish t o br eak fr ee of t he financial

r at r ace w hich enslaves t he vast m aj or it y of people

To t he beginning of your financial fr eedom

Ta ble of Con t e n t s

Dedicat ion Table of Cont ent s

I nt r oduct ion

1 Over view of Day Tr ading Penny St ocks

Get A Bir d's Eye View of The Pr ofit Making Pr ocess

2 Get t ing St ar t ed

The ABSOLUTE Minim um Requir em ent s You Need

3 What Dr ives Penny St ocks Up

I dent ify These and Wat ch Your Pr ofit s Sky Rocket

4 Wat ch Out For These Tr aps

Spot These and Save Your Capit al Fr om Being Wast ed

5 The Pow er of Tr ends

Lear n To Spot “ Tr end St ocks” and Easily Double Your Money

6 The Best Tool

Mast er The Tool That Gives You THE EDGE

7 The 10 I r r efut able Law s of Day Tr ading Penny St ocks

Follow These and Reap Consist ent Pr ofit s

8 THE ALPHA LAW of Day Tr ading Penny St ocks

I gnor e This And Be Doom ed To Failur e

9 Paper Tr ading

Your Tr aining Wheels Pr ogr am To Ensur e Success

10 Put t ing I t All Toget her

A Day Tr ader 's Daily Rout ine

I n t r odu ct ion

War ning: Do not dive int o day t r ading penny st ock s w it hout a t hor ough com pr ehension of t his eBook

How it all began:

For as long as I could r em em ber , m y fam ily w as never financially secur e Sim ply put , w e w er e poor and I hat ed it

I w as det er m ined never t o live like t hat w hen I got older so I st ar t ed t o educat e m yself on how t o m ake m oney I ’ve hear d of people m aking

m oney by invest ing in t he st ock m ar k et so I buck led dow n and hit t he books

Blue chip, War r en Buffet , CANSLI M, holding, aver aging dow n,

com pounding, t hese w er e t er m s t hat I soaked up like a sponge at t he public libr ar y Then, I r ealized som et hing t hat m ade m y st om ach sink

Lit t le did I r ealize t hat long t er m invest ing in t he st ock m ar ket on aver age, only r et ur ns 10% A YEAR

For exam ple, if you do t edious r esearch on choosing t he r ight com pany t o invest in by looking at t heir balance sheet , indust r y, com pet it ion,

fundam ent als, cash flow , EBI TDA, t echnical analysis, et c, and invest

$1,000 in it , you’ll get $1,100 aft er 1 year And t hat ’s not even a

guar ant ee All t hat har d w or k for a m easly 10% a year

That ’s WAY TOO SLOW for m e I needed som et hing t hat ’ll r et ur n pr ofit s fast er

About t his sam e t im e, I also st ar t ed a j our ney of per sonal and financial dev elopm ent

Along t his j our ney, I r ead a num ber of books such as Psycho Cyber net ics and Rich Dad Poor Dad t hat involved t he pow er of beliefs and w ays t o obt ain financial fr eedom

I r ead in Rich Dad Poor Dad t hat you’ve got t o m ake m oney w or k FOR YOU

Many people r ever se t his st at em ent They w or k FOR MONEY To t hem THEY ARE A SLAVE TO MONEY NO NO NO

M ON EY I S A SLAV E TO YOU

Let m e r epeat t hat because it is t he under lying t hought of all financial success

M ON EY I S A SLAV E TO YOU

That is a ver y pow er ful belief I t changes your w hole out look on finance

Kiyosaki’s m ain t hesis in Rich Dad Poor Dad w as t o use your m oney t o buy asset s, m eaning invest your m oney int o vehicles t hat w ill give you a nice r et ur n

So I asked m yself, w hat can I buy, w it h r elat ively lit t le w or k t hat w ill give

m e subst ant ial pr ofit s fast ? I t sounded like a quest ion w it hout an answ er

That ’s w her e t he per sonal developm ent cam e in I r ead in David

Schw ar t z’s The Magic of Thinking Big t hat if you fir m ly believe som et hing,

t he how t o par t w ill t ake car e of it self I fir m ly be lie v e d t hat t her e w as

a w ay t o use m y m oney t o buy asset s t hat w ill give m e subst ant ial

r et ur ns fast I w ait ed for t he how t o par t t o t ake car e of it self

And so I w ait ed And w ait ed And w ait ed, t ill t he answ er finally cam e The answ er

Day t r ading penny st ocks

That ’s m aking your m oney w or k FOR YOU r ight t her e

Now I know m ost of y ou ar e saying day t r ading= losing all your m oney See, t hat ’s t he pow er of beliefs

The pr ev ailing belief is t hat day t r ading is r isky, you’ll lose all y our m oney

Because people believe t hat , t heir eyes ar e shut off t o t he possibilit ies of

m aking m oney by day t r ading They have t unnel vision Their belief dict at ed t hat As a r esult of t hat belief, t hey don’t bot her t aking t he t im e

t o educat e t hem selves on day t r ading penny st ocks

That ’s ONE BELI EF

Ther e is ANOTHER belief t hat is EQUALLY POWERFUL I N TRUTH

YOU COULD MAKE A TON OF MONEY BY DAY TRADI NG PENNY STOCKS and you know w hat … PEOPLE DO

So I sim ply t r ansfor m ed m y belief

TH ERE I S M ON EY TO BE M AD E I N D AY TRAD I N G PEN N Y STOCKS

BI G M ON EY

The next quest ion I asked m yself w as HOW CAN I DO I T?

I asked m yself consist ent ly, “ How can I ident ify WHI CH st ocks w ill r ise in value and how can I lock in t hose pr ofit s?”

I asked m yself t hat quest ion on a daily basis for year s and discover ed t he ver y know ledge t hat leads t o pr ofit ing fr om day t r ading penny st ocks That is w hat t his book w ill ent ail

_

The infor m at ion in t his eBook r efer s t o a specific niche I t ’s not gener al infor m at ion I t is specialized know ledge t hat is der ived fr om exper ience and pain, som e of t he gr eat est t eacher s know n t o m an

I t ’s a st ep by st ep guide t hat w ill show you t he ent ir e pr ocess of pr ofit ing

fr om day t r ading penny st ocks fr om st ar t t o finish

Ch a pt e r 1 : Ov e r v ie w of D a y Tr a din g Pe n n y

St ock s

I know w hen I fir st hear d of day t r ading penny st ocks, I w as t ot ally lost Ther e w as so m uch vocabular y, so m any t hings t o r em em ber , I didn’t know w her e t o st art I didn’t know how ever yt hing fit t oget her That ’s

w hat t his chapt er w ill solve This chapt er is dedicat ed t o giving you t he over all pr ocess of day t r ading penny st ocks

Let ’s get dow n som e key t er m s fir st

Day t r ading sim ply r efer s t o buy ing and selling shar es of a st ock on t he sam e day

Penny st ocks are st ocks t hat t r ade on t he OTCBB ( Over The Count er

Bullet in Boar d) and Pink Sheet s ( t hink of t he OTCBB and Pink Sheet s as

t he Nasdaq and New Yor k St ock Exchange of penny st ocks) Their t ypical

pr ice/ shar e is ar ound $0.0001- $5.00

Due diligence ( oft en r efer r ed t o as dd) – r efer s t o t he r esear ch t hat is necessar y befor e deciding t o buy a st ock I t is ext r em ely im por t ant

Mar ket m aker s – inst it ut ions t hat r egulat e t he st ock s on t he OTCBB and Pink Sheet s

Bid – t he pr ice at w hich m ar ket m aker s ar e w illing t o buy your shar es I n

ot her w or ds, t he pr ice you can sell your shar es at I t ’s t he bidding pr ice

for your shar es

Ask – t he pr ice at w hich m ar ket m aker s ar e w illing t o sell you shar es I n

ot her w or ds, t he pr ice you can buy shar es at I t ’s t he asking pr ice t o buy

shar es

Pr ofit Per cent age Gain – t he m axim um per cent age level at w hich you

w ant t o t ake your pr ofit s For exam ple, if your pr ofit per cent age gain is

20% , t hen you w ill a lw a y s t ake pr ofit s w hen t he st ock r ises by 20%

You w on’t w ait for it t o go higher You’ll sell and t ake t he 20% pr ofit

St op Loss Per cent age – t he m axim um per cent age level at w hich you w ill

t ake a loss For exam ple, if your st op loss per cent age is 15% , and a

st ock you invest ed in falls by 15% , you w ill a lw a y s sell your shar es and

t ake t he 15% loss t o preser ve your capit al

Now t hat w e got som e basic vocabular y out of t he w ay, let ’s find out w hat day t r ading penny st ocks is r eally all about

Day t r ading penny st ocks is sim ply buying and selling shar es of a penny

st ock on t he sam e day

Now , w hy in t he w or ld w ould you w ant t o do t hat ?

Be ca u se t h a t is h ow y ou ca n REAP t h e M OST PROFI T in t h e

SH ORTEST AM OUN T OF TI M E

Her e’s an exam ple

Penny st ock ABC is t r ading at $0.05 cent s/ shar e That m eans each shar e

is w or t h 5 cent s

You buy 10,000 shar es of ABC That m eans you spent $500 ( 0.05 * 10,000)

Penny st ock ABC r ises t o $0.08 cent s/ shar e

You sell 10,000 shar es of ABC at $0.08 cent s/ shar e

That $500 dollar s you invest ed in has t ur ned t o $800 ( you sold 10,000 shar es at t he pr ice of 0.08 so $0.08 * 10,000= $800)

$500 - > $800 I N ONE DAY! That ’s a 60% gain You WI LL NOT see 60%

gains in ONE DAY w it h st ocks t r ading at t he NASDAQ OR NYSE ON LY PEN N Y STOCKS d ispla y t h is k in d of r a pid g r ow t h

Hist or ically speaking, long t er m invest ing in t he st ock m ar ket yields an aver age of 10% A YEAR

W it h da y t r a din g pe n n y st ock s, y ou ca n ge t 1 0 % A D AY

We’ve all seen t he exam ple of com pounding 10% a year and becom ing a

m illionaire in 60 or so year s What w ould happen if you com pounded 10% A DAY? Would it t ake as long? You don’t need a m at h degr ee t o figur e t hat one out The r esult s ar e j aw dr opping!

So her e is day t r ading penny st ocks in a nut shell

1 Do r esear ch ( dd) and com e up w it h a list of st ocks t hat you w ould consider day t r ading for t hat day

2 Gauging how t he m ar ket r eact s, pick one st ock accor dingly

3 Ent er a LI MI T ALL OR NONE buy or der t hr ough your online br oker

4 Buy t he shar es

5 Sell t he shar es w hen you r each your pr ofit per cent age gain

6 Get on w it h t he r est of your day

7 Repeat st eps 1- 6 daily and go on a w ell deser ved vacat ion w it h t he

m oney ear ned

Quest ions t hat m ay ar ise ar e:

How do I r esear ch?

What am I looking for ?

How can I ident ify w hich st ocks w ill go up?

Which st ocks do I buy?

When do I buy?

When do I sell?

How m uch m oney should I use?

Fear not , all of t hese quest ions w ill be answ er ed t hr oughout t his eBook, but fir st you’ve got t o get st ar t ed

Ch a pt e r 2 : Ge t t in g St a r t e d

When you under t ake a big endeavor , you w ant t he best of t he best You

w ant t o m ake sur e you have all t he t ools necessar y t o get t he j ob done You w ouldn’t st ar t building a house w it hout t he pr oper t ools w ould you? The sam e t hing applies t o day t r ading

Her e is w hat you need t o get st ar t ed:

1 A r eliable and fast com put er ( at least 256 MB of RAM, at least a 1.2 GHZ pr ocessor , and a net w or k/ w ir eless car d for I nt er net

connect ivit y)

2 Fast I nt er net connect ion – ex: DSL/ Cable/ T1/ T3/ Wir eless

3 Micr ocapFeed – pow er ful t r ading soft w ar e w it h r eal- t im e dat a

4 I n- dept h know ledge of t his eBook

5 One m ont h of paper t r ading exper ience

1 A r e lia ble a n d fa st com pu t e r

You need a fast com put er in or der t o execut e t r ades online Tim e is of

t he essence w hen it com es t o day t r ading You don’t w ant t o be st uck

w it h a slow com put er You also w ant a r eliable com put er You don’t w ant

t o put in an or der only t o have your com put er fr eeze, t hen have t o r est ar t your com put er and log back on again You need a r eliable and fast

com put er t o pr ot ect your invest m ent s

2 Fa st I n t e r n e t con n e ct ion

The sam e logic applies t o your int er net connect ion You do NOT w ant

dial- up for day t r ading penny st ocks Speed is of t he essence I f you

w er e t o use a 56k m odem , you w ould see connect ing… loading… and

t hat w ould t ake sever al seconds You m ight have m issed t he t r ip by t hen

I t ’s bet t er t o have t rades execut ed inst ant aneously DSL is m or e t han enough and is pr et t y cheap I t r uns about 20 dollar s a m ont h and is a

r eally good invest m ent

3 M icr oca pFe e d – pow e r fu l t r a din g soft w a r e w it h r e a l- t im e da t a

You absolut ely need Micr ocapFeed in or der t o day t r ade penny st ocks Micr ocapFeed is a r eal- t im e dat a feed applicat ion and is THE TOOL t hat

w ill give you THE EDGE you need t o profit fr om day t r ade penny st ocks

I t has ever yt hing you need in r eal- t im e Fr ee st ock quot es online ar e

delayed 15 m inut es, w hich is an et er nit y in day t rading Micr ocapFeed also has sales t im es and quant it ies and Level I I , so you get m or e inside

infor m at ion on w hat ’s happening They also have pow er ful r eal- t im e scans and filt er s w hich ar e ext r em ely useful

Micr ocapFeed is explor ed in- dept h lat er on in t his eBook Th r ou gh a spe cia l de a l w it h M icr oca pTr a de ( t h e com pa n y t h a t offe r s

M icr oca pFe e d) , a m on t h ly $ 2 0 0 0 discou n t is giv e n t o bu y e r s of

t h is e Book ! The link t hat pr ovides t he discount is given at t he end of

Chapt er 6 ( chapt er dealing w it h Micr ocapFeed)

4 I n - de pt h k n ow le dge of t h is e Book

St udy t his eBook t hor oughly, w at ch for t he t r aps, know w hen t o buy and sell, lock in your pr ofit s et c, apply t hem , and you w ill be m or e equipped and know ledgeable t han 99.9% of t he new bies out t her e Do not at t em pt

t o st ar t m aking m oney w it hout r eading t his eBook fr om st ar t t o finish

5 Pa pe r t r a din g

Even aft er r eading t his book and under st anding it , you have t o APPLY I T

I f you st ar t w it h r eal m oney w it hout any pr act ice, you w ill LOSE it out of

em ot ion I t ’s bet t er t o “ paper t r ade” , m eaning use fake m oney t o get a feel for your skills Take som e t im e t o apply t he r ules in t he book t o see how w ell you far e paper t r ading Do t his for a m ont h and r ecor d your

r esult s This w ill give you t he essent ial confidence you need w hen you

st ar t day t r ading Mor e on paper t r ading is given lat er on in t his eBook

But w ait , don’t I need an online br oker account w it h cash so I can buy and sell shar es? Yes you do, but w hen you’r e get t ing st art ed, it ’s bet t er

t o paper t r ade Once you’r e done w it h t hat , yes go set up an online

br oker account Ther e ar e m any out t her e such as E- t r ade, Scot t r ade,

et c Pr efer ably, I choose Scot t r ade They ar e ver y or der ly, have nice cust om er ser vice, and ar e ver y r eliable w hen ex ecut ing t rades and t heir

pr ices can’t be beat

Now t hat w e’r e all set , let ’s go t o day t r ading school and figur e out w hat

t he heck dr ives penny st ocks up

Ch a pt e r 3 : W h a t D r iv e s Pe n n y St ock s Up

Class is now in session

Let ’s st ar t off w it h a quick lesson on econom ics When you hear t he w or d econom ics, w hat do you t hink of?

Dem and and supply

Dem and and supply That ’s all w e need t o look at w hen it com es t o day

t r ading penny st ocks We w ant t o m axim ize bot h fact or s in our favor I n

ot her w or ds, w e w a n t H I GH D EM AN D a n d LOW SUPPLY

I f w e find t hat com bo, w e ar e SURE TO FI N D AN I N CREASE I N PRI CE

Let ’s fir st look at t he dem and side and figur e out how HI GH DEMAND is

cr eat ed

H I GH D EM AN D = GOOD N EW S + H I GH V OLUM E

Not hing else m at t er s Not how m uch cash t he com pany has, how m any

em ployees, w hat t he CEO get s paid, et c Rem em ber , you’r e buying st ock

at 9: 35 AM and selling at 10: 04 AM I n ot her w or ds, day t r ading You don’t need t o do HUGE am ount s of analysis You’r e j ust r iding t he

dem and w ave and t aking pr ofit s fr om it

Let ’s look at new s fir st New s pr ovides t he fuel t hat dr ives penny st ocks

up A per fect exam ple of t his is GLI F

Char t cour t esy of St ock Ch a r t s.com

Look w hat happened on Sept em ber 22, 2005 Yup A HUGE JUMP I N PRI CE Alm ost a 1000% I NCREASE! ! ! I f you had invest ed $500, you

w ould have t ur ned t hat int o $5,000 in ONE DAY! What caused t his huge

j um p?

I m por t a n t N ot e : For t he benefit of t he r eader , I w ant ed t o include t he

full t ext of all pr ess r eleases ( PR) in t his eBook How ever , due t o

num er ous copyr ight issues fr om var ious new s w ir e or ganizat ions, I w as not able t o include t he full t ext of all PRs I nst ead, I inser t ed a link t o t he

PR, but be w ar ned t hat t hese links w ill expir e in t im e

Reading pr ess r eleases and get t ing a “ feel” of t he cont ent is VERY

im por t ant Fear not ! You w ill have plent y of t im e t o r ead num er ous

pr ess r eleases dur ing your paper t r ading per iod Mor e on t hat w ill be cover ed lat er on in t he eBook

Gr a n t Life Scie n ce s Aw a r de d Pa t e n t for V it a l Com pon e n t s of

Blood- Ba se d Ce r v ica l Ca n ce r Te st

That m y fr iends, is t he pow er of new s

The next quest ion is, w hat kind of new s? Will any new s cut it ? Will a

pr ess r elease about a com pany w it h a 10% incr ease in r evenue cut it ?

No, of cour se not

The underly ing pr inciple in det er m ining w het her or not t he new s is good enough t o shoot a st ock up is t o use t he “ WOW” t est Aft er r eading t he

PR, is it enough t o m ake you say “ WOW” ?

Her e are som e t ypes of new s t o look out for

1 Affilia t ion w it h a big com pa n y

I f a m aj or cor por at ion is doing business w it h a penny st ock com pany,

t hat speaks volum e of t he penny st ock com pany Big businesses ar e ver y car eful w ho t hey do business w it h They only do business w it h com panies

t hat ar e ser ious and get t he j ob done By affiliat ing t hem selves w it h a penny st ock com pany, t hey ar e sending out t he m essage t hat t his penny

st ock com pany has w hat it t akes You’ll see a per fect exam ple of t his

w it h GZFX lat er on in t his chapt er

2 N e w pa t e n t

I f a penny st ock com pany has r ight s t o a new pat ent , t hat is r eally good new s What t hat m eans is t hat t he penny st ock com pany basically has a

m onopoly on t he pr oduct / ser vice t hat t hey got t he pat ent for I t ’s

indicat ive of high fut ur e r evenue num ber s A per fect exam ple of t his w as

j ust given – GLI F

3 Gr e a t qu a r t e r ly fin a n cia l n u m b e r s

Ever y year, penny st ock com panies r elease t heir quar t er ly num ber s Som e of t hem have r eally gr eat num ber s This can be due t o a num ber

of r easons such as gr eat er num ber of cont r act s, r oyalt y fees, higher

dem and for pr oduct s/ ser vices, et c Bot t om line, t he num ber s speak for

t hem selves This w ill usually r esult in a r apid incr ease of pr ice t o r eflect

t he cur r ent quar t er ly num ber s of t he com panies An exam ple of t his is given lat er on in t he chapt er You w ill see an exam ple of t his w it h ATSI

4 Esca pe fr om b a n k r u pt cy

When a penny st ock com pany announces t hat it has filed for bankr upt cy,

t he st ock pr ice goes dow n dr ast ically Panic selling ensues The pr ice is

at an all t im e low Then, if a com pany r eleases a PR dr aw ing up a

det ailed plan of escaping bankr upt cy, you’ve got a basem ent floor bar gain

her e Pr ices ar e at an all t im e low , and t he com pany has a plan t hat t o get out of bankr upt cy I nvest or s com e in and buy again, dr iving t he pr ice back up You can get a piece of t hat act ion Not ice t hough t hat a plan in

it of it self is enough psychological lever age t o get invest or s t o buy and

dr ive t he pr ice back up I t ’s all about invest or psychology

5 Re v e r se m e r ge r

A r ever se m er ger is basically m oney in t he bank 9/ 10, t he pr ice w ill go

up Som e of t he com panies in t he penny st ock m ar ket ar e “ shell”

com panies They ser ve no pur pose except t o funct ion as a w ay for

pr ivat e com panies t o go public

The t r adit ional w ay for a pr ivat e com pany t o go public is t o issue an I PO ( init ial public offer ing) This can be ver y cost ly and t im e consum ing To get ar ound t hat , t he “ shell” com pany offer s it s shar es t o t he pr ivat e

com pany t o buy it out The pr ivat e com pany, by t aking t hose shar es,

ow ns t he m aj or it y of t he “ shell” com pany’s st ock This r esult s in a

t r ansfer of ow ner ship fr om t he “ shell” com pany t o t he pr ivat e com pany The pr ivat e com pany t hen becom es a publicly t raded com pany

The r eason w hy t her e is pr et t y m uch a guar ant ee of an incr ease in pr ice

is because t he “ shell” com pany did not have any asset s and w as not

gener at ing any r evenue The pr ivat e com pany, no doubt , has asset s and

is gener at ing r evenue Wit h a r ever se m er ger , t he “ shell” com pany

lit er ally has r evenue and asset s over night The pr ice of t he st ock should

r eflect t he acquisit ion of t hese new asset s and r evenues, and it does so

by incr easing t he pr ice or value of t he penny st ock

6 I n sid e r bu y in g

Whenever em ployees st ar t buying shar es of t heir com pany, t hat ’s a ver y good sign Nobody else know s w hat is exact ly going on inside t he

com pany except t he em ployees t hem selv es I f t he em ployees ar e w illing

t o put dow n t heir m oney t o buy shares, you can expect t hat t hey know som et hing good is com ing up t hat w ill give t hem a r et ur n on t heir

inv est m ent

7 Goin g t o m or e pr e st igiou s e x ch a n ge su ch a s t h e N ASD AQ, or

N YSE, or AM EX

I f a penny st ock com pany announces t hat it is leaving t he OTCBB or t he Pink Sheet s t o go t r ade on a m or e “ pr est igious” m ar ket , t hat ’s a good sign Mar k et s lik e t he NASDAQ, NYSE, AMEX have st r ict r equir em ent s

t hat m ust be m et befor e t hey can be t raded These ser ve t o w eed out

t he m en fr om t he boys I f a penny st ock com pany has m et all t he

r equir em ent s t o t r ade on a m or e “ pr est igious” m ar ket , t hen t hey ar e

invit ed t o play in t he m aj or leagues By m eet ing t hose r equir em ent s,

t hey send a posit ive signal about t he advancem ent of t heir com pany

9 W in n in g of big con t r a ct s

I f a com pany announces t hat it has w on m ult i- m illion dollar cont r act s,

t hat effect ively m eans t hat t heir r evenues have incr eased by t hat m uch Even t hough t he ser vice has not been r ender ed, it ’s invest or psychology

t hat t he com pany has a lot m or e r evenue now The st ock pr ice m ust

r eflect it , so it goes up

1 0 D oin g bu sin e ss in t e r n a t ion a lly

When a com pany st ar t s doing business int er nat ionally, it signals t hat it has t he r esour ces and capabilit ies t o do so I t also signals t he st ar t of an even gr eat er cust om er base, w hich leads t o even gr eat er pot ent ial

r evenue All good t hings in t he eyes of t he t r ader

To sum up ident ifying good new s, use t he WOW fact or I F t he new s

doesn’t m ake you say “ WOW” , it ’s not w or t h it

Her e is anot her exam ple

Char t cour t esy of St ock Ch a r t s.com

What w as t he new s t hat m ade it shoot up on Sept em ber 14t h?

ATSI Re v e n u e Up 3 7 9 Pe r ce n t

And anot her exam ple

Char t cour t esy of St ock Ch a r t s.com

What happened on Oct ober 5t h t hat m ade t he st ock pr ice soar m or e t han 400% ?

Cir cu it Cit y t o Offe r Ga m e Zn Flix ' s On lin e V ide o Ga m e a n d D V D

Re n t a l Pr ogr a m

Closely cor r elat ed w it h good new s and bear ing t he ot her half of t he

equat ion t o high dem and is VOLUME I f you look at t hose char t s again, you’ll see t he volum e SKYROCKETED t he day of t he new s

For t hose of you w ho ar en't savvy w it h invest or t er m s, volum e is sim ply

an indicat or of t he am ount of shar es being bought and sold High v olum e can go eit her w ay I t can m ean a t on of people ar e SELLI NG and in t ur n having t he pr ice DROP, or a t on of people BUYI NG, m oving t he pr ice UP

The logic behind looking at volum e is sim ply t his I f all of a sudden, out of

t he blue, a st ock begins show ing high am ount s of volum e, in par t icular people buying, t hen som et hing m ust be up People ar e buying for a

r eason, a GOOD r eason Join t hem and r ide t he w ave

Som et im es, volum e in of it self is so pow er ful t hat it alone can cr eat e high dem and

Her e is a per fect exam ple, SWKJ

Char t cour t esy of St ock Ch a r t s.com

Take a look at Sept em ber 12, 2005 About 35 m illion shar es t r aded

Looking at t he r ange of volum e, you can see t hat t he aver age volum e on

a given day w as about 5 m illion On Sept em ber 12, SWKJ w as show ing 7

TI MES t he aver age daily volum e Som et hing w as up See w hat

happened? I t w ent fr om about 0.025 t o alm ost 0.06 That is a 240%

I NCREASE! Ther e w as no new s r elease on t hat dat e The st ock j ust

skyr ocket ed on VOLUME ALONE

Anot her r eason w hy volum e is good for day t r ading is because it pr ovides liquidit y That m eans it 's easier t o buy and sell your shar es because t her e

so m any people involved in t his st ock The m or e t r ader s t her e ar e of a

st ock, t he m or e volum e t here is This r esult s in a snow ball effect because all of a sudden, t r ader s see abnor m al volum e on a st ock, com e over t o check it out , and t hen j oin in on t he fun Your j ob is t o m ake sur e you get

in t her e ear ly

Anot her exam ple t o pr ove m y point

Char t cour t esy of St ock Ch a r t s.com

As y ou h a v e se e n in t h e e x a m ple s, it s ABSOLUTELY CRI TI CAL y ou

h a v e a cce ss t o n e w s of pe n n y st ock s a n d v olu m e a le r t s

What I m ean by volum e aler t s is filt er ing ALL t he penny st ocks t o see

w hich st ocks ar e show ing unusually high volum e

Wouldn’t it be gr eat if t her e w as an applicat ion t hat show ed you r eal t im e penny st ock new s and volum e scans?

Well t her e is, and you guessed it , it s Micr ocapFeed!

Now you’r e beginning t o see w hy it ’s so valuable, but it has t ons m or e t o offer as you w ill see lat er on

Thus, w e fulfilled HI GH DEMAND We t hen have t o fulfill low supply

W E M UST TAKE SUPPLY I N TO ACCOUN T Ev e n if t h e r e is h igh

de m a n d, a h igh su pply w ill j u st n e u t r a liz e t h e in cr e a se in pr ice LOW SU PPLY = LOW FLOAT + RSI LEV EL BELOW 5 0

What t he heck is a float ? Float is sim ply t he num ber of shar es t hat ar e available for t r ading Ther e ar e out st anding shar es w hich ar e t he t ot al num ber of shar es, and t hen t her e is t he float , w hich is t he num ber of shar es t hat ar e act ually allow ed t o be t r aded You w ant t o buy st ock w it h

a low float Anyt hing under 30 m illion shar es is consider ed t o be a low float for a penny st ock, but t her e ar e except ions

Her e’s an exam ple of a st ock w it h good new s but a high supply, m eaning

a high float

Char t cour t esy of St ock Ch a r t s.com

On Oct ober 3r d, ONEV r eleased a pr ess r elease saying t hat t hey’ve

t eam ed up w it h Dell, one of t he t op leading PC m anufact ur er s Affiliat ion

w it h a big com pany like t hat is sur e t o t ur n heads ( r em em ber GZFX and

t he new s w it h affiliat ion of Cir cuit Cit y) and t he volum e pour ed in About

14 m illion pour ed in But let ’s look at t he float

The float for ONEV accor ding t o ot cbb.com is 311,136,312 shar es as of 8/ 11/ 2005 Only a fr act ion of t he float w as t r aded Once t he pr ice didn’t

go up, t r ader s w onder ed w hy, discover ed t he huge float , r ealized t hat

t her e w er e t oo m any out st anding shares, sold t heir shar es, and as a

r esult t he pr ice t anked

But som e of you m ay be w onder ing about GZFX The float for GZFX is about 925,001,665 as of 06/ 30/ 2005 About 3 t im es as m uch as ONEV Why did it show such t r em endous gains? Let ’s look at t he char t for GZFX again

Char t cour t esy of St ock Ch a r t s.com

Look at t he volum e t r aded on t he day of t he huge spike Alm ost t he

ent ir e float got t r aded! That ’s t he key in det er m ining t he w het her a st ock has a low float or not I t ’s all r elat ive A st ock m ay have a huge float like GZFX, but if t he dem and is high enough t hat t he ent ir e float get s t r aded,

it ’s safe t o say it ’s a “ low float ” st ock, r elat ively speaking

The second fact or is t he RSI RSI st ands for r elat ive st r engt h index and

is a m om ent um indicat or t hat t ells t r ader s how over sold/ over bought t he

st ock is That ’s t he cool t hing about day t r ading penny st ock s You j ust need t o r ely on one t echnical indicat or You don’t have t o w or r y about all

t hose ot her confusing indicat or s The m or e over sold, t he low er t he RSI

w ould be, t he m or e day t r ader s like A RSI of about 20 is consider ed t o

be ext r em ely over sold As day t r ader s, w e like it w hen t he RSI is at 20 Most st ocks bounce up at t hat level A RSI of about 80 w ould be

consider ed over bought Most st ock prices go dow n aft er r eaching t hat level

Let ’s look back at t hose pr evious st ock exam ples Pay close at t ent ion t o

t he RSI levels at t he beginning of t he spike and at t he end and you’ll see

w hat I ’m t alk ing about

Char t cour t esy of St ock Ch a r t s.com

You can see a cor r elat ion bet w een t he RSI level and t he pr ice As t he

pr ice r ises, t he RSI levels r ise as w ell When t he st ock pr ice shot up, t he RSI level w as ar ound 40 and shot up t o 65

Char t cour t esy of St ock Ch a r t s.com

This is a m or e dr ast ic exam ple Befor e t he spike, t he RSI level w as near ly at 20, w hich is ver y good for us day t r ader s We like t hat Look how far it spiked up, t o 80 NEVER BUY w hen t he RSI is t hat high Look

w hat happens The pr ice falls That ’s w hy it ’s SO I MPORTANT t o t ake int o account t he supply side of t he equat ion

Char t cour t esy of St ock Ch a r t s.com

You can analyze t his one your self

I f y ou hav e high dem and, but a high float and a RSI of 80, t he pr ice isn’t going t o r ise t hat high and y ou w ill get bur ned

REM EM BER, M AX I M ZE BOTH D EM AN D AN D SUPPLY

YOU W AN T H I GH D EM AN D AN D LOW SUPPLY

H I GH D EM AN D = GOOD N EW S + V OLUM E

LOW SU PPLY = LOW FLOAT + RSI BELOW 5 0

num ber of shar es in t he st ock Rem em ber w hat w e said about

supply? You w ant low supply S- 8 ’s in cr e a se t h e n u m be r of

sh a r e s in t h e floa t You D O N OT W a n t t h a t I nvest or s st ay

aw ay fr om t hat I lear ned t his t he har d w ay A com pany r eleased

r eally good new s and I bought expect ing it t o go upw ar d I t didn’t

go up t hat m uch at all The r eason? The com pany filed an S- 8 t he day befor e I nvest or s w ho have done t heir dd ( due diligence, aka

r esear ch) saw t hat and didn’t bot her invest ing As a r esult , ot her

t r ader s did not buy and I had t o sell at a loss

2 M e ssa ge Boa r ds

Message boar ds ar e full of pum per s and bashers What ar e

pum per s? Pum per s ar e people w ho have bought a st ock and w ant

ot her people t o buy so t he pr ice w ill go up They convince ot her people t o buy t he st ock by post ing “ evidence” t o dr ive t he pr ice up Once t hey convinced enough people t o buy and dr ive t he pr ice up,

t hey sell and leave t hose people hanging Do NOT leav e your fat e in

ot her people’s hands These pum pers can be ver y convincing and

ar e oft en know ledgeable about t echnical indicat or s and

fundam ent als t hat sound ver y per suasive and convincing Don’t fall for it I fell for it St ick t o y our ow n guns Do not let t hem

influence you You m ay t hink t hat you can’t be influenced, but t hey

ar e ver y good

Then t her e ar e basher s w ho m ake you t hink t he st ock you picked sucks so t hey w ant you t o sell Don’t list en t o t hem Message

boar ds cloud y our t hinking and m ake you behave illogically and

ir r at ionally St ay AWAY Leave t hem be

3 St ock Pr om ot in g Em a ils/ Fa x e s

You m ay get an em ail or fax saying t hat som e st ock is going t o skyr ocket 1000% in t he next 2 w eeks I t ’s gr oundbr eaking I t ’s innovat ive I t ’s going t o m ake a t on of m oney Guess w hat ? No

it ’s not And even if it does, w ho car es? You’r e a day t r ader , not a long t er m holder You get in and out w it hin a day Not sever al days, w eeks, or m ont hs These t ypes of em ails and faxes ar e j ust anot her for m of pum ping Pr ess DELETE or shr ed t he fax Pay no heed t o t hese

4 Gr ou p Ru n s

This is VERY TRI CKY Gr oup r uns ar e w her e or ganized gr oups of

t r ader s buy up shar es of a st ock t hat t ypically has low volum e When t hey buy lar ge am ount s of shar es, t his act s like a hom ing signal This at t r act s ot her t r ader s like bees t o honey Soon ot her people see abnor m ally lar ge volum e on t his st ock and get in on it

t hink ing t hat som et hing big is going t o happen But it ’s a t r ap When ot her people st ar t t o buy, t he gr oup st ar t s t o “ sell int o t he buying pr essur e” , m eaning t hat w hen t he pr ice r ises, t hey st ar t t o sell and t ake t heir pr ofit The t r ader w ho buys at t he highest

buy ing point is “ caught holding t he bag” Basically, he/ she is

scr ew ed These can be ver y fun t o play, but ver y r isky This

r equir es lot s of exper ience You can choose t o invest in t hese but

m ake sur e t o get out QUI CK Don’t be t he last one caught holding

t he bag

5 N RO ( n e w s r e le a se ov e r dose )

Ther e ar e som e com panies w ho “ t alk a lot ” They issue press

r eleases ever yday infor m ing t he public of w hat t hey did on t hat day and som et im es issue t he sam e pr ess r elease in differ ent w or ds I t ’s

r idiculous The m or e pr ess r eleases t hat com e out of a com pany,

t he less m eaning each successive one has I t basically devalues

t heir pr ess r eleases Com panies t hat r elease PRs w henever

significant developm ent s occur ar e t he ones y ou should be looking

for So if you see good new s pop up, m ake sur e t o check t he

com pany’s r ecent new s r eleases Som et im es you’ll find t hat t he PR you’r e looking at is j ust a r ew or ding of a pr evious PR, such as

yest er days Exper ienced t r ader s st ay aw ay fr om t hose com panies and you should t oo

6 So- So N e w s

New s is t he cat alyst of day t r ading I f t he new s you pick isn’t t hat

gr eat , your r et ur ns w on’t be t hat gr eat eit her Make sur e t he new s

is good I f it doesn’t m ake you go “ WOW” , it ’s not a cash cow As you paper t r ade, you’ll get a feel for w hat const it ut es “ WOW” new s and w hat const it ut es “ so- so” new s

Ch a pt e r 5 : Th e Pow e r of Tr e n ds

Ther e ar e som e st ocks t hat com pr ise of a cer t ain par t of t he sect or t hat show m or e t han 100% gains in t he cour se of a day or a couple of days These ar e w hat I call “ t r end st ocks” That ’s because t hey follow t he

cur r ent t r end

How is it t hat t hese st ocks gain so m uch and how can w e ident ify t hem ?

The w ay t r end st ocks w or ks is t his Usually, new s or event s st ar t

cir culat ing t hat ar e BI G What happens t hen is t hat exper ienced t r ader s

st ar t t o m ake a “ w at ch list ” They include all penny st ocks t hat ar e

associat ed w it h t hat t r end When one of t hose penny st ocks r eleases a

PR based on t he cur r ent t r end, t he t r ader s conver ge on it and buy it up like cr azy, dr iving t he pr ice up This in t ur n cr eat es a m assive snow ball effect Ot her t r ader s see t his and m ake st ar t m aking t he connect ions and

st ar t w at ching t hese t r end st ocks m or e closely As soon as anot her

com pany r eleases a PR associat ed w it h t he cur r ent t r end, t he sam e t hing happens

Let ’s consider som e exam ples

Ar ound Mar ch and Apr il of 2005, t her e w er e a num ber of new s st or ies about E- bay dr op off st or es I n t hese new s st or ies, t hey st r essed t hat

t h is t y pe of in d u st r y h a s t h e pot e n t ia l t o ge n e r a t e billion s of

dolla r s of r e v e n u e a y e a r

The seed w as plant ed

Tr ader s kept a w at chful eye of any penny st ocks t hat r eleased PRs

associat ed w it h t his E- bay drop off st or e t r end Am ong t hem w er e 2 penny st ocks, AMRE and SNPD Her e ar e t heir one year char t s for 2005 See if you can find out w hen t hose PRs associat ed w it h E- bay dr op off

st or es w er e r eleased I t shouldn’t be t oo har d t o find

Char t s cour t esy of St ock Ch a r t s.com

As you can see, bot h exper ienced m or e t han 1,000% gains in less t han a

w eek dur ing t he m iddle/ end of May That ’s because bot h com panies

r eleased PRs st at ing t hat t hey w er e going int o t he E- bay dr op off st or e business The pr ess r elease for AMRE is linked below

Am er iResour ce Subsidiar y Net 2Auct ion, I nc Begins Tr ading - - St ock

Sym bol 'NAUC'

The pr ess r elease for SNPD is no longer available online, but t he cont ent

of t he pr ess r elease indicat ed t hat RAPT ( t he sym bol it w as t r ading at t hat

t im e) w ould ent er t he E- bay dr op off st or e business and st r essed t hat t his indust r y had billions of dollar s in pot ent ial

This is a per fect exam ple of invest or psy chology Just t he announcem ent

of ent er ing an indust r y w it h a pot ent ial of $30,000,000,000 annually is enough t o shoot t he st ock pr ice up

Her e’s anot her exam ple of a t r end: Ar ound t he m ont h of Oct ober 2005,

w or ldw ide exposur e w as given t o t he Avian Bir d Flu This w as a ser ious

t hr eat t o t he healt h of m illions ar ound t he w or ld Nat ur ally, dem and w as ext r em ely high for any com panies t hat could help deal w it h t he t hr eat

Am ong t hem w er e t he follow ing penny st ocks:

NNVC, MCET, AMAR, EMFP, and LWLL

Let ’s see w hat t heir char t s have looked like ar ound t he t im e of Oct ober

2005

Char t cour t esy of St ock Ch a r t s.com