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Strategies & Market Trends : Technical Analysis - Beginners -- Ignore unavailable to you. Want to Upgrade?

To: Daniel Miller who wrote (8432)	7/14/1998 12:05:00 AM
From: TechTrader42	Respond to of 12039

The reason that TA doesn't work well with penny stocks, Daniel, is that it's such a big clumsy tool or weapon, like a broadsword, a mace, a lead ball on a chain, or a sledge hammer. Some people foolishly believe that TA encompasses a wide range of indicators, systems, theories and approaches that can be applied to a broad range of stocks. But as you've realized, it's more like a heavy unwieldy tool that can be applied only to big stocks, with limited success. It's such a clumsy tool that it needs a big target -- and a stationary target. Big caps don't move much, as you know, so one can swing with abandon at them with TA and hardly lose any money at all. Penny stocks, however, are so volatile that they require a more detailed, studied approach, one based on careful scanning of SI and Yahoo bulletin board notes. TA cannot possibly take into account all the finer points of Internet rumors, heated debates over the merits of proposed new high-tech gadgets, cursory rundowns of companies' expected losses, speculation about future balance sheets, etc. I studied TA for a few hours and realized all of this at once. I also realized that I could never make money from high-priced stocks because the percentage gains would be too small. I now day-trade exclusively in stocks priced under 75 cents (though I prefer those under 25 cents). I haven't yet made a killing, but I figure that I can recoup my losses and make my fortune with just one winning trade. In the meantime, I've got market makers eating out of my hands (we even play a game called pigeon), camping out on my front lawn, inviting me down to the pit every day. They don't let me bring my sledge hammer. "Too dangerous," they say. "Someone could get hurt." Brooke

To: Daniel Miller who wrote (8432)	7/14/1998 1:21:00 AM
From: Richard Estes	Read Replies (1) \| Respond to of 12039

Humor aside. I feel that TA can work with any price stock. You need to adjust the periods within your indicators. And it depends on what indicators you use. Since the stock can move 20% up and down in a day, you have to tailor your action to the minute charts and watch it closely, they can be fast, faster than you. Only use gambling money on them. And watch out for markets that are made on the net, by people with an agenda. It can be like trading Elvis plates or beanie babies. A $0.50 stock goes faster to $1.00 then a $50 to $100. In both you have a 100% move. But to get the same money out of each, you must invest the same amount. $5000 gets you 100 shares of one and 10,000 of the other one. that way if you go down an 1/8 you can lose $13 or $1300. That 1/8 move on a $0.50 is a 26% loss. I know of only one person that remains fairly successful with pennies, he uses TA. If TA doesn't work, what does? A story? Blind luck?