In reading the replies to your post, Cliff, I was surprised that no one brought up what in my opinion is at the heart of went wrong with you. And thousands of others, so don't feel alone. Because I have sympathy to what happened to you, I am quite hesitant to give advice, ridicule you, or make fun of you. So please accept the following as a sincere effort to help you and others not make the mistakes again.
First of all, while I realize that pennies are attractive for a number of reasons, they really are for the most part sure paths to failure. I know that not everyone can afford to invest in regularly priced stocks, and this is what the sleazebags involved in this end of the business count on. Add to that the incredible percentage gains supposedly possible, and you get a recipe for what is like taking candy from a baby. And, notwithstanding what some may post as to making tons of money, I can guarantee you that virtually NO ONE makes any money playing pennies for any length of time. Only the insiders make any substantial money in the pennies. Even the ones who make four baggers, etc., will piss it all away by trying again, and forgetting when they should get out. I know, because I was on the inside ten years ago, and it disgusted me so, that I couldn't get out fast enough. Explaining what goes on behind the scenes, (and most of you only THINK you really know) would be useless, because it's not germane to the discussion here. And I know some think this has been a good learning experience for you, paying your dues, etc. But I absolutely guarantee you that you will repeat the mistakes again, if you continue to play the pennies, no matter how much you think you have learned. The insiders are too smart for you, and they will mercilessly take yours and others money without a second thought. This isn't to blame the evil MM's, the hypesters, the bashers, etc. They are only filling a need. Sure, their behavior is contemptible in many cases, but they need you in order to ply their trade. Without you and others falling for their crap, they don't exist.
The real key, is understanding behavior. Simplistic to say, I agree, but your nemesis is GREED, pure and simple. But that's not a criticism, it's a basic human trait. We all have it. What's important is to fight against it whenever possible. It's what let you stay in when you had a $7k profit. And a $12k profit. And so on and so on til you had a $60k profit, or whatever the max was. It's in all of us, Chris. Why couldn't you be ecstatic with a 30% profit? 40%, 50%, 500%? Because your eyes got big, and your greed kicked in and gave you dreams of grandeur. This is what they know will happen. That's why the stocks tank so fast when they tank, and why the spreads are so large, and why market orders basically give them a license to hold you up etc. etc. etc.
Rational investors know that over the long term, they will have many losers. But they also know how never to let a profit turn into a loss, and to cut their losses quickly, rather than getting emotional about the dollars involved. All they care about is that they are right more often than they are wrong, because they know that the profits will take care of themselves. And they don't let an initial big score delude them into thinking that they can repeat that at will. They know those are few and far between, and they don't look for them. They come to those who aren't pressuring themselves to find another one right away.
Listen, I know how easy it is to get lost in the hype. I started out trading stocks with pennies, and was real successful at first. But as sure as could be, they turned against me. I then decided to get into the business, thinking I could learn how to be successful at it. Trust me, the odds are so ridiculously stacked against you that it makes the chances at success over any length of time close to nil. And I speak not of my experiences, but of the real numbers.
I haven't read this thread, though I hear it's quite contentious. I was alerted to your post, and I thought maybe I should post you back. I then read the replies, and knew I needed to mention what I feel is the root cause of penny investors losing money. Believe me when I tell you that the majority of the people in this end of the business are former used car salespeople, con-men(women), and all those other kinds of people generally thought of as sleazy. (Please, no used car people flames, I know there are some decent ones. Maybe? <g>)
Anyway, forgive the intrusion into the thread. My only intent is to pass on what I consider to be valid information. Some may disagree with me, but that's OK, too. I have no quibble with anyone. It's just my humble opinion. And I don't wish to get into a pissing match with anyone who wishes to prove me wrong. If some people get away from pennies, then I'm happy.
Len |
