The problem with penny stocks

Morning. This is $2,000 Small Account Journey training #6.

The penny stock paradox.

I’m well known for teaching people how to trade penny stocks.

It’s my options strategy, the $2,000 Small Account Journey that’s become my most popular service over the last year.

Why?

Its rising popularity stems from addressing core issues when growing a small account.

Penny stock problem #1

The dreaded pattern day trade rule.

If you’ve ever traded with less than $25,000 you know what I mean.

The problem!

It’s Friday and you’re riding a big win on a penny stock and want to sell before happy hour.

What a wonderful way to end a week that saw you crush 3 day trades in your small account.

Enter the dreaded pattern day trade rule.

If you sell that winner, your account, suspended from opening any news trades for 90 days.

That's one quarter of the year!

So you hold until the following week.

At which point the gains have not only evaporated, but the loss wipes out the prior week's gains.

In the $2,000 Small Account Journey Theta or “time” decay works in our favor. 

Rewarding overnight holds or what I call swing trades.

Penny stock problem #2

Fear of missing out on explosive penny stocks is a major problem for small account growth.

My edge in the $2,000 Small Account Journey is better than penny stocks for trying to grow a small account.

Ever chased a penny stock breakout? 

You know, bought the top, watched it dump, and take a huge loss?

Yup, me too.

Fear of missing out (FOMO) preys on our emotions and works against our goals.

It’s natural to get caught up in the excitement and penny stocks are notorious for doing this to traders.

It’s not your fault, but if you keep making the same mistakes, can you expect to get an edge in the market?

Let alone grow a small account?

Penny stock problem #3

I love penny stocks.

But they are dangerous for the trader desperate to grow a small account.

Because monster breakouts lead to FOMO.

Which leads to chasing.

Which leads to catching the top.

Which leads to drinking the “Kool-Aid”.

"Drinking the Kool-Aid" refers to a trader who thinks a doomed stock has high rewards.

Which leads to bag holding.

A bag holder is a trader who holds onto poorly-performing stocks, hoping they will rebound.

Remedying losses, versus focusing on realizing gains, is the root issue here.

Bag holders tend to lose money by being the last owners of a failing trade.

And they miss out on new opportunities watching their account bleed out day after day.

Now I love penny stocks. It's one of my biggest services.

They are great for the retail day and swing trader i.e. big fish in a small pond.

But NOT for trying to grow an account under $25,000, let alone $2,000.

There’s a better way! 

And it’s what I teach in the $2,000 Small Account Journey.

Here are step by step instructions to getting started.

1. Get a $2,000 margin account

We don’t ever trade on leverage. The broker requires this type of account to trade spreads. 

2. Create a 2-3 stock watchlist with earnings winners on the best companies in the world 

Let’s go with NVDA, META, and NFLX. 

See how NFLX expected move was +/- 8.6% post earnings? 

But actually moves +16.1%? That’s an earnings winner. 

Anytime the stock dips over the next quarter you can bet it’ll get bought up by algorithms. 

I look to sell puts into dips, below the 10-day EMA, Keltner Channels and basic bullish chart patterns.

Think about it for a second.

A short put vertical spread is neutral to bullish. 

An earnings winner with strong guidance is NOT likely to fall apart.

Know these 4 bullish chart patterns. 

I’ve already taught you the 10-day EMA and Keltner Channels but click on those links if you need a refresher

Do you see the cup with a handle on META?

They’d recently crushed the expected move.

I nailed 10 wins in a row, from May 8 onward, which was the rounding action of the cup. 

See how powerful selling put spreads below earnings winners can be?

3. Learn what a short put vertical spread is 

Which brings me to training #6. 

Click here to watch the training.

I assure you  this is an easy order to make and once you learn it, you can’t unlearn it. 

4. Understand probability of buying versus selling options

A bull put spread means I’m SELLING a put and buying a put at the same time.

So do option SELLERS have a trading edge? 

A CME study covering 3-years showed an average of 76.5% of all options held expired worthless. 

Three key patterns emerge from this study: 

1. On average, three out of every four options held to expiry end up worthless;

2. The share of puts and calls that expired worthless was influenced by the primary trend; and

3. Option SELLERS still come out ahead even when the seller is going against the trend. 

In fact, of put options alone, 82.6% expired worthless.

The last point on put options illustrates why this strategy I’m teaching you to grow a $2,000 balance is so effective. All we do is SELL put spreads and ONLY on stocks that smashed the predicted move. Starting to add up? 

The study suggests an 82.6% chance of winning these trades. 

Coupled with earnings winners (bullish trend) and it’s starting to click, right?!

5. Understand the time decay of an option

Options are time-limited, expiring trades. Near expiry, the trade “spoils” with less chance for buyers to make a profit. In the final 30 days, the rate of decay picks up speed, with the steepest decay occurring in the final 5-7 days.

This “time decay” is why 76.5% of all options trades expire worthless and of put options alone, 82.6%.

6. Know the economic calendar, I use MarketWatch’s calendar 

This helps us know when big moves in the market are likely to occur. 

For example, think about how interest rate decisions moved the market in 2023. 

Summary.

I taught you how I make my trade plans and execute my trades.

The beauty is, I put all that information into a daily watchlist for you.

Then, before I enter and exit trades, I send you what looks like a text right to your smartphone.

Like this 42% $558 win on TSLA from November 22nd to the 24th. 

This is my favorite strategy for trying to grow a $2,000 balance, or any balance under $25,000.

Currently I’m on a 8 trade win streak and have grown $2,000 to $6,651 in under 2-weeks. 

The best I’ve done so far is $2,000 into $32,000 in under 4-months before a draw down, after which I decided to take profits. 

As a personal goal I’d like to get one of these balances to $100,000.

I want to point out that I cannot speak for my members’ performance, as results may not be typical and trading is HARD. And I cannot guarantee you will make money. But what I can guarantee is that I will work my BUTT OFF to teach you WHY I trade WHAT I trade.

We’re 6 trainings into this email service and if you’re ready to:

• Get ALL the education!

• Get ALL the daily watchlists! 

• And get ALL the trade alerts, before I enter and exit, like a text, on your smartphone. 

Moreover, get 40% savings right now. 

CLICK HERE and APPLY Coupon Code: SAVE40 

And START YOUR JOURNEY this week.

Jay

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