Stock Trading For Beginners

Is it a scam or a legitimate opportunity? Can you make money with the penny stock picks the formula identifies? That’s the real question, right?

If you’re a seasoned professional trader, I’m sure you run every pick through your own series of checks and balances. When you do get a tip on a hot stock, you follow up with your own research and then decide if it’s for you or not.

But what about the beginner or novice trader, how can you get in the game? You want to know if this Penny Stock Prophet can really see into the future with this mathematical algorithm. Can you make the Penny Stock Prophet Newsletter something that can work for you?

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Let me give it to you straight. Penny Stocks are NOT a safe investment strategy. Micro Caps are without a doubt, one of the trickiest and riskiest investments you could possibly get involved in. But with extreme risk, comes the opportunity for extraordinary reward. This is what attracts people to penny stocks in the first place.

They are incredibly inexpensive…so you can buy lots of shares. And with their high volatility, if a penny stock jumps up you can make a fortune! The downside is that if the stock dips, you could suffer a crushing loss.

So what should we do?

Find someone who can give us good reliable penny stock picks. Then learn to do a bit of our own research. Finally, it comes down to trial and error as we learn the ins and outs, and the ups and downs of the penny stock market.

This brings us to the Penny Stock Prophet. If you do any research on his product, you will see his refund rate is super low. He offers a 60 day money back guarantee, but there are hardly any returns, so most people are happy. And we already know that you can’t please all of the people, all of the time. Sometimes it’s user error.

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Perhaps it’s my experience paying off for me, but I have had a good success rate using the penny stock picks given to me in the daily tip alerts from the Penny Stock Prophet Newsletter. I haven’t had gains on all of them, but I’ve managed to take a profit on most of the trades that I’ve chosen to get in on.

Free Penny Stock Prophet Bonus GuideTo help you increase your odds, I’ve put together a Bonus Guide that will show you how to do your own research on penny stocks. I have included a list of criteria as well as some other great tips and tricks. You can use these tools to further evaluate the penny stock picks given to you in the Penny Stock Prophet newsletter.

Using the Penny Stock Prophet Bonus Guide will help give you an edge, but it is by no means a sure thing. Penny Stock trading is gambling, it’s as simple as that. Doing the work suggested in the guide will give you experience and increase your knowledge. This in turn will help you to increase your percentage of profitable trades when deciding which of the penny stocks to buy that have been identified in the Penny Stock Prophet newsletter.

If you buy Penny Stock Prophet from this link, I’ll give you Free, the Bonus Guide specifically designed to help with your Penny Stock picks.

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Reading charts is a tricky thing, one you need training to do successfully. A person without training will see simply up-and-down moves with no meaning. Those trained in analysis, however, can discern the meaning of these sometimes seemingly random movements. Those ‘in the know’ can use the charts to see what the future holds for stock prices. There is not necessarily one pattern that can be used to make good predictions but when the dozens and dozens of different patterns, all of the indicators, are taken together, those with practice can be very good indeed at anticipating future market movements.
Stock Price Patterns – One commonly used pattern to watch for is Cup and Handle. A high price to start then a dip and then back up forms the cup. Then when prices level out for a bit you have the handle. Buying on the handle can bring you quite satisfactory profits.
Head and Shoulders is another commonly watched pattern to look for. The first shoulder is a peak in price. Then follows a dip, then a second, higher, peak forms the head. This is followed by a dip and then the rise that forms the second shoulder. This is interpreted bearishly and you should look for prices to fall significantly after the second shoulder.
Moving Average – Hands down, the most used indicator is the Moving Average. For a 30 day moving average the Average price over time is calculated by adding the closing prices each day for 30 days together and then dividing by 30. Moving averages are also frequently used for 20, 50, 100 and 200 days. Moving averages are plotted onto a graph as a line that goes up and down as the price changes. When you see prices fall below the moving average they often will continue that fall. On the other hand, a rise above the moving average often signals a continued rise.
The Relative Strength Index (RSI) is used to analyze the number of days a stock ends up with the number of days it finishes down. It is calculated as follows. You take the closing price of a particular stock over a certain period, (usually between 9 and 15 days) divide the average number of days with an up finish by the average number of days with a down closing. Then add this number to one and use the result to divide 100. Subtract that result from 100. This gives you the RSI, which has a range between 0 and 100.
Often an RSI above 70 is a signal that a particular stock is overbought and a fall in price can be expected. Conversely, an RSI below 30 can be a good signal that it is time to buy. Of course, these numbers must be used in conjunction with an appreciation of how the market stands as a whole. What is a high or low RSI varies between a bull and bear market. If you chart RSI over longer periods the movement becomes less abrupt so looking at charts that cover a year or more gives a good indication of how that stock normally moves against its RSI.
Unlike the RSI, which follows only stock prices, The Money Flow Index, also known as MFI, also includes the number of shares traded. This indicator also varies from 0 to 100. As with the RSI, 30 is usually a good place to look at buying and 70 is where selling should be considered. And again as with the RSI, tracking the MFI over longer periods gives a more accurate result.
For Bollinger Bands three lines are charted on a graph and read together. Market volatility is measured in the upper and lower lines. A more volatile market moves the lines apart and when the market is quieter the lines move toward each other. The simple moving average is plotted on the middle line. When prices rise toward the upper line it signals that an overbought stock is due for a fall in price. As you would expect, then, when the market price falls toward the bottom band a rise in price should be expected. Of course, no single indicator should be used in isolation. Those who succeed as technical analysts consistently look at a number of indicators before making trading decisions.

Elliott Wave theory is considered as one of the best theory to forecast trends in movement of price. It was introduced in 1920’s by Ralph Nelson Elliott. He studied the repetitive cycle pattern and came to the conclusion that this pattern resulted because of the psychology of the people. Based on these wave patterns he made stock market predictions.

According to this theory, there is an impulsive wave that goes along with the main trend. These are five in numbers. Whenever there is an increase in price, it is corrected by what we call corrective or correction wave. This theory states that the five impulsive waves are followed by three corrective waves in order to correct the price rise; this is called a 5-3 move. Thus, it is concluded that a complete Elliott wave comprises of eight waves spanning over two phases.

In short, Elliott waves are three or five wave series of decline or advances that define a trend. Since these are based on psychology of the people thus, they have more reliability as compared to some other methods and that is why they are used in some important indices like Nasdaq Composite Index and S&P 500 Index etc.

Even though many future traders, forex traders and stock brokers are aware of this method of analysis and its reliability, still they do not go for it because they often find it difficult to understand and to integrate it into their technical analysis. However, it is not as difficult as some people perceive. It does requires some time and effort on your part, but the results that you will get after learning Elliott wave analysis will be satisfying. You just have to learn few guidelines and rules and you will be all set to use this powerful statistical tool.

Please check my story – Elliott Wave Analysis for detail how we can combine quantitative and qualitative analysis for stock trading.