How Penny Stock Newsletters Work

How Penny Stock Newsletters Work

Trading penny stocks has become extremely popular in recent years, thanks in most part to the advent of online trading platforms giving individuals the vehicle to trade stocks without needing the actions of another human to do so.

There are two reasons it is penny stocks (rather than mid to large cap stocks) which have seen the biggest growth from online trading. Firstly because trading in penny stocks requires the trader to be able to get in and out of stocks very quickly (something a broker cannot do) and secondly because penny stocks can deliver huge gains if traded correctly.

Choosing the right stock and being able to enter a trade at the right time can, with penny stocks, mean gains of several thousand percent in just days, or on occasion in just hours.

The risk/reward rule however also applies in that with penny stocks they can also leave the trader holding big losses in the same amount of time.

So how do traders know which penny stocks to trade? The answer of course is that most (the vast majority) of traders DO NOT know which are the hottest penny stocks and end up losing their shirts. Let’s face it, someone has to pay for all the profits the smart money traders (and market manipulators) are making.

So how does the average trade-from-home trader get an edge in the cut throat world of penny stock trading? They subscribe to a penny stock newsletter or email alert service. This way they receive an email when a penny stock is about to breakout.

Understanding the mechanics of the stock market can help explain how penny stock newsletters work, and how an individual such as yourself can profit from them.

The mechanism in question is the fact that a stock price will go up when more buys are made than sells. Relatively speaking, with penny stocks it doesn’t take that many buy orders to significantly increase the price of the stock.

Conversely, it doesn’t take many sales to force the price down either.

Picture yourself in the position where you have hundreds, if not thousands of traders waiting on your word on which stock to buy. You know that as soon as you email them they will quickly take a position in the stock you are recommending. This will cause the price of the stock to jump.

The more subscribers you have, the more influence you have on the stock price. I know what I would do if I was in this position. I would buy into a stock, then tell my subscribers about it. They would buy in as well causing the price to rise. This price rise would in turn attract the masses causing the price to rise even higher.

Then I would exit at the new higher price (for a profit) and then tell my subscribers to do the same. Provided they exit before the masses do they would all make a profit and I would be hailed as the penny stock ‘master’.

In many ways, although the accuracy of the picks is important (in terms of news action), it is not as important as the influence my picks have on the stock price. If enough subscribers buy in then the stock price will go up regardless of the underlying fundamentals of the stock.

Once the dust has settled, the subscribers who got in the quickest after my ‘buy alert’ went out and those who got out the quickest after my sell alert went out would receive the biggest profits from the trade.

This is essentially how the penny stock newsletter alerts work, and the more subscribers they have the more profit potential they have.

The message here is that subscribers to penny stock alert services can profit handsomely provided they are able to enter a stock quickly (before the price rises too much) and exit quickly (before it falls). If you can’t be quick then don’t even try.

In the world of the penny stock newsletter there are only a few which have survived the scrutiny of penny stock traders.

Penny Stock Prophet vs Penny Stock Egghead

These two are the ‘big boys’ of the penny stock newsletter email alert services.

Penny Stock Prophet

James Connelly’s Penny Stock Prophet is arguably the grand-daddy of penny stock newsletters. It’s a weekly (3x) alert (email) newsletter identifying penny stocks product developer is about take a position in himself. This allows buyer to trade alongside proven track record. Limited to 500 subscribers only.

Learn more about Penny Stock Prophet

Penny Stock Egghead

Although Nathan Gold’s Penny Stock Egghead could be considered the new kid on the block, the take up for this service has been enormous and the feedback in terms of accuracy of predictions has been extraordinarily good. The summary of this product: “Weekly email alert service of penny stocks about to break out. Normally product developer takes a position himself, allowing the member to trade alongside proven track record.”

Learn more about Penny Stock Egghead

Penny Stock Newsletter Alternatives

Microcap Millionaires

Monthly newsletter identifying microcap (penny) stocks about to make substantial gains. Tells entry and exit points. Beginners to trading get step by step guidance

Learn more about Microcap Millionaires

Best Penny Alerts

Weekly (and more frequent) email alert newsletter identifying penny stocks product developer is about take a position in himself. This allows buyer to trade alongside proven track record. Limited to 500 subscribers only.

Learn more about Best Penny Alerts

Penny Stock Newsletter Conclusion

There is a lot of money to be made with penny stocks provided you pick the right on and are quick to act on the alerts as they come in. Buy in quickly, and equally important exit quickly. Many have a tendency to hang on to make more profit, only to see their profits evaporate when the price plunges.
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Note: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.

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