The Downside To Penny Stocks
Many traders assume that much lower-priced penny stocks can be an answer to this problem, but they are, by definition, highly volatile and, therefore, risky.
Unfortunately, some penny stocks are what market insiders, with characteristic tact, like to call “garbage.” That’s not to say that they’re not legitimate and viable businesses. It’s just that the relatively low number of shares available to trade makes them super volatile and vulnerable to manipulation through shady “pump and dump” schemes.
On the other hand, if you learn how to recognize and anticipate the very sharp price movements these kinds of stocks produce, you can indeed make a fortune – as many have.
But to profit consistently requires a precise sense of timing that can only be developed by many hours of dedicated practice. And penny stocks are not, by their very nature, well suited to swing trades left open overnight or longer.
"I’ve used this time of "lockdown" to do a lot of learning. Recently, I've made a lot of base hits and many for extra bases. Of course, I've been thrown out too, but I've learned that this is also part of keeping on a steady growth plan."
How The Little Guy (or Gal) Can Match The Market Pros
The good news is, there's a proven way for a person of limited means, working a regular job or on retirement, to participate in the markets risking small sums, with the possibility of significant profits.
And they can do it without having to spend countless hours staring at a trading screen.
Mark DeBoer of Hillside, Illinois certainly thinks so. And the answer he found is options trading.
Now it’s true that options have the reputation of being too risky and complicated for beginners to trade. Aren’t they, after all, a kind of derivative, one of those esoteric financial instruments that crashed the world economy in 2008?
The Trading Secret Wall Street Pros Don't Want You To Know
Properly understood, options are, in fact, an excellent way for outsiders to safely trade stable blue-chip stocks of the kind they could never afford, otherwise.
And while it’s true that options can be highly volatile, all that’s at risk is the price of the options contract, giving you control of 100 shares, which can be purchased for a fraction of the cost of the underlying stock.
Plus, it’s their very volatility that makes options enormously profitable.
Mark DeBoer only came recently to this type of trading, but with the help of Kyle Dennis and his other RagingBull mentors, he’s already enjoying some spectacular wins.
More importantly, he has turned the recent COVID-19 restrictions to his advantage by making time for some serious study.
"When the live scanner came out, I was hooked. It provided me with another way to try and keep a pulse on the market. Kyle's instruction on how to read the tool has helped me be a better trader and understand the options market."
Trading Options For Base Hits
“I’ve used this time of "lockdown" to do a lot of learning,” explains Mark, “Recently, I’ve taken what I've learned and made a lot of base-hits, many for extra bases. Of course, I've been thrown out too, but I've learned that this is part of keeping on a steady growth plan.”
As with all kinds of trading, there’s a learning curve with options.
And knowing how to manage risk and loss while building an account by swinging for regular base hits is indeed an essential part of the learning process.
Bagging a 1000% Gain in Just 2 Days
The beauty of options is that they can provide small-account traders with some great home runs.
Mark freely admits to being hooked on Dollar Ace’s live market scanner, a valuable tool that finds daily profit opportunities from among thousands of reputable stocks.
Scanners are yet another way in which technology has leveled the playing field between market insiders and part-time traders.
“In back to back days, I bagged a 1,000% gain on 2 ideas from the Dollar Ace scanner,” recalls Mark, “I used to get excited about making 300%, but now I've got a taste of the 1000%+ club!”
"In back to back days, I bagged a 1000% gain on 2 ideas from the Dollar Ace Scanner. I used to get excited about 300%, but now I've got a taste of the 1000%+ club!”
More To Give And More To Play With
While Mark’s excitement is understandable, he's not letting himself get carried away.
We asked him what advice he’d give to new traders, and he said that “It’s all about putting in the work. It’s about learning from every tool available. Practicing by paper trading and, above all, knowing when to get out of trades to minimize the losses that are as inevitable with options as with any other kind of trade.”
And with this as his guiding philosophy, most people would agree that Mark is well on his way to achieving and likely exceeding his financial and personal goals.
“I’m looking to make trading a big part of my supplemental income,” is how he sums it up, “and be able to give more away and have more to play with.”