Some 2016 Updates

Since we're entering a new year, I figured it would beneficial to do a quick post updating some information that may be out of date or not clearly stated on my blog. I hope everyone finds this beneficial and it answers some questions!

Brokers I am using:

• Centerpoint Securities (ETC Clearing)
• Centerpoint Securities (Vision Clearing)
• Speedtrader (COR Clearing)
• Fidelity (Roth 401k Retirement Account)

Trading platforms I use:

• DAS Trader (Provided by Speedtrader)
• Sterling Trader Pro (Provided by Centerpoint)
• ThinkorSwim by TD Ameritrade (For free charting only)

Level 2 Provider:

• DAS Trader (Available through numerous brokers)

Stock scanner I use:

• "Equityfeed"

Similar scanners I have used and liked:

• Interactive Brokers scanner (found on their TWS Platform)

News alert software:

• Thomson Reuters Eikon

Free scanners (with less features):

• http://finviz.com/screener.ashx
• ThinkorSwim by TD Ameritrade scanner

Stock promoters I follow closely:

• http://tradetheticker.blogspot.com/p/stock-promoters.html

Trading rules I think are most important:

• http://tradetheticker.blogspot.com/2014/02/some-tips-for-new-traders-from-old-blog.html

Trader Tax Preparation Services:

• Green NFH
• Tradelog software

Any questions not answered here can be found on my FAQ page:

• http://tradetheticker.blogspot.com/p/list-of-faq.html

More Details About My Watchlists

For the past six months or so, those of you that follow me on Twitter may have noticed that I've been posting a list of stock symbols that I'm watching for the following day. I'll be the first to admit that this is not at all detailed regarding my plans for my trades - I just want people to have an idea of what I'm looking at. For those of you who haven't been following me, below is an example of what one of my watchlists might look like:

The responses I receive from users who view these watchlists are far-ranging. The most common question I'm asked is, "Long or short?" Sometimes, one of the stocks will make an especially severe move in one direction or the other and I'll get a "Great call!" Or every now and then I may even get an especially entertaining troll warning me not to short their company because it's going to save the world with whatever miracle product they're working on. Regardless of which of these categories you fall into, I want to provide a little bit more detail about what these watchlists mean and what I'm thinking behind the scenes that you don't see.

For those of you that missed HOW I pick tickers for my watchlists, you can find my OTC scan parameters in this post, while my listed stock scan requirements are in my 2014 Vegas presentation slides. Once I have these tickers, what is my plan for them?

The truth is, when I list these stocks, I probably am short-biased most of the time. When I say short-biased, I mean that the primary play I'm looking for the next day is a short sale opportunity. But this is not always the case. There are some long setups I like as well. Which way I'm biased is always affected by the "big picture", how the daily chart looks. I run my scans, I look at daily charts, and I cherry pick the setups that I think I may have an edge with, long or short.

While all you see may be my list of tickers, far more goes into my watchlist than that. Below, you can see an image of the FULL watchlist that I created for myself the night before September 8:

As you can see, I have very specific plans for each ticker. In some cases, I have a plan for both a long AND a short opportunity, should the setup present itself. Just because a ticker is on my watchlist does not guarantee I will trade it the next day! When I pick my stocks, I have a VERY specific scenario I'm looking for in order to make a play. If that scenario doesn't present itself, I will not feel compelled to do something anyway with the stock. In some cases a stock I was looking to short will fade away all day, but I won't trade it once, because it never gave me the ideal setup I was looking for. I have absolutely no problem missing the play if that is the case.

This is how I trade day after day. My list of stocks changes, my plans change depending on the daily chart (and in some cases, some intraday details), and then the next morning I look for my top watches to, hopefully, give me an opportunity I planned for. I'm watching these stocks because they're liquid, because they're volatile, and because they're the most likely to set up in a chart pattern that I'm familiar and comfortable with. 

I'm sorry I don't share my full watchlists on a nightly basis, and I have no plans to do so. I really do believe that it's possible to be too spoon-fed when it comes to trading and that it will hinder newer traders' development if they're just trying to follow other people's plans. I'll let you know what I'm watching, but you will only improve by making your own plans, trading your own niche, and looking for the setups that YOU are comfortable with. This may also mean making your own mistakes, but I know that I wouldn't have become a successful trader if it wasn't for learning from the mistakes I made day after day when I first started trading. Even now, mistakes are my best learning tool.

I hope my nightly list of tickers continues to be helpful, but I encourage all of you to form your own bias, make your own plan, and learn from your mistakes along the way! 

Answering DVD FAQs

Below, I'm going to provide answers to the most commonly asked questions I've been receiving about my upcoming DVD. Please post any additional questions in the comments section, and I'll do my best to add them! If you want a better idea of what my live trade examples will look like, make sure you check out this post for a video of an OTC breakout, or this post with a video of a Nasdaq short.

For those of you who are interested, I'll do my best to keep this post updated with a link to the best discounted price for the DVD. Currently, the best deal is coupon code "NEXT100", which will save you $800!

Wow guys, thanks so much for the early feedback on my DVD. Reviews have been incredible so far, be sure to check them out in this post, or check out the official "Investimonials" page for my DVD!

Is this DVD good for a beginner?
I absolutely believe it is! The most relevant part for beginners in this DVD will undoubtedly be Chapter 2, which focuses on all of the tips I have for new traders. I started trading with absolutely no market knowledge, so I draw most of this material from mistakes that I made when I first started trading and things that I wish I had known from the start.

The main topics included are:

-Market and Trading Basics
-Basic Trader Lingo
-What is Short Selling
-Trading/Computer Setups
-Account Building 101
-Overcoming Your Emotions
-Annoying Rules/Regulations
-Choosing Brokers
-Intro to Market Scanners
-Handy Desktop Applications

If you learned from Tim Sykes, why not just buy his DVDs? What makes yours better/different?
My style of trading has diverted greatly from what Tim teaches in the last couple of years, to the point that we're rarely trading the same stocks anymore. I trade completely based off of chart patterns, and I only trade liquid stocks that are easy to enter/exit. So if you're looking for different patterns and different strategies, you don't have to worry about that. While Tim and I are both successful traders, there's a lot we do differently from each other.

The other aspect is that this DVD has 35 live trade examples, where I recorded my entries and exits and explained to you my thought process throughout the trade. This is so much more useful than looking at end of day charts and, in hindsight, telling someone where they should have entered and exited. Instead, you get to see where I actually DID enter and exit, hear how emotions played a role, see how I handle bad trades, and so many more subtleties that you'd otherwise miss completely. I will teach you the strategy, I will show you my attempts to trade the strategy, and I will explain exactly what I did right and wrong in every single trade.

What makes your DVD better/different than Nate's? (Investorslive)
While my trading strategy is closer to Nate's than Tim's, there still are quite a few differences between our styles. I must admit, Nate's DVD was a big inspiration to me to create this one, as I loved the idea of showing live examples as I traded them.

One big difference is that I go much more in depth when it comes to OTC trading, and although the OTC market is in the midst of a dead patch, the opportunities that do still come around like new promotion releases are some of my most reliable and most profitable trades that I make. You will also get both introductory/beginner information and specific trading strategies all in one DVD with me, while Nate has that split into two products. So you can definitely save a buck by getting it all in one place with mine.

How long is your DVD?
My DVD is roughly 16.5 hours long. At least 10 hours of this content is live trade examples of my top strategies.

Will the DVD be a hard copy, or streaming only?
There is currently only an option to stream the DVD on your computer. If this ever changes, I'll be sure to announce it.

Does your DVD teach level 2?
Yes, I teach level 2 basics and show new examples that I recorded to illustrate points. You can also find free level 2 educational material on this blog.

How many different strategies do you teach?
There are eight different strategies I cover in this DVD. Three of them are buying strategies, five of them are short selling.

How many of your 35 live trades are listed stocks vs. OTCs?
13 of the trades are examples of different OTC strategies; the other 22 are listed stocks (Nasdaqs.)

Do you show losing trades?
Absolutely! Some of our best lessons as traders are from our losses. 7 out of my 35 examples are losing trades. Several of them show me cutting a loss as planned, when the setup doesn't work. But in the others, you actually get to see me get stubborn, fight the stock, and turn a bad trade into a bigtime headache.


Let me know if there are any more questions you need answered!

Some 2015 Updates

Since we're entering a new year, I figured it would beneficial to do a quick post updating some information that may be out of date or not clearly stated on my blog. I hope everyone finds this beneficial and it answers some questions!

Brokers I am using:

• Centerpoint Securities (ETC)
• Centerpoint Securities (Wedbush)
• Speedtrader

Other brokers I have used and liked (for various reasons):

• http://tradetheticker.blogspot.com/2014/02/question-what-brokers-do-you.html
• http://tradetheticker.blogspot.com/2014/04/question-which-broker-is-best-for-me.html

Trading platforms I use:

• DAS Trader (Provided by Speedtrader)
• Sterling Trader Pro (Provided by Centerpoint)
• ThinkorSwim by TD Ameritrade (For free charting only)

Stock scanner I use:

• "StockstoTrade"

Similar scanners I have used and liked:

• Equityfeed
• Interactive Brokers scanner (found on their TWS Platform)

Free scanners (with less features):

• http://finviz.com/screener.ashx
• ThinkorSwim by TD Ameritrade scanner

Stock promoters I follow closely:

• http://tradetheticker.blogspot.com/p/stock-promoters.html

Trading rules I think are most important:

• http://tradetheticker.blogspot.com/2014/02/some-tips-for-new-traders-from-old-blog.html

Any questions not answered here can be found on my FAQ page:

• http://tradetheticker.blogspot.com/p/list-of-faq.html

Question: "How Does Your Strategy Change in a Bear Market?"

"Sell in May and go away" is an expression commonly heard in trading circles. Veteran traders know that the summer can tend to be slower, especially in the OTC market. The first few months of 2014 were the craziest three months of trading in the OTC market I have experienced since I began trading. I couldn't believe the number of plays we had on a daily basis, and it seemed that every time one died, another would immediately surface. Finally, we are beginning to see action slow down, and many traders are left wondering what to do.

I have been asked a number of times about how my strategy changes as the market shifts. To be completely honest, my strategy barely changes at all. If anything, I become slightly more short-biased, but this really only applies if it is a very bearish market. However, I am still watching the same chart patterns, I am still looking for the same setups, I continue to take the same approach as I would on any other day.

There are far fewer runners right now than there were in early 2014. All this means is that I must be more selective as a trader. I don't find different setups to play to keep myself entertained. If there's no setup, then there simply is no play. It is perfectly fine to go a day or more without even making a trade if the setups that you're comfortable with don't present themselves.

The natural question you might be left with is, "If I don't trade as much, won't my profit rate decline?" Unless there are a couple of truly spectacular setups in a slow month, yes, this will be the case. Trading does not provide a steady monthly salary. Some months will be great, some months will be a bit slower. The key to making it as a trader is remaining consistently profitable. Every day, no matter what kind of market we're in, I play the same chart setups I've been playing for the past two and a half years. As a result, I have never had a losing month and very rarely even have a losing week. I survive market slowdowns/downturns because I focus ONLY on the patterns that work for me, even when there are very few of them in the market.

I hope this helps clear up any confusion!

Question: "Which Broker is Best for Me?"

Before reading any further, please take a moment to review my first post on brokers. I will do my best to update this post anytime there is a significant change.

I am often asked by new traders to give my opinion on which broker would be the best fit for them given their circumstances. Since I can't take the time to reply to all of these questions individually, I thought that I would rank brokers I have used based on certain criteria. Of course, this is all my opinion only. Keep in mind this only covers brokers I have experience with; there may be other options out there. If you don't see a broker on this list, you'll have to try it for yourself, because I will have no opinion on it.


Brokers I Would Use for Short Selling:
1. Centerpoint Securities
2. Interactive Brokers
3. Speedtrader

If you want locates, these are the only brokers that will be able to get them for you. By far, Centerpoint has the best borrows - it isn't even close. Even if a stock isn't easy to borrow there at the start of the day, there are other ways to get a locate on it. To short-sell pump and dumps, these are the only three brokers I would consider.

Brokers I Would Use for OTC Executions:
1. Centerpoint Securities
2. Speedtrader
3. Etrade
4. Interactive Brokers

Speedtrader recovered most of their OTC routes, and they added CDEL to their list which is a huge help. Centerpoint has the best executions, mostly because I feel their NITE route offers better executions than Speedtrader's. They also offer routing options to CSTI, ATDF, CDEL, ARCA, and a few others. Etrade won't let you pick specific routes, so that definitely limits your ability to get a fill sometimes.

Brokers I Would Use for Trading Cheap Stocks:
1. Etrade
2. Speedtrader
3. Interactive Brokers

If you want to trade sub-penny stocks or anything even remotely cheap, you need a broker that won't eat you alive with routing fees and commissions. Speedtrader and Etrade don't charge on a per-share basis for their routes, which helps keeps fees cheap and under control. Centerpoint does charge per-share though, so fees add up VERY quickly on the cheaper stocks you need to trade large amounts of shares with. Interactive Brokers makes this list because their commission structure is .005/share OR 0.5% of total trade value, whichever is cheaper. At the end of the day, they will also be a cheaper option than Centerpoint.


Please let me know if there are additional categories you'd like to see me break down. I will also do my best to update this post as I gain experience with new brokers. Hope this helps!

Question: "Will You Give Me Your Full List of Promoters?"

Sorry, but this is no longer something I'm going to provide. I'm barely staying on top of it myself. A lot of the information in my current spreadsheet is outdated (which many of you have noticed). A large part of the reason for this is because, recently, I find myself trading off of stock scanners more than anything.

There are very few effective promoters out there right now, so don't worry, you're not missing much. Stocktips remains my favorite promoter to play. I will continue to scalp their picks when new alerts go out. They're the closest thing right now to a replacement for Awesome Penny Stocks. It is important that I note that their "premium" paid service is scam, do not pay them because you will not get picks early! Should any other promoters surface, I will be sure to keep everyone posted!

Question: "How Should Small Accounts Avoid the PDT Rule?"

There's no denying that the pattern daytrader rule causes huge frustration for many new traders. I often get questions about how to best deal with this rule. While I can't advise you on what decision you should make, I can outline the route that I took when I first started:

• Open Multiple US Accounts

In the US, you are limited to three daytrades every five business days. If there are certain US brokers that you have your heart set on, one option is to open multiple accounts. That way, you get three daytrades at each broker. This is the strategy I used when I first started. I had accounts at ThinkorSwim, Speedtrader, and Interactive Brokers. Interactive Brokers does have a $10,000 minimum to open the account, but once it is opened, you can immediately pull most of that money if you so choose. There is no minimum balance requirement to my knowledge. By using three brokers, I got nine daytrades every five business days. Once I reached a total of $25,000, I chose which broker I was happiest with (at the time it was Speedtrader) and merged all of my money into that account.

I will not tell you which option is best for you. This is an example of something that is best to learn for yourself. I believe both can be good options, though, so take a shot with one of them - and if it's not working, don't be afraid to change it up! 

Question: "Why do you prefer trading OTC Stocks?"

There are two main reasons why I prefer trading OTC and Pinksheet stocks over stocks that trade on the major exchanges:

1.The Level 2 Advantage

Most OTC market makers do not offer instant executions. This creates the stacking action from market makers in level 2 that I love to analyze and makes it much easier to time exact tops/bottoms during volatile periods. You can see further examples of what I'm talking about in my level 2 posts. Listed stocks have instant executions, so you do not get the same advantage from level 2.

2. Chart Patterns are More Reliable

I have found that OTC stocks trade based off chart technicals far more than any kind of fundamentals. Perhaps this is because most OTC stocks are garbage and have no fundamentals at all. Also, the overall market tends not to affect the patterns. The tweet below from Modern Rock sums it up best:

Of course there are challenges with OTC stocks as well, such as getting executions or finding shares to short. This is why it's important for you to have the right broker(s) if you're going to trade them. (Which broker will best fit your style is up to you, so please don't ask me.)

I hope this clears up any confusion about why I prefer OTC stocks. Remember that this is just a personal preference - do not interpret this as a statement saying OTC stocks are better to trade. What is best for you to trade depends on your personality and the strategies that have been successful for you.

Question: (Insert Any Question About Taxes Here)

I will be honest, I am CLUELESS when it comes to taxes. I tried doing them by myself in 2011 when I first got started, the process took me 8 hours. Back then, I traded just a small fraction of what I trade now. You could not pay me enough to do them myself again. In 2012 I tried taking my taxes to H&R Block. I didn't know much, but I at least knew enough to know they botched them terribly.

I wound up making the switch over to a specialized trader tax service, professionals I could trust. I have to thank Michael Goode for pointing me in their direction: http://www.greencompany.com/. Here is further information from Michael Goode regarding taxes on his blog: http://www.goodetrades.com/2012/02/taxes-for-day-traders/

Now when it comes to taxes, I simply ask them what to do and follow instructions. I have no answers when it comes to tax questions, so please don't direct any my way. I suggest you get a tax professional of your own to consult, because their answers will be far better.

Question: "What DVDs do you recommend?"

This is going to be an easy answer, because I've only seen two trading DVDs, and I recommend both of them! The two DVDs I've viewed are "Pennystocking Part Deux," by Tim Sykes, and "Investors Live: Textbook Trading DVD," by Nate Michaud.

In addition to these DVDs, I've created one of my own, "Trading Tickers: the Long and Short of it." If you read the linked FAQ post, you can see why I think this DVD stands out above the rest, aside from the fact that I made it ;) However, if you want some unbiased opinions, you should be sure to read the early reviews my DVD has been receiving!

"Pennystocking Part Deux" focuses mainly on chart patterns and identifying various setups. It's packed with content, and Sykes keeps it quite entertaining with his wit and over-the-top personality he's certainly well known for. I viewed this DVD during the summer of 2011, when I was first getting started. I found this DVD was quite helpful to me as a beginner, as I was still learning the basics of chart patterns.

"Investors Live: Textbook Trading DVD" came out more recently, so I had a very different perspective since I was viewing it from the standpoint of being a far more experienced trader. Even from this perspective, though, I'd have to be blind not to see the value of it. Nate's DVD is incredibly in-depth, covering everything from chart patterns to building your own watchlists. His attention to detail is incredible, and I really do think there is something in here for everyone, no matter where you are in your trading career.

If I come across more DVDs and think they're worth sharing, I'll add them to this list. I hope this helps!

Question: "What technical indicators do you use and how do you judge risk?"

As far as technical indicators go, I like to keep it simple. Moving averages, trend lines, and advanced metrics have never been of interest to me. I really do think they just over-complicate things. When I'm reading a chart, I'm just using the very basic support and resistance levels. See the chart below of CVM for an example:

CVM had its morning spike up to a high of $1.25, a level that held as a top for the next three and a half hours. The red line I drew on the chart represents this resistance level. The yellow line represents the level that I believed to be support. Just as $1.25 acted as a top for most of the day, $1.18 was acting as the bottom. $1.18 had several more tests than the $1.25 level did, but it held every time. As the stock was channeling between this $1.25 and $1.18 range, I was prepared to buy if the stock broke past $1.25 or perhaps even short-sell if the stock cracked below $1.18.

Once the $1.25 breakout occurred, I bought CVM and decided to use the previous $1.18 support level as my mental stop loss. A lot of people would use $1.25 as their risk level, expecting the breakout level to hold. I don't do this, as I have seen plenty of successful breakouts that are choppy at first. In my mind, I could give my position a little extra wiggle room, because I believed I would only need to be concerned if that previous $1.18 support level failed.

Let's use this example to talk a little more about how I manage my risk. I frequently am asked "At what % do you cut your loss?" The point I want to make clear is that I don't think like that! I want to play off of the CHART, not some preconceived notion of what a good % stop loss is. So then how do I keep my risk under control? I think in terms of dollars, not percentage.

In this case, I knew the support on the chart that I wanted to risk off of was $1.18. My buy was at exactly $1.25. That meant I was risking $0.07/share. But what if support had been lower? What if I had needed to risk $0.15/share instead? I control my risk by taking different position sizes in each of these situations. If I'm not comfortable taking more than a $1000 loss, then I shouldn't buy more than approximately 14,000 shares when I'm risking $0.07/share. In the hypothetical example where I have to use a wider stop-loss, I must decrease my position size so that I don't lose more than $1000. In this example, I can only buy approximately 6500 shares. See the math below:

$1000 (max loss) / $0.07 (risk) = 14,286 (# of shares you can buy)

$1000 (max loss) / $0.15 (risk) = 6667 (# of shares you can buy)

By thinking in terms of dollars instead of percentages, I allow myself to focus on the chart and use that to guide my decisions. Check out the chart, assess your risk based off of key price levels, and then size in accordingly. Please contact me with any questions!

Question: "How do you determine who the best stock promoters are?"

So what makes a good promoter? Many people would respond that it's a promoter who can make a stock price increase dramatically when they announce it as their "pick." There is some truth to this. However, there is one angle that I frequently see new traders overlook. When it comes to trading pumps, or any stock for that matter, VOLUME is key. You could have a stock go up 100%+, but this would do you absolutely no good if the stock isn't trading volume. Let's use a promotion from Friday as an example, USNU:

On paper, USNU looks great. The previous day it closed at $0.104, and Friday it hit a high of $0.343. Many people will look at this and say, "Wow, a gain of over 200%!" In fact, the promoter will even claim this pick as a "win" based off of those facts alone. Here's what people fail to notice. When USNU was announced, it traded under $0.30 for only two minutes. During these two minutes, it only traded about 10,000 shares below $0.20 and only 24,000 shares below $0.30! The opportunity to make that 200%+ didn't really exist. It would have been nearly impossible to get an execution on this stock at the ground floor, because hardly any shares at all were traded! Some people would try the "get in at any cost approach" and be the unfortunate buyers that purchased this stock above $0.30 (not coincidentally where most of the volume occurred). Ask yourself, if you were one of these buyers, would you still be long the stock an hour later when it had dipped to $0.17? Liquidity and volume is KEY to trading; without that, a high-odds play doesn't exist. Don't let yourself be one of the suckers who sees the 200%+ claim and decides that the promoter is worth following. Make sure the volume is real and the result is actually realistic.

Let's compare USNU to a promotion that actually did trade volume, just as a reference point. Just this weekend, stocktips.com released WPWR as their new pick. Compare Day 1 of this promotion to USNU:

Unlike our previous example, WPWR traded real volume. About 800,000 shares traded below $0.22, and even more shares traded pre-market, well below $0.20. Would fills have still been difficult with this stock? Absolutely. It's tough to buy any OTC stock into strength, which is why it's important to have the right brokers. However, in this case the possibility for profits existed because there was plenty of volume.

Sure, it looks easy enough in hindsight, but how do you know in the moment which promotion is going to trade good volume and have high odds of spiking? This is where knowing promoter history comes in so handy. Let's look at recent "Stock Tips" promotions, starting with the oldest:

As you can see, "Stock Tips" has been consistently improving with each promotion they've run. The volume has steadily increased with each promotion (trading millions of shares throughout is plenty), and each promotion has run for multiple days. Given these facts, it was very likely that their new pick this morning would trade high volume and have a strong open. By saving emails from "Stock Tips," you could look back at previous picks and draw this conclusion for yourself or create a document to track the performance of their picks so you have that to refer to. Either way, it is important to have a way to check a promoter's history so that you can make better decisions.

One important thing to note is that past performance in no way guarantees future results. Use past performance to help guide your decisions, but don't make the mistake of thinking anything is guaranteed. You must still pay careful attention to the price action and be willing to sell if the promotion starts to fail. A "hold and hope" strategy will only work for so long. Once you run into your first "money-grab" promotion, you will get destroyed if you're unwilling to adapt. What is a "money-grab?" An old promoter known as "Awesome Penny Stocks" had a reputation for huge volume and multi-day runs. They were considered the best promoter out there. Let me show you a daily chart of one of their "money-grab" promotions:

Point made? At the end of the day, you're buying a scam. Never forget that and trade scared, because one day that attitude will save you.

With all that in mind, below I will share a portion of my promoters list so that you can see how I organize it. Who the "Hot" stock promoters are changes pretty frequently, and these days there aren't very many quality promoters left, due to larger awareness of scams and increased SEC halts. I do not endorse these promoters and am in no way affiliated with them, but I do believe they are still worth following. Remember, buying stock promotions is a VERY risky strategy and should not be attempted until you have a good degree of familiarity:

11/3/14 EDIT: LOL a few short months later, ALL of the promoters I had listed no longer exist! Currently stocktips.com is the only promoter left who has proven they can produce volatile picks that have good volume.

Hope this helps. Please send any questions my way!

Question: "How do you find and track penny stock promoters?"

It's always tricky advising people on which stock promoters they should follow or which promotions they should consider buying. The fact that they are con-artists and the stocks they promote are complete trash makes it very difficult for me to encourage people to buy promotions - unless they're absolutely certain they know what they're doing. However, it's this very strategy that jump-started my account, so I can't just avoid explaining it forever. Let it be understood that I am not, in any way, recommending buying promotions by any promoters that I will discuss. Also, please understand that just because an "effective" promoter is profiling a stock, that doesn't mean it has to go up! Take your time to learn, and please understand that playing these is not for beginners. I can't stress that enough.

The first thing we need to cover is how to find stock promoters. Here's the approach I took:

• I created two new email accounts

The first account I used to sign up to ALL promoters that I stumbled across. Their results and track record didn't matter - I just wanted to be on their lists and be able to track their history or what current stocks are undergoing promotions of any level. Anytime I find a new promotion website I haven't heard of, I throw it on this email list. I save ALL of these emails. Currently I have roughly 100,000 emails in this account, dating back to early 2012. This way if I see an OTC stock trading unusual volume that looks like it might be a promo, I simply search my emails in this account and see if one of the sites I'm signed up to is sending paid emails on it. It is important that these emails are compensated (you can find this by reading the disclaimer section of the email). Many crummy promoters will email on the current "hot" stock randomly while in reality they have no involvement in the actual promotion.

The second email address I used to sign up again for the promoters that I determined can actually move stocks and are worth paying closer attention to. I separate these because I like to remove the best promoters from the rest of the clutter. It just makes it easier for me to keep track of what the best current promotions are without having to dig through the rest of the clutter. This is my "good" list, and I make promoters EARN their spot on it.

• I utilized search engines

There are a few ways to do this. The first thing to keep in mind is that different search engines will bring up different results, so don't just limit yourself to one. Then just plug in search terms like "Hot penny stocks" or "Penny stock picks." Aside from going through the first 5-10 pages of results and signing up to all the sites, I paid extra attention to which sites were advertising. Don't just assume that advertising makes for a good stock promoter, but it increases the odds that they are of higher quality if they're willing to pay to get their name out there. Anytime I see a new site advertising, I immediately sign up to it and then wait to see what they email about.

• I utilized helpful websites

I have to say, involving myself with the Promotion Stock Secrets team was one of the most helpful decisions I made while learning about the stock promoters, and it even helped in gaining a better understanding of how promotions work. The site is absolutely loaded with great information - even reading their free content can be educational. For those of you who would prefer free options, there are other routes to go. Penny Stock Rumble is a great tool to use to find out which websites were sending emails on the top OTC movers of the day. I subscribed to their email list and then signed up to the sites they mentioned in each of their daily emails. This was also a great way to help figure out which sites were connected. pumpsanddumps.com is also a good way to keep track of which sites are emailing on what tickers. I wouldn't rely on this site to give you alerts on promotions, but you can certainly use their information to find more promotion websites to sign up to. Their "Directory of Touts" is especially helpful, although a bit outdated.

• Pay Attention to DETAIL

You have to notice the little things. pennystock.com is NOT the same promoter as pennystocks.com. Sites ending in ".com" and ".net" are DIFFERENT WEBSITES. Don't get confused by the minor differences. There are tons of crummy websites out there trying to look like the best promoters! You really have to have an eye for detail.

If you have 10 promoters emailing on the same ticker, that doesn't mean they're all related. Read the emails, see which emails are exactly the same. Related websites will send out the same emails, word for word. If two sites are promoting the same ticker but the emails are different, chances are they aren't the same promoter. Once you've began to figure out which sites are related, start a spreadsheet or some other tracking tool and keep track of who's grouped together and what their past promotions are!

I hope this advice on finding promoters will be helpful to all of you! See part two of my article, which details WHAT makes a good stock promoter and some of the promoters I currently believe to be most effective.

Question: "What charts do you use when trading?"

There are really only two charts I pay close attention to while I'm trading. The first chart that I'll pull up when looking at a ticker for the first time is a daily chart. I typically pull up a daily chart for the past year, but I tend to care more about the recent history and when the volume really started to pick up on the chart. Once I've seen the daily chart and have an idea of what the big picture looks like, I then look at a one-minute chart for the current trading day and make my decisions based off that (all the while remembering where the daily chart is). Let me use HEMP the day I shorted as an example:

Going into the day, as always, the first thing I looked at was the daily chart. Yes, HEMP was only trading at $0.30 entering the day, but that doesn't mean it was "cheap." The FIRST thing I notice when I pull up the chart is the volume. The volume was MUCH heavier over the past month, especially in the last few days. The next thing I noticed is that we clearly have a parabolic daily chart. In three days the stock had gone from $0.10 to a high of $0.34. Another detail I noticed is that during this three-day parabolic, the stock had never gone red on the day, meaning the price never dipped below the previous day's closing price. So, as the trading day began, I switched over to a one minute chart but remembered the "big picture" of where the daily chart was.

The line drawn above on the one-minute chart reflects the previous closing price. Entering Thursday morning, HEMP did gap up a little bit, from $0.30 to $0.3125. When the morning spike failed, however, I started into a short sell position. The stock could not break past $0.32 in the first few minutes, and I knew that even if it did, there was still resistance at the $0.34 high from the previous day. Then the price began to drop. When HEMP broke below that $0.30 mark, I added to my short sale position. I did this because it was the first time in four days that HEMP had gone "red" on the day, which made a panic likely since, "big picture," the daily chart was so overextended. While this doesn't work EVERY time, it's a high-odds trading setup and as you can see on the chart below, it worked out great in this case as I covered into the morning panic:

This is just one example of how I will use daily charts and one-minute charts in combination. Of course, the daily setup could be completely different, and that would change my plan and my bias when trading the intraday chart. Hopefully this gives you an idea of how I use charts to my advantage. As always, please email me if you have any further questions!

Question: "How do you create your watchlists?"

My watchlists are actually pretty simple; not a whole lot goes into them. There are two things I use to build them - market scanners and my email address.

The email address is simple enough. All I have to do is check my email and see what stocks are being promoted by my favorite promoters (blog post on this coming soon). If the stock is trading good volume or has a chart pattern that I like, it is immediately added to my watchlist for the following day.

Market scans are slightly more complicated. I recommend one of two market scanners, either "Equityfeed" or the market scanner that comes with Interactive Brokers' trading platform. But what exactly do I scan for? Since I've made most of my money trading OTC stocks, the first thing I do is set my filter to only pick up OTC or Pink Sheet stocks.

There are a few criteria I look for when scanning the OTC market. I set my scanner to find stocks that are trading above $500,000 in volume, priced above $0.05, priced below $5, and up more than 5% on the day. This will pull up a list of stocks that meet this criteria for the day. Next, I look at the daily charts for the stocks that appear on this scan and look for chart patterns that I'm familiar with and like to trade. For example, I'll look for daily stock charts that are getting overextended, or perhaps close to a key breakout. If I like the chart, I add the stock to my watchlist. If I don't like the chart, I simply ignore it.

From there, it's simply a matter of prioritizing what I'm most likely to play the following day and which plays are more on radar than immediate plays. When the following day concludes, I decide which stocks to keep on my watchlist (based off of their charts), which to remove, and then I start the whole process over again.

Hope this clears up my preparation process! There really is no more to it than this. I don't dig through filings, I don't analyze news releases, I don't worry about what the message board trolls are saying. It's all about the chart and the pattern for me. If any of this isn't clear, feel free to leave a comment, I'll be happy to clear up any confusion!

Question: "What is the $2.50 rule?"

After my post about brokers that I use and recommend, a few people were asking what exactly the $2.50 rule is. Fair enough; let me clear that up.

The $2.50 rule applies when you are short selling stocks that are priced under $2.50. Basically, the rule states that for every share you are short, you still need to put up $2.50 of capital, even if the stock is priced lower.

Why does this matter? Let's say you have a $1000 account and you want to short sell pennystocks. If the stock is under $2.50, you will not be able to take a full $1000 position, even if you wanted to. Here's the math:

You have a $1000 account;

For ANY stock under $2.50, you must still put up $2.50 in capital.

Divide $1000 by $2.50, and the MOST shares you can short is 400 shares, REGARDLESS of price.

This can be a huge frustration for small accounts. You might have the perfect supernova chart and the stock is trading at $1, but you can't short 1000 shares. You can only short 400 because of the $2.50 rule.

Here are a few examples of the MOST shares you can short based on your account value:

$1000 account   -   400 shares max
$2500 account   -   1000 shares max
$5000 account   -   2000 shares max
$10,000 account -  4000 shares max
$25,000 account -  10,000 shares max

The cheaper the stock, the larger a disadvantage this is because of the smaller $ position size you will ultimately wind up taking. Unfortunately, it's one of the realities of short selling but as your account grows, it will become less of a nuisance. I hope this helps clear up any confusion!

Question: "What brokers do you Use?"

Let me start by saying that if any of you see information listed below that is incorrect about any of these brokers, please let me know so that I can fix it! But before I get into brokers, please note that the brokers I use are best for MY trading strategy. I don't believe there is one broker that fits everyone, and it is up to you to decide which broker(s) might be the best fit for you and the trading strategy that you implement. There are plenty of brokers out there that I don't know about or don't care to use, so don't limit your research just to this blog post. Listed below are notable brokers I use or that I have used and some info about each:

• Interactive Brokers

Commissions: .005/share or 0.5% of total trade value, whichever is less expensive

Trading Platform: "Trader Workstation 4.0"

Platform Cost: Under $10/month

Required Initial Deposit: $10,000 (no requirement to maintain $10,000 in account beyond opening)

Interactive Brokers' main strengths are their low costs and their availability of shares to short. However, while Interactive Brokers typically has more shares to short than other brokers, don't make the mistake of thinking that it will be easiest to short the biggest pump and dumps here. They issue their shares on a "first-come, first-served" basis; and given the limited number of shares they usually have, they run out quickly. However, if you're looking to short and hold long-term, IB probably gives you the best chance of being able to hold the shares beyond the typical three day period. While I still have an IB account, I rarely use it anymore. They just don't have shares available for me often enough, I don't want to rush my entries trying to lock them up in the cases where they do, and I don't take long-term positions so that benefit is meaningless to me. IB enforces the $2.50 rule and the Pattern Daytrader Rule. One downside of IB is that they do not offer level 2 data for OTC stocks.

• Speedtrader

Commissions: $6.95/trade or $.0044/share + Routing Fees

Trading Platform: "DAS Trader" 

Platform Cost: See Platform/Data Costs Here

Required Initial Deposit: $15,000 

Speedtrader has recently returned to their former glory, as they've added back most of the OTC routes that they lost and executions are once again superb. I use Speedtrader almost exclusively for buying, and their routing fees are still MUCH cheaper than anywhere else. One downside of Speedtrader is that you will rarely find shares to short of OTC stocks there, however if you open an account with their ETC-clearing division that will help solve this problem. The Pattern Daytrader Rule is enforced at Speedtrader. You can view Michael Goode's early video review of Speedtrader here. One other upside is that I'm a big fan of their trading platform, "DAS Trader". I use it for all my level 2 feeds as I find it to be very reliable and quick information. Unfortunately, they recently raised their account minimums, and now you need $15,000 to open an account.

• Centerpoint Securities

Commissions: $4.95/trade (up to 10k shares) + routing fees (usually $.002/share)

Trading Platform: "Sterling Trader Pro"

Platform Cost: $284/month for platform + data

Required Initial Deposit: $50,000 (must maintain $30,000 minimum balance)

The old saying, "You get what you pay for," sums up Centerpoint pretty well. While they are the most expensive of all my brokers, they are also by far my favorite. The biggest downside to Centerpoint is the cost. Routing fees and locate costs can really add up in a hurry. That being said, they don't enforce the $2.50 rule intraday. I can almost always find shares to short on the major pumps, and there are plenty of OTC routes; so executions are excellent. This is probably not a broker for beginners, or costs will eat you alive. However, if I had to pick one broker on this entire list to trade with, Centerpoint would be an easy choice.

Whether or not one of these brokers is right for you I leave to you to decide. All I can do is lay out the information. I hope I have given some of you a good idea of what's out there though - but, of course, remember to do your own research and see if there's anything else out there that appeals! Who knows, maybe someday one of you will refer me to the latest-and-greatest broker!

Question: "How much time do/did you put in to be a trader?"

I frequently get this question, but my answer now would be different than it was when I was getting started. Obviously, I am/was in front of the market from 9:30-4:00 (when it is open), but my time outside of that is what has varied. When I first got started, I had to put in a considerable amount of time outside of market hours to develop my skills. I needed the time to pore through video lessons, track my favorite setups to see how consistently they performed, and try to find the latest-and-greatest promoter websites. I think it's safe to say that I would put in 2-3 hours a day outside of market hours on average.

Now that I've matured as a trader, I don't need that time to sift through content. With experience I have found the setups that I'm successful and comfortable with, so I find myself studying much less than I used to. I'm now at the point where I probably spend 20-30 minutes per night getting my watchlist prepared for the upcoming day or tracking new setups that I may want to start trading. The bottom line is that you need to put in the time when first getting started if you want to be successful. However, as you grow as a trader and (hopefully) become successful, the time commitment begins to become a bit less demanding.

Question: "How do I get started trading?"

First, I recommend you check out my posts "Is trading right for me" and "How much money do I need to start trading." If I haven't scared you off yet, the next items you need to consider are what broker you will use and whether or not you want to sign up with a trading service or not. Personally, I believe it is helpful for beginners to utilize a service rather than jumping in blind with no guidance. The trading services I have used and recommend can be found here; however, there are plenty of others out there that I have no experience with and that could very well be a better fit for you. When signing up keep in mind you should NOT be signing up for "stock picks." That will get you nowhere. Rather, target a strategy that you want to LEARN inside and out so that you can become self-sufficient.

Once you've found a strategy that you like, you are going to need a broker to trade with! Different brokers suit different types of strategies. I'll have a detailed post on what brokers I have used and recommend coming soon. Until then, I suggest checking out some broker reviews at investimonials.com and investigating whether you can track one down that will fit you well. Good luck guys!