How I think PennyPickAlerts.com works

Penypickalerts.com offers a free penny stock picks newsletter. They claim that their trades are successful:

"Our Team would like to take a quick moment to thank our loyal readers and welcome new subscribers.  This newsletter is ranked among the top industry leaders and continues to exceed expectations.  The PennyPickAlerts newsletter has consistently outperformed the majority of competitors during the course of 2013.
 
Some of our most recent picks have soared to gains as high as 2000%.  This past summer we have already given readers 6 alerts that had gains of well over 100%!  The majorities of these gains happen over the course of just One Day, allowing readers to book profits quickly.
 

We have our next Monster Pick ready and it will be released at 9:30am EST Tomorrow morning."

Why would the be giving such information away for free?

My hypothesis is that they really do pick small financially promising companies...or at least companies whose stock price will move exponentially when they release their picks and at the same time they make a ton of money when people follow their advice. They buy low, before they release what their next pick is, and then sell at a peak, and do this all throughout the trading day. Notice the potential to generate a TON of profit? This is why I believe PennyPickAlerts gives away the info. They need to do so to generate the momentum needed to raise the stock price! They nearly make this admission themselves:

"Today's Play was ALL about Momentum!! We had said this one could be an amazing Winner and it delivered QUADRUPLE Digit Gains as promised.  SDON went up over 1,900% from the previous day's close.

 
We had real gains of 190% and those who day traded the play and bought on the dips had continuous opportunities for 50%-100% gains throughout the trading session!
 

This is the exact type of plays that we try to deliver on a consistent basis and our team has already started researching our Next Monster Play!"

How can you or I use this to our advantage? I recommend, and will try blindly trusting their pick, and buy it as soon as it is released tomorrow (with the virtual account of course). I will not waste time researching...its all about buying it the moment they release before the price goes up, and then sell as other traders are driving the price up. So use their greed to your advantage! They profit from the system they set up, and we can too...I will verify this tomorrow. Win-win I hope!

I also want to try holding on to stock they say is a good buy to see if it really increases in the future. Maybe sell half, and hold the rest. As long as I make enough money to pay for the entire purchase I can easily hold on to half the shares. 

On my OptionsHouse virtual account, GLL seems to trade normally in practice. As per last post I set for a buy at $107 but thankfully, by some luck, the actual fill price was $105.26...not really sure why. So although it worked well in this case, this...feature...may cause me problems in the future.

Gold traded up from $1220 today to $1250 at the end of the trading period. This has happened before, and in my eyes it may represent an opportunity to buy inverse gold etfs.

Just a FYI: this gent seems to have a more correct and realistic view on gold: http://seekingalpha.com/article/1512602-gold-i-hate-to-say-i-told-you-so-but-i-told-you-so

How Gold Really Works:

There also was this GREAT, long article I cannot find now. It talked about what actually drives the price of gold. Most analysts look at mine production. Just today I came across an article by Frank E. Holmes doing just that...titled "The Asian Giant Stampeding into Gold"...China has bought most of the annual mine production this year...a huge demand (:rolleyes:)

The short story is that gold is hoarded...not destroyed. Mine production does NOT drive the price, it simply inflates the price of gold. So China buying 1-2% of the total gold supply (and remember this is new supply) is not a major driver of the price. What drives it is the sentiment of the people holding the other 99%...if they find better economic opportunities and the global economy looks like it is improving, then they will sell and the price will go down, since there are other people who will be buying when these sell. For every seller there is a buyer. This free market exchange determines the price of gold. I need to find who wrote that article. It is truth.

So Frank is either trying to pull the wool over investors' eyes and influence the gold market to the upside or he really believes his jazz. Either way, I would not trust him for investment advice.

So Long-term gold should continue to drop if there is indeed an improvement in the global economy...it was purchased as a safe haven and has no driving factor besides investor sentiment. I still need to invest my real money! Is now the time? I suppose I will wait to tomorrow. I think that gold will drop back down again as investors take the opportunity to sell at a slightly higher price.

A Seamless Order Triggers Order Trade

I bought 10 shares of SSO at $75 knowing the S&P 500 would go up. I then used an OTO to make an automatic sell order at $80...determining these prices by looking at charts.

Then I forgot I did this and as the 500 was rising I started looking to sell. All of a sudden my SSO holdings disappeared! Well, I now know where they went :)

Drive for Greater Profit

Making $60 here and there on a $750 trade is OK...but that's not the kind of money I am looking for. Well-chosen penny stocks are what has real potential but they are extremely risky...many of these companies fail and you lose your entire investment. I subscribed to Penny Picks awhile ago and they report successes. The key to make sure of that myself is to try their recommendations in my virtual account for awhile and see if they make sense! So I think I will start doing that. I will report my results.

Finding a Good Analyst
If you can find someone who is giving free (even for payment) information away on where and how to invest...and their advice consistently returns a handsome profit...well...AWESOME!! I believe there are people and groups out there. The problem is finding a trustworthy source.

My nature is to often neglect the help others can be...I like to do things predominantly alone...but I do not have the time or the knowledge or the experience to find good investments yet. So relying on others advice would be a sensible thing to do.

I just need to find a few people like this. If you have suggestions...please lets have them. I will prove them with my virtual account!

I'm just a novice but I seem to be growing surprisingly fast...I have noticed a big improvement in confidence and reason as I share my thoughts...this is why I cannot stop this time! But we must not get cocky...

I think I'm going to Bet Against Gold Even though it's already down quite a bit this year

Once again, I am unsure of the OptionsHouse platform. It is telling me the bid for GLL, my preferred vehicle to bet against gold, is $85 while the ask is $115. So time to try this in the virtual account again. Buy 12 Shares at $107 with a trailing stop which will sell these shares if the ask price falls 10%...not sure how to set up trailing stops yet but my thought is this will give me some protection if gold skyrockets but won't be triggered during a bounce.

But just look at this chart and tell me where gold is going...

I'm just a novice. I've seen others annotate charts...and I'm trying my hand at it for the first time :)

Think it is time to short the US Dollar.

I read an article on Kitco's gold app that the US Dollar has risen to a 3 year high. Right now it is at 84.5 points on the USD index or USDX as I take it.

Here are some articles from my research:

http://www.marketwatch.com/story/new-etfs-allow-investors-to-play-us-dollar-movements
http://currencyetf.net/us-dollar-etf.htm

But...then I found a pair of 3x Bull/Bear ETFs that looked promising: http://www.powersharesetns.com/portal/site/etns/currency

Seems this is one of the only pairs of ETFs out there for my purpose, and I am fairly confident that I will make a good return on this short (I will report how it goes. I am just a novice after all) so I like 3x ETFs.


The Play:

I know the dollar is at a 3 year high (84.5 on USD index). This is right after some really good news, so the dollar will probably settle. I may be wrong and here comes some great news after the good news and the dollar really takes off...well...I'm catching the falling knife I guess. Perhaps I should go long on the US dollar because it does seem the US economy is improving...at least on paper...but then again I believe it could be all wind.

So the only think I BELIEVE right now is that the dollar is at a local maximum and will come down in the near future. I believe this enough to act on it. Let's look at the charts on this ETF.

The current price for the 3x Bear ETN of choice is ~$13.3...and this is supposed to be a 3 year high from 1 source. Well, it is a high, but..a quick chart check reveals this is indeed the case: http://www.marketwatch.com/investing/index/DXY

So...Wait. I thought I was investing in a ETF now I see this is an ETN...and one whose daily movements do not correspond to the market movements very well it seems. Well. This seems a lot riskier now, but I think I am going to go through with this plan.

Specs:
I am going to execute an order triggers order. Where I buy at a certain price and then trigger a sell at a reasonably higher price. I will not try to make maximum profit, I WANT OUT of this position so I am just going to try to make a little bit of money. I am going to use the charts to determine roughly where to buy and sell.

Buy: UDNT Shares...$500 dollars or so worth.

Time period: Day...I may set my limit price too low and not catch the trade at all, but this is a short trade and I DO NOT want to be stuck in this position!
Limit Buy Price: Lets say 13.0. I don't want to miss this, and the most recent low of this ETN was ~12.8 a bit over a month ago. But I definitely don't want to pay too much. And I don't want the dollar to jump to 86 on the USD index for that would be a disaster for me.

Sell Price: I don't want to try and make too much money and then have the trade leave me behind. One month ago there was a high of $15...but this is not going to happen since the recent prices were about $14 before this decline. So I will bite my ambition and shoot for $13.8 to play it really safe--or what I think is safe. This will be a GTC since it might take awhile for the price to decline.

Escape: If the dollar starts to skyrocket, I will sell this and take the loss, hopefully during a dip. Because I think over the long term the USD will be increasing in value and I do not want to hold on to a 3x bear ETN.

Let's see how this trade looks in the Optionshouse calculator. Maybe its just not worth the risk.

So I would trade $38 shares and take a $24 profit if everything goes as anticipated...this trade is looking worse and worse.

Now the OptionsHouse platform is telling me the market price is 0.0000

SO I will try this as a virtual trade :( just to see what happens when OptionsHouse gives a ridiculous market price...I don't want to lose $500.

I wish there was a better way to short the USD. I feel like this is a great opportunity. More research I guess. BUT I HAVE HOMEWORK TO DO!!

Well, there is UDN. A regular, non 3x bearish ETF. And I stand to make 30 cents for every $25 share if the trade goes as planned. Really not worth it. I will report back on what happens with the virtual trade though. Oh well. I will have to wait to use my real money another day.

RESULTS:

Even though the USD behaved as I expected, rising to ~84.55 before falling to 82.50 today (7-10-13), UDNT did not track the price. As a result, the trade never executed in the virtual account. Oh well. The market price was not zero as OptionsHouse said before. In fact, as the USD dropped UDNT dropped to 13.01...I thought this was a bear ETN? Apparently this is for long positions only, and is not good for short-term trading.

My Online Discount Broker and How I started

I chose OptionsHouse. I wanted a reliable libertarian style broker (which let you do what you wanted and charged readily apparent fees) with low trading cost. I looked at other brokers such as Sogotrade (because of their $3 trades) and three larger discount brokers for active traders...and the more expensive brokers such as Scottrade. I started by reading all the online broker reviews I could. I found that people were generally disappointed with Sogo trade's customer service, some complained about slow trade execution, and others questioned the reliability of their platform (one customer reportedly lost $1000 into thin air). The other three brokers I mentioned required minimum deposits around $10,000. I wanted to invest $2000 in stocks, initially. So although they had great fees I couldn't use them. OptionsHouse has relatively low fees of $4 so I opened with them. They are highly rated and when I contacted customer service they were very nice. A definite plus in the virtual trading account they give you. I haven't made a real trade yet, but have already learned one lesson: go with what you believe. If you think gold is going to go lower, and you don't have the time to monitor the market every day, don't try to "catch the falling knife" and make short term trades. Also, don't be unrealistic. You can day trade if you don't try to maximize your earnings and play it safe, because if you want to wait to the very top of a peak to sell, you had better have experience and the time to look at the markets alot. So I lost $150-200 of virtual with a 3X Gold Bull ETF...hence the lesson. And I am still bearish on gold but I am not going to short it now since its already pretty low. If I had started trading when it was $1,600 I would definitely have shorted it.

I actually got into trading because I know it is a great investment if done properly. I was looking at Tesla Motor's stock and was going to buy once I set up a brokerage account, but was too lethargic. I saw the stock rise from $25 to $114 in the space of a month or two. If I had jumped on board earlier I would have purchased the stock because I believe in that company. Now, I think the price is too high. Unless they get really big at most it could triple, and this will take a few years I think. I think the current danger is maybe price going down. But Tesla investors seem pretty tenacious.

But what do I know? I'm just a Novice.