Quantcast
MY RULES FOR TRADERS WITH $500 to $2500 TRADING CAPITAL | Stock Haven | Stock Chat Room | Penny Stocks | Options |Stock Haven | Stock Chat Room | Penny Stocks | Options |

Stockhaven Blog  

MY RULES FOR TRADERS WITH $500 to $2500 TRADING CAPITAL

This is a great article that was written by one our very own here at stockhaven.com: angell. Most of our members have met angell in chat and she’s a very helpful person. She sent us the following write up and asked what we thought? For the most part we agree with everything she says, especially her emphasis on having a plan and being a prepared trader! This article is a must read so make sure you thank angell when you see her. Enjoy!

“It’s best to start with a stock that is on it’s first day of promotion from one of the popular stock promotion companies. Stockhaven.com chat room members like AwesomePennyStocks, PennyPic picks, and BDPS (bestdamnpennystocks), as well as some others. But these are 3 of the most popular.

You must get into a stock trade at as low a start price as possible. If you cannot, do not chase the price.

If it jumps away from you or you do not get filled at the open of the 1st day then you must wait for a new stock pick and it could be a week. But this will give you the best chance at success. However saying that: most stocks will “dip” or make a pull- back in the first hour of trading. Be familiar with the stock chart to plan your entry price. Have patience and wait for your price, don’t keep changing it up and up chasing to get in. Look at your stocks chart. See the price it closed at the previous day. That is often a good entry price. At the beginning of the opening bell, the stock may “gap” away from you without filling your trade. But as I said earlier, most stocks will come back down, usually in the first hour, before continuing their track upwards. It’s at that point that your order will often fill.

With so little money to start you must conserve your capital and make small gains, but often and then you will see your total trading capital begin to grow. (Then you will be able to make trades with increasingly more expensive stocks.) Continue to trade just like this until you have $1000 in your trading account. If you are starting with $1000 it is imperative that you still continue to trade like this to a price of only .05 stocks. That leaves 50% of your capital safe and untouched. You will have losses. Every trader does. By doing this you will still have trading capital to implement this plan even with several losses.

Trading parameters

In the beginning you will have to trade only stocks with these parameters:

A price of .018 to .03 buy-in price.

You must get enough shares to cover cost of commissions and make some gains.

10,000 shares will do this. So buying a stock costing .03 x 10,000 shares = $300.

If you have more money than that; please resist buying more shares. You will need that money for a buffer in case that a trade goes against you and you have to get out.

“Plan to Trade and Trade Your Plan” is a moto of traders at Stockhaven.com

The trading parameters above show you some of the details of getting into a trade successfully.

Now let’s look at getting out with your Plan goal.

SELLING YOUR TRADE

Before you place a trade you must know your goal sale price for the trade.

If the trade goes against you, find the 10% price below what you bought at and that is where you sell, if the trade does indeed go against you.

You must do this to be able to “trade another day”.

If you got in at .03 and the stock drops to .02 you must just sell it. For those who are trying to trade with $500, this essentially puts you out of being able to trade anymore. There just isn’t enough capital to make gains with. You will have to save and put enough back into your account to make it $500 again.

Hopefully, your first trade will not go against you. That is why trading on the 1st day of a promo is so important. Even stock picks that fizzle, usually will at least get that first day pop.

.01 = $100 gain for the trade. So if you got in at .03 you would sell at .04.

If you got in at .028 you would sell at .038. This gives you $100 gain and then minus your commissions.

Be patient. Just as you waited for your entry price, you will wait for your exit price to appear. Stocks often will make an upward gain after lunch when the NY traders come back from lunch at 1:00 EST. They will also often make gains during the “power hour” which is the last hour of the trading day. Just know your exit price!

Now all that being said, here is another moto: “Let your winners run”.

This is more difficult due to the fluctuations of any one stock.

Watch your chart. If you have reached your goal to sell and the stock is still making green candles then let it run and sell on the next red candle. That way you capture those extra gains. But do sell at that point.

More advanced traders and also those who don’t know what they are doing and have no plan; may jump out and back in again on a single stocks trade. Don’t be tempted! That is the best way to lose your capital. You must stick with your plan. Once you have sold the stock for your gain or loss, then you must wait until the next promoted stocks first day. They have them every week and sometimes several times a week. You must trade in the stock price entry level as well. Some promo stocks start above where your plan allows. Don’t trade it. You must sit it out. Another will be along soon that you can trade safely.

Successful stock trading takes being in control of yourself. Do not give into the excitement of the other traders. It can lead you quickly into a trade that will eliminate a lot of your hard won capital or leave you stuck in a trade that you can’t or rather won’t get out of because you let the loss get too big. And then you are sitting on the sidelines waiting and hoping it eventually goes up so you can sell. Or worse that you give up and sell it for that deep loss.

I would rather be on the sidelines waiting for the safe trading range priced stock than on the sidelines stuck in a trade. Ask any trader…. They all have made this mistake at some time or another. Please learn from our mistakes and save yourself so much agony!

Learning to read charts is essential to recognizing a stocks trending patterns and better judging placement of entering and exiting your trades.

Watch the videos at Stockhaven.com’s Trading University and all of his video charts (you can find the video charts by typing “video chart”into the search bar on the bottom left hand corner of the stockhaven home page). Watch them over and over until you are sick of them and then watch them again!

Listen to what other traders are saying about particular stocks and look at those charts. You will begin to recognize over time, different behaviors of stock movement. Watch the L2 movements in tandem with the stock chart movement. It is all a dance. You will begin to get a sense of how stocks tend to move. Get a good understanding of finding points of support and resistance as they move during each trading session and from day to day in it’s trading history.

Essential points are :

  • Closing price
  • Opening price
  • High of day (hod)
  • Low of day
  • A high or low previous to a period of consolidation.
  • The high and low point that a stock keeps “bouncing” off of during consolidation

These are points that a stock needs to “break above” or “stay above” which help tell you to tell if the stock is going higher or lower. Many times you make your buy or sell decisions based on this information. Learning these points and this “dance” takes time and experience. Until you feel comfortable knowing them, you must stick close to the pre-set gain or loss strategy we talked about earlier to limit your losses. It will also limit your gains, but if you stick with this method, over a few trades, you will begin to accumulate funds.

In the beginning it is very hard to listen to other traders tell of their $200 win or even their $1000 or more win.

If you truly wish to become like them, you must stick to this plan in the beginning until you make $2500 trading dollars or more. Then you will still use this same plan only adjusted to getting in and out and using only 25 to 50% of your capital on any one trade. Even the best traders suffer losses. Don’t ever “go all in” on any trade. If you lose you will be out of the trading game altogether.

Now:

Re-read this article again. Learn it by heart. This is the way you will trade successfully from now on in your trading career. The only difference is as time goes on; is that you will adjust the price of the stocks that you can trade in. However you should always follow this trading plan to conserve trading capital and trade successfully.

Then, go watch those videos one more time, and relax and have fun!”

-Stockhaven member angell

Did you know that you can watch Stockhaven trade live in real time?

Learn how to daytrade by watching someone else trade! Watchhimtrade.com is the only site that lets you look over the shoulder of a professional daytrader.

Watch this video now where he shows you how it’s possible to make 100% in just 5 minutes!

About stockhaven

StockHaven is your #1 Source for reliable and honest picks.
  • Bill

    Well done!

  • SilverFox

    Excellent post Angell! I’ve taken my lumps from penny stocks and I’d add learn some charting techniques too before you start with real money. Rules are different but TA still works to some degree. And I agree unless you have experience never try to “get back in”. Take the small gain and wait for the next one, there IS always a next one!

  • GLABVS

    Excellent article for starters and traders with low capital. Thanks Angel and StockHaven for posting this.

  • Billy “OceanEagle1″

    Thank you Angel … and SH. This is great advice and I know first hand about losing as a rookie. Another mistake I made was trying to play more than 5 stocks at a time on a very small budget … bad mistake. I cut my losses, which fortunately were still gains, put myself in SH trading University, got ETrade Pro and now with a little more education … like you said … I’m waiting for the next best rightplay.

  • http://twitter.com/kcprinters Dave

    As I can relate to starting out this way from an empty account that I put a delisted stock into from my registered, I can add a few things. In general, I agree in theory with everything. I had a $340 starting point Oct 2010 and caught a BDPS pick (now NSAV) at first alert, and cleared 50% on it….I now have that account at $33000 while working full time and for the most part, and pulling money out starting over, just trading pennies. Essentially if you are starting so low, you need ‘some’ luck for sure, and you need to gamble as well. I disagree with the 10% loss rule to start with if you were trading $300. You are almost at an all or nothing situation there. You buy something at 0.03, you have to sell at 0.027? You could be there in a heartbeat and right back up again, especially if promo. You have absolutely no flexibility for the volatility of promos and pennies. If you know you got in first thing on a crazypenny or PP promo, you do not worry if a slight dip comes in first few minutes – you ride it out as least to the day 2 gap…end of story.

    Even now, I rarely use a 10% rule – if anything, I base it on a $ rule and unless I ‘know’ its a sure thing, I will be out 80% of the time at a $200 loss point. Minimize those losses because those gains will come, and never average down a losing position because you ‘think’ a bounce is coming. Many times I have seen stocks just go down down down without a real bounce (can you say POWT?)Other than that great strategy

    • Amtrakusa

      I did not understand that 1st sentence

    • Abdel

      Can you please help me out? Email me asulei2@gmail.com. I’m a college student who helps out my father financially with supporting our large family and still go to college fulltime. I began trading and used all my savings and till today I have a total loss of 25k all my savings. I don’t know what to do anymore and now I have maybe $500 I could try to save up and use to start trading again

  • MaltMan

    Great article angell! Thank you for taking the time to explain all this.

  • http://profile.yahoo.com/R6BZTU7F3KZFSPC2UIRIRS5DBY Tony

    Angell this istbraxton,you know we love your legs,” great artical” one thing if you go from .03 to .02 it’s about a .334% lose not 10%…we love you and Thank you!

Educo Web Design

Sign up for the FREE SH Newsletter