Penny stocks… when you hear that, red flags probably go up and you tell yourself to avoid them at all costs — because you don’t want to get caught up in a pump and dump scheme.
The thing is… you can only get caught in pump and dumps if you overstay your welcome (if you’re long)… or for some reason decide to short the stock because it moved “too much”.
Just take a look at this trader who shorted KaloBios Pharmaceuticals (KBIO) back in 2015… thinking the stock moved too far, too fast. He was playing for a $2.00 fade (probably playing for the dump). Instead, he woke up to the stock trading 8 times higher than where he shorted at one point.
Heck, if you actually spotted that play, you could’ve gotten paid… all you had to do was know when to take profits.
Just because pump and dump schemes are rampant in the penny stock market, it doesn’t mean you shouldn’t trade them. In fact, there is one simple way to avoid these pump and dump schemes at all costs and still profit in penny stocks.
All you have to do is trade penny stocks, rather than investing in them — thinking you’ll find the next Apple (AAPL) or Amazon.com (AMZN). The best part about penny stocks is the fact that there are proven chart patterns you could use to find monster winners.
Take my good buddy Jeff Williams for example. We got our start trading stocks when we were teaching in New York State more than a decade ago… and he’s figured out a way to hunt down profits in stocks trading under $5… every single trading day.
Just take a look at his performance by day in his small account challenges.
Collectively, he’s been able to eke out gains, no matter what day of the week.… and he doesn’t get caught up in the pump and dump schemes.
How does he do it?
Well, he both day trades and swing trades. On the left-hand side, you can see his day trading performance, while the right-hand side shows his swing trading performance. You see, Jeff doesn’t hold onto penny stocks for weeks or months on end. His holding period is typically 2-3 days.
That way, he’s able to actually take part in the run higher, and avoid the inevitable dump.
Let me show you how it all works with one of his favorite trade setups.
You Can Avoid Pump And Dumps, While Raking In Profits
Check out this daily chart in Bloom Energy Corp. (BE).
This is what Jeff calls his “consolidation pattern”. Basically, he looks for the stock to drop after making a massive move… followed by a period of consolidation (where the stock finds a bottom and trades in range).
Thereafter, he waits for the stock to trend higher with volume.
That way, he can actually get in on the “pumps”.
All Jeff did was wait for a breakout of a key resistance level and plan accordingly. He wasn’t planning to hold this for too long. He stalks these plays, gets in and takes profits real quick.
He spotted the consolidation pattern in BE, and found there was massive upside potential. You see, when penny stocks break above a key resistance level, they tend to have legs and continue higher. Well, with BE, he figured it could move more than 20%.
BE hit a 30% target area within one day… overnight basically… and traders were loving it.
“Thanks Jeff 20% on BE” – Victor A.
“thrilled to have gotten a profit on my 1st trade with Jeff” – Daryl S.
“In BE at 4.19 out 4.84 thank you Jeff” – Gwendolyn J.
“+315 on BE @15%..” – Trader C.
“in BE at 4.24. Out on its way up at 4.8 +224. Trading my plan not worrying about the rest! Thanks Jeff!
Jeff has been trading penny stocks long enough to know that once you see profits, it’s wise to take them off the table… because if you don’t, the stock could dump and you could turn a massive winner into a loser.
Just because penny stocks get a bad rep, it doesn’t mean you shouldn’t trade them. All you need to do is have the right strategy in place, and you could take down winners just as Jeff does, consistently.
Tomorrow at 2:00 PM EST, Jeff Williams will go LIVE to show you how to find plays like the one I showed you above… and prove to you why you want to trade penny stocks.
Thousands of eager traders have secured their spots… and I’m hearing we may reach capacity soon. Don’t run the risk of missing out on this potentially life-changing event, and sign up now.