The Rulebook

Thank you for choosing the Stock QB. My goal is to teach Rookies and Veterans alike how to play the game, and consistently win. Trading OTC Stocks is a lot like football, and being an expert in both fields I'll show you how they're related and hopefully the analogies will help you learn this market easier than a normal newsletter would. Our Newsletter is called "The Huddle", this is where I will give you "The Play", I will also give you tips on the best way to execute the play. Just like in a football game, I can put you in position to win, with the best play and the best way to run said play, but it is up to you to execute it correctly. We will let you know the difficulty of the play, if it's a simple "handoff" Rookies should feel comfortable jumping in, however if it's a trick play, we'll warn the Rookies that the play is only for the Veterans.

If you have not already had a chance, please take this time to go into your email box and make sure that you "white-list" our email address so our newsletter will go directly to your in box and not your junk email folder.

I typically send out a few NEW PLAYS a week. I also send REPLAYS on how the stocks are doing, and explain what happened as well as what I feel will happen next. Please do not enter into the stock when I send REPLAYS unless I say it may be a good idea, because at that point the defense probably already knows the play and is prepared to stop it. These updates are only to let those who own the stock know what my thoughts are.

AGAIN, Please do not enter a new trade based on a REPLAY letter no matter how good it sounds. It is often too late at this point and I don't want you to buy the stock when others may be getting ready to sell.

I do not send out price targets with our alerts. Typically when you see target prices in newsletters its nothing more than hype anyways. Just know that every play we call is designed to move the ball forward.

Here are a few good ideas to keep in mind when trading penny stocks. As you learn and use them you will begin to limit your losses and increase your profits. We play a conservative style, we run the ball a lot and are content with small gains, every play isn't designed to be a touchdown, but you put enough good plays together you can bet you'll be doing your touchdown dance.

The number one rule is to remember that the penny stock market is like a draft pick. There is risk around every corner. Assume everything you read about these stocks much like an incoming draft pick is speculation. Just like agents will hype up their clients, this market is filled with similar liars, and cheaters. Most penny stocks will not be around two years from now in the same form they are now. Most will have gone through a name change, reverse split, and have new management with the next greatest business idea that they are going to carry out. Because of this I am never a long term player in these stocks. I am in most trades for hours to weeks at best.

JUST LIKE A RISKY PLAYER WITH CHARACTER ISSUES GETS A SHORT TERM CONTRACT WITH A SMALL SALARY, YOU CANNOT PUT BIG MONEY INTO PENNY STOCKS. I URGE YOU TO ONLY MAKE SMALL INVESTMENTS IN THESE STOCKS. IT DOESN'T MATTER HOW GOOD THE STORY SOUNDS, REMEMBER THESE COMPANIES ARE NOT PROVEN SO YOU CAN'T BELIEVE EVERYTHING YOU READ ABOUT THEM. PENNY STOCKS SHOULD ONLY BE A SMALL PART OF YOUR PORTFOLIO. PLEASE DO YOUR OWN DUE DILIGENCE AND NEVER INVEST MORE THAN YOU CAN AFFORD TO LOSE.

With that being said, there is a lot to love about this market. Stocks move quicker in this market than any other US market. Low liquidity provides us with high volatility which gives us a chance to earn big profits.

Ok, so now that I've warned you about some of the dangers involved in this sport, here are some tips and strategies which will help you avoid losing.

Getting In The Game

USE LIMIT ORDERS when getting into a stock. Pick an entry price and stick with it.

Don't chase these plays. As I said these move quickly, so unfortunately if you are late you probably missed them, but don't worry about that because there is always a new play right around the corner. Too often I see players lose all their money chasing stocks, it's a quick way to get yourself pulled from the game.

NEVER use market orders. A market order leaves you at the mercy of the market maker, which can subject you to bad fills (or in laymen's terms you will pay too much for the stock).

PAY ATTENTION TO THE OPEN!

Watching the open is like reading a defense it is very important to the success of the play. You can learn almost everything you need to know about how a stock may act in the first 10-15 minutes after the open. The first thing to keep an eye on is heavy selling, as it can be the most damaging to a stock. If the stock your watching or invested in has an average daily volume of 25,000 shares, and on the day you're watching it, its trading 250,000 shares and it's not moving this is an indication to sell. It means that there are large sell orders in place, which is why the stock isn't moving up, and since the stock isn't moving up, as people realize this they too will sell and the stock will fall apart. So this is why you want to watch for this first in an effort to limit your losses. If the stock is steadily ticking up on the heavy volume this is a good sign and is what we are looking for. Limiting Your Risk

When a quarterback faces a blitz, he knows he has a set amount of time to get the ball out and what he's looking for in the defense. Smart Quarterbacks know if it isn't open, to throw the ball away or take a sack, but they don't force a pass because a interception will hurt you much worse than an incompletion or a short loss. The same can be said for these stocks, you must decide how much you are willing to risk BEFORE you make the trade, and STICK to that number, if you hit that number immediately sell. Every big loss starts as a small loss where the investor lost control of their emotions and didn't close out the trade (they didn't throw it away, they forced it). Every investor in the history of investing has dealt with losses, it inevitably happens to everyone. What separates the successful traders from the unsuccessful traders is how well they limit a loss. The unsuccessful investor will become hopeful that the stock will eventually turn around and before they know it the small 5% loss is now a 45% loss. Then the delusions become worse as they believe "it surely can't go any lower I'll hang on for when it turns around". Then BOOM the selling continues and they're at 95% loss at which point they finally sell. So instead of losing 5% of their principle, they are left with 5% of their principle. Do not be an unsuccessful trader. Always stick to your game plan even when you fall behind. Know what you're comfortable losing, and if it hits that number, get out. It should be automatic.

Speaking of automatic, there is an order called a Stop Loss Order. These orders are placed at a set price you decide below the current market and are triggered when a stock is on the way down. A stop loss order is designed for two purposes:

YOU SHOULD NEVER TRADE PENNY STOCKS WITHOUT STOP ORDERS.

THE IDEAL PRICE TO PLACE YOUR STOP LOSS ORDERS IS RIGHT BELOW THE PREVIOUS DAY'S CLOSE. I WILL ALWAYS MENTION THE PREVIOUS DAY'S CLOSE IN MY ALERTS. KEEP YOUR STOPS TIGHT TO LIMIT LOSSES. 10%-20% OF YOUR PRINCIPLE MAX.

I NEVER WANT TO HEAR ONE OF MY PLAYERS TOOK A BIG LOSS. IF YOU FOLLOW THIS RULE, YOU NEVER WILL. THIS IS THE SINGLE MOST IMPORTANT KEY TO SUCCESS IN TRADING.

IF YOU DON'T USE A BROKER THAT ALLOWS STOP LOSS ORDERS, GET ONE.

Here is a link to ChoiceTrade they allow stop loss orders and only $5 trading fees on penny stocks. Here is a link to open an account:

http://whisperfromwallstreet.com/choicetrades

Sell On The Way Up

As I stated in the ‘Limit Your Risk' section, you should always have set goals in prices before you make a trade. It works both ways, just like you want to limit your losses, you also want to lock in your profits. Set the desired price you want to get out at when the stock goes up and stick to your game plan by selling when it hits that price. One way to take emotion out of it is by setting a sell limit order at that price at the same time you place your buy order. This way when the stock hits this price you are taken out and don't have to struggle with wondering if it's going to keep going higher. Book your profits. Unlike football you won't get any brownie points by fighting for extra yards, take the path of least resistance and head right out of bounds once you hit that desired yard marker, because if you don't the next thing you know you'll be fumbling your profits.

Keep Moving The Ball Downfield

Make booking profits a habit, no matter how small. It helps by taking small profits when you start trading. There is no shame in taking 5, 10, 15, or 20% profits on trades. Five 10% gains are equal to one 50% gain, and are also easier to get. Just like with anything else in life repetitions make you better, the more profits you book, the better you'll be at booking profits and therefore the better you'll be at setting price goals. Winning in the stock market isn't about buying the absolute low and selling the absolute high, it is nearly impossible to accomplish, and will make you crazy trying. Be consistent, luckily there's no set amount of plays you need to get down the financial field, 100 one yard gains, will give you the same result as one 100 yard gain, don't be greedy.

Trailing Stops

Three things we focus on at the Stock QB, Limit your Losses, Book Your Profits and Protect Your Profits. We protect our profits by setting trailing stops. Say you bought a stock at .15 cents and it runs up to .25 cents; you want to protect your profits. Some people will decide to get out completely and that's smart but as you get better and learn more about trading you might ride the trade out a little longer. The best way to do this is to use a trailing stop. In my example your stop may be .23 cents which means if the stock comes down off .25 cents and gets to .23 cents your stock is sold. This protects your profits. A mistake that many traders make is allowing a profitable trade to turn into a break even or losing trade. Don't let this happen to you. Use trailing stops. If the stock continues to move up you move your trailing stop up with it to continue to protect profits as you go.

Always book profits no matter how small. Put the money in the bank and you'll win the game!

Good Investing,

The QB
StockQB.com
info@StockQB.com