My Dad (jerk or not) was right about messing around with penny stocks, just look at CPE on Tuesday (even though it hit over $8, I still consider it a penny stock). I wish he would have taught me about risk management before he left. I had to learn that on my own, and it was expensive.
CPE started out today another 9-10% up then quickly dropped 30%, punishing those who went long this morning and the past couple of days. Now again; I don't really fool around with penny stocks much. If I have a $10,000 trading account (I'm no millionaire like lots of folks here), I would never use more than one tenth of it on these types of stocks. So I might take $1000 and split it up into 3 or 4 different positions.
Before buying any, I would make sure they are in some sort of recognizable pattern, look for a good entry and realize that all of these could drop drastically. Emotionally, I prepare myself that these could all end up worthless so if they do have a huge drop, I will not panic and sell right away. I measure my risk before I buy, and am ready to lose whatever I risk before I buy. I also don't set stops initially since they could go down 10-20% or more then up 10-20% in a matter of minutes, and I never double down or add to a loser.
CPE worked out well, I bought 178 shares @ 1.40 = $249. I was able to sell half of the original position at $4.00 x 89 = $356. I am already in the green even if my remaining shares plummet; I see them as free shares now since I made my money back and then some. I did set stops after I sold half though, they are very loose since this is "buy and hold" for me, and they were not hit with today’s crazy price action (another day like today and they probably will be though). If my stops are soon hit, I will still pocket close to another $512. Gaining a total of $356 – (249 (original investment)) + 512 = $619.
Even if my two or three other risky penny stock positions end up worthless; this one will almost cover all of them. If the other two work out well, I might be able to purchase my Fiero. I saw several nice ones for sale in New Jersey. I will then be able to drive it out to Vegas for slopefest. You can call me "The Fiero Guy", and I will take you all out for personal tours in my new ride.
Leisa, you can have the first ride!
Editor's note: I will be looking for you to pull up in this one
