Four Stages of Penny Stock Trading


by Rob rens

Through penny stock trading I have found that there are 4 stages of penny stocks. This is through my lears of trading and I will share them with you.

Stage 1: Accumulation, shares are transferred from weak hands to strong hands. This stage usually occurs after a long decline or even after the stock has had a pretty good advance. In this stage, stocks will often trade in a narrow range, the forces of supply and demand are about equal.

Stage 2: Starts at "big" money accumulation. Seller will eventually thin out and disappear. The stock become stronger, as the stock continues move higher, the public become interested and they begin to buy too. Combined, all of these activities, pushes the stock higher.

Stage 3: Profits are usually being taken out of the stock, the stock begins to trade in a range and move sideways. It will usually bounce off of new points of support and resistance in the process. Compare to stage 1, this stage has greater volatility and large price swings.

Stage 4: Begins after demand for the stock dry up. Sellers become King, the sell off starts. At the bigining of this stage, average traders often believe the pull back is just a pemporary correction, and become bag holders. The longer the price advances in stage 2, the more popular the stock will be once it enters the begining of the stage 4 sell off.

To be a successful trader, you must understand that it is financial suicide to buy a stock that is in a stage 4 sell off, and it is completely idiotic to buy a stock that it is topping out (stage 3).

This article was written by light of stockhideout.com Hot Penny Stocks and Penny Stock Investing Stock Message Board

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light of stockhideout.com Penny Stocks and Stock Picks

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