Quote from makloda:
I think averaging in and out of stocks is a good idea if you did your homework analyzing them. Actually, I guess with some low volume stocks you have no other choice if you don't want to move the price too much.
I usually just dump full positions based on technicals since I am not too much of a discretionary value investor. I wish I was better at it though.
Do you use any entry/exit prices derived from technicals (support/resistance) or is your trading purely fundamentally driven (earnings, news, sector macro events)?
One of my systems a mix of fundamental and technical data to buy/sell stocks and as you said - often the small/OTC stocks are real gems although volatile. I taught myself to never look at the stocks again once I sold out of them. Too painful at times when they doubled or tripled in coming months
I don't really use any specific manner. You watch how the stock trades, how the stock handles buying, can you just sit on the bid?, and then you do what you need. In the end, I invest in OTC and small caps to make big gains. I might hit the ASK with the majority of buying I want to do and save a bit of money if it dips, but I'm not the type that really sits around picking my shots and buying 500 share lots when I'm gunning for 40k shares of something. Maybe I'll buy 30k shares right off and then pick at the last 10k...but nothing much more than that.
I'm not a buy before the news type person...earnings effect small caps and OTC stocks much differently than they do larger caps. Unless something very interesting happens, the small caps you want to buy are news driven more than earnings. Earnings might be the end result of the news that drives a company a bit higher, but it usually starts with news about partnerships, contracts, or some other factor in small caps. That's with my experience. Small caps usually don't just explode revenue unless they have a product that suddenly becomes a huge hit, but I find that rare. They usually rise due to (hopefully) low float, organic business growth, etc. Those small caps I like can grow 100-400% in a year or two and really need to in order to make the gains I look for.
Looking can hurt. I mentioned FRPT before...I could have bought that at $1 a few years ago...a $50k investment would be worth $1.5M...but that's how the cookie crumbles. I just made a nice return and can't complain.
I think the OTC is where you still buy and hold a good company and the price is secondary until the company's plan comes to fruition. The mistake people make with the OTC is probably overinvesting in too many companies. There are mostly shit companies on the OTC, but there are GEMS! Those gems are literally probably 1 in 200...so you have to use discretion, be patient, and sort of be lucky sometimes I think.
Cheers.
