Can we buy penny stocks in our regular brokerages? I use thinkorswim. Can I buy here?
Which way? Penny Stocks education
- Thread starter themickey
- Start date
Manipulation as I described previously, in particular, where price is manipulated downward can actually work for you, in that if you want to buy more they are opening up an opportunity.
Pump and Dumping wont work for you because this type of stock manipulation is usually done on crappy stocks which you don’t want to touch in the first place.
Pumping & Dumping (P&D) can easily fool you to buy into shit stocks, more later on how to largely avoid getting sucked into the hype.
In this post I’ve borrowed some info from wikipedia plus I’ve added my own content.
Pump and dump (P&D) is a form of securities fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price. Once the operators of the scheme "dump" (sell) their overvalued shares, the price falls and investors lose their money. This is most common with small/Micro/nano cap and cryptocurrencies.
While fraudsters in the past relied on cold calls, the Internet now offers a cheaper and easier way of reaching large numbers of potential investors through spam email, investment research websites and social media sites such as Twitter, Facebook (Meta Platforms), Reddit, Telegram etc.
Pump and dump schemes may take place on the Internet using an email spam campaign, through media channels via a fake press release, or through telemarketing from "boiler room" brokerage houses (such as that dramatized in the 2000 film Boiler Room). Often the stock promoter will claim to have "inside" information about impending news. Newsletters may purport to offer unbiased recommendations, then tout a company as a "hot" stock, for their own benefit. Promoters may also post messages in online chat groups or internet forums, urging readers to buy the stock quickly.
If a promoter's campaign to "pump" a stock is successful, it will entice unwitting investors to purchase shares of the target company. The increased demand, increased price and trading volume of the stock may convince more people to believe the hype, and to buy shares as well. When the promoters behind the scheme sell (dump) their shares and stop promoting the stock, the price plummets, and other investors are left holding a stock that is worth significantly less than what they paid for it. They can become bagholders if they don't otherwise sell for a loss.
Fraudsters frequently use this ploy with small, thinly traded companies—known as "penny stocks", generally traded over-the-counter (in the United States, this would mean markets such as the OTC Bulletin Board or the Pink Sheets), rather than markets such as the New York Stock Exchange (NYSE) or NASDAQ—because it is easier to manipulate a stock when there is little or no independent information available about the company. The same principle applies in the United Kingdom, where target companies are typically small companies on the AIM or OFEX.
Pump and Dumpers are organized and operate similar to professional traders in as much as they are systematic, they target particular stocks, these being;
1 Most often the target company of P&D are horrible crappy worthless stocks which you shouldn’t touch with a barge pole.
2 Low number of shares on issue.
3 Low share price penny stocks.
4 Low Liquidity, low turnover, been trading in the doldrums.
5 Often will use an obscure news event or company announcement to trigger the P&D.
5 Broadcast over social media.
6 Front run the call.
7 Exaggerate the company outlook.
8 Use stock themes which are currently running hot, Lithium, Gold, Crypto, Rare Earths, Hydrogen, Green Energy, etc
9 The promoters bail out of their position after a healthy profit.
10 P&D can be over several days or even weeks, it does not necessarily be a one off intraday event.
11 P&D is illegal but promoters flout the law often blatantly.
12 New IPO’s are also susceptible to P&D events.
One other notable observation I’ve made, on days the market is in a correction, usually on lower turnover days, these are days the shit stocks seem to shine. Often on the worst trading days the worst stocks will move up. So don’t be suckered into believing these stocks have some merit because they are rising when the market is weak. It’s a con!
The term “Meme Stocks”, is a type P&D event where you get Youtube type celebrities promoting companies.
The directors of small cap penny stocks themselves can be involved in stock promotion of their shit shares.
Penny Stock directors are not known for their professionalism, from my experience many penny stock directors are shady and run a backyard outfit.
These directors can exaggerate or market their stocks to enhance the share price.
Penny stocks are highly vulnerable to manipulation from all directions, it’s a minefield, don’t become shark fodder.
Penny stocks also suffer from lack of detailed news, they are not covered by the majority of brokerage houses or funds, most often institutions won’t touch them, there will be a large lack of research into their comings and goings.
There will be hardly any fundamental information, no earnings, no P/E ratios, no dividends, only 3 directors on the board, operating from an old house in a quiet suburb which has been converted to an office, this sort of nonsense being typical.
Pump and dump (P&D) is a form of securities fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price. Once the operators of the scheme "dump" (sell) their overvalued shares, the price falls and investors lose their money. This is most common with small/Micro/nano cap and cryptocurrencies.
While fraudsters in the past relied on cold calls, the Internet now offers a cheaper and easier way of reaching large numbers of potential investors through spam email, investment research websites and social media sites such as Twitter, Facebook (Meta Platforms), Reddit, Telegram etc.
Pump and dump schemes may take place on the Internet using an email spam campaign, through media channels via a fake press release, or through telemarketing from "boiler room" brokerage houses (such as that dramatized in the 2000 film Boiler Room). Often the stock promoter will claim to have "inside" information about impending news. Newsletters may purport to offer unbiased recommendations, then tout a company as a "hot" stock, for their own benefit. Promoters may also post messages in online chat groups or internet forums, urging readers to buy the stock quickly.
If a promoter's campaign to "pump" a stock is successful, it will entice unwitting investors to purchase shares of the target company. The increased demand, increased price and trading volume of the stock may convince more people to believe the hype, and to buy shares as well. When the promoters behind the scheme sell (dump) their shares and stop promoting the stock, the price plummets, and other investors are left holding a stock that is worth significantly less than what they paid for it. They can become bagholders if they don't otherwise sell for a loss.
Fraudsters frequently use this ploy with small, thinly traded companies—known as "penny stocks", generally traded over-the-counter (in the United States, this would mean markets such as the OTC Bulletin Board or the Pink Sheets), rather than markets such as the New York Stock Exchange (NYSE) or NASDAQ—because it is easier to manipulate a stock when there is little or no independent information available about the company. The same principle applies in the United Kingdom, where target companies are typically small companies on the AIM or OFEX.
Pump and Dumpers are organized and operate similar to professional traders in as much as they are systematic, they target particular stocks, these being;
1 Most often the target company of P&D are horrible crappy worthless stocks which you shouldn’t touch with a barge pole.
2 Low number of shares on issue.
3 Low share price penny stocks.
4 Low Liquidity, low turnover, been trading in the doldrums.
5 Often will use an obscure news event or company announcement to trigger the P&D.
5 Broadcast over social media.
6 Front run the call.
7 Exaggerate the company outlook.
8 Use stock themes which are currently running hot, Lithium, Gold, Crypto, Rare Earths, Hydrogen, Green Energy, etc
9 The promoters bail out of their position after a healthy profit.
10 P&D can be over several days or even weeks, it does not necessarily be a one off intraday event.
11 P&D is illegal but promoters flout the law often blatantly.
12 New IPO’s are also susceptible to P&D events.
One other notable observation I’ve made, on days the market is in a correction, usually on lower turnover days, these are days the shit stocks seem to shine. Often on the worst trading days the worst stocks will move up. So don’t be suckered into believing these stocks have some merit because they are rising when the market is weak. It’s a con!
The term “Meme Stocks”, is a type P&D event where you get Youtube type celebrities promoting companies.
The directors of small cap penny stocks themselves can be involved in stock promotion of their shit shares.
Penny Stock directors are not known for their professionalism, from my experience many penny stock directors are shady and run a backyard outfit.
These directors can exaggerate or market their stocks to enhance the share price.
Penny stocks are highly vulnerable to manipulation from all directions, it’s a minefield, don’t become shark fodder.
Penny stocks also suffer from lack of detailed news, they are not covered by the majority of brokerage houses or funds, most often institutions won’t touch them, there will be a large lack of research into their comings and goings.
There will be hardly any fundamental information, no earnings, no P/E ratios, no dividends, only 3 directors on the board, operating from an old house in a quiet suburb which has been converted to an office, this sort of nonsense being typical.
This thread gives me flashbacks when Timothy Sykes was peddling his penny-stock guru crap...
Then he blew off over 30% of his fund (or was it a lot more?). Only then did his followers start to clue in and wise up a little.
Timothy then tried to save face and say he was GLAD that happened... cause it made him a better trader.
Ok, so if he was selling you his crap that was flawed before... what makes you think--
Then he blew off over 30% of his fund (or was it a lot more?). Only then did his followers start to clue in and wise up a little.
Timothy then tried to save face and say he was GLAD that happened... cause it made him a better trader.
Ok, so if he was selling you his crap that was flawed before... what makes you think--
You lost a bit of credibility here by saying that AMZN was once a penny stock.
I read a while back Amazon was one of the very few .com blue-chips that got away with only a 30% drawdown after the tech-wrek. But I never paid close attention to it to be sure.
What was most interesting, were all those companies who could not make any income, but were still taking on debt and issuing equity in order to fund super-bowl ads. I couldn't make any sense of it back then, and I still can't make any sense of it now. When I used to post a concern about it, I was of course told by shareholders how we were in a new paradigm... the CEOs all knew what they were doing.
What was most interesting, were all those companies who could not make any income, but were still taking on debt and issuing equity in order to fund super-bowl ads. I couldn't make any sense of it back then, and I still can't make any sense of it now. When I used to post a concern about it, I was of course told by shareholders how we were in a new paradigm... the CEOs all knew what they were doing.
“Investors who stuck with Amazon through the roller coaster ride of the dot-com bubble around 2000 would have been handsomely rewarded for their patience. The stock soared from a split-adjusted IPO price of $1.50 per share to $106.69 per share on Dec. 10, 1999. From there, it proceeded to fall 96% until it bottomed on Sept. 28, 2001, at $5.97 per share. ”
https://www.fool.com/investing/2019/11/24/if-you-invested-500-in-amazons-ipo-this-is-how-muc.aspx
I don't get involved with US stocks, I was just using an example of how much a stock can run up over the years if you get in early. The priciples are the same whether penny or not. That is the principles of detecting high flyers early.
What I would highly suggest you do is block me or stop reading this thread.
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