Lessons From A Penny Pro

Penny Stocks Trading: Case Studies

Stocks have been fighting to stay green today…after suffering one of their worst losing days of the year yesterday, which saw the Dow drop by nearly 500 points and the Russell 2000 declined by 2%.

Of course, this all stems from a Sunday tweet from President Trump which implied that a trade deal between China was dead. That said, discussions are still ongoing, and a potential deal is still possible.

China tariffs will take into effect on Friday if no deal can be reached. Expect stocks to be choppy until the uncertainty passes.

As for me, there hasn’t been much going on with penny stocks… but I have been on a hot streak trading SPY options.


spy pnl

(I’ll take it on a  Wednesday… If you want to learn my 5-step trading system and receive real-time alerts then click here to find out more)


However, what if you’re not an options trader and you’re primarily interested in trading penny stocks…

Well… in that case, stay patient and review. I believe one of the best ways to improve our decision making as traders are to review WINNING trade more than losing ones.

Yes, you want to discard what isn’t working… but you want to figure out what makes you money so you can expand and try to scale up on those strategies.

Furthermore, I put together a small case study highlighting a couple of my best and worst trades.

We can learn from both, but you’ll see why it makes sense to focus on one more than the other. Click here to continue reading.

Penny Stocks Case Studies


For the most part, I’ve been on the sidelines – I only have one position on in my $2K account. Now, when I’m not trading a whole lot, I like to go back and walk through my trades… looking back at some winners – going over what I did right. Not only that, I go over losers (if I had any) and look at the mistakes I’ve made… and what I could do better next time.

Now, if you don’t know, I primarily focus on chart patterns. You see, chart patterns work when you’re trading penny stocks… and sometimes, these patterns become self-fulfilling prophecies.

That said, let’s take a look at some case studies of some winners and how I learned from a small losing trade.


SOLO Case Study


Here’s a look at the daily chart in Electrameccanica Vehicles (SOLO).



Now, you’ll notice three phases of the trade. First, we see the stock spike up on volume – that’s the volatility phase. I noticed the stock was getting close to the 200-day simple moving average (SMA)… and I was anticipating a break above the green line (200-day SMA).

So what did I do? I bought shares at $3.55, looking for a technical breakout.

Here’s a closer look at the chart on SOLO.



Now, when beginner penny stock traders see their stock gap up… they tend to hold on and get greedy… thinking the stock could run further.

However, when a penny stock gaps up the following day, you want to sell into the strength. You see, penny stocks are volatile, and they can experience large swings. The last thing you want to do is be the bag holder, after seeing your stock nearly double overnight.

Well, I stuck to my trading plan… and this trade actually turned out to be a home run (I was able to lock in 70% on the trade).


(If you want to grow your small account and receive alerts like these in real-time, click here to get started).


Moving on, let’s take a look at another case study of one of my trades.


SIML Case Study


Here’s a look at SIML on the daily chart.



Now, the stock had just dropped and found support. This is one of my patterns that I call the consolidation. Basically, the stock drops, and finds an area where it has a hard time breaking below… thereafter, the stock catches a bounce.

There was actually a clear pattern after this spike. Basically, you’re looking for an uptrend line (the stock makes higher highs and higher lows) – as shown in the chart above. Thereafter, it’s about timing your entries and buying around the trendline.

Now, I bought shares right around the black line at $0.061, looking for the stock to get to $0.07s or $0.08.

Keep in mind, I bought shares on a Friday – looking for the stock to trade higher that following Monday. Now, once I saw the stock reach my target, I sold into the strength and didn’t get greedy with the trade.


(That’s a 20%+ gain using my chart patterns… if you want to learn how to grow a small account and trade penny stocks, click here to learn more about my money-making strategies.)


TRUU Case Study


Now, you’ll often hear traders just talk about their wins… not me. My goal is to get better and refine my patterns, as well as help my clients learn.

One example in which I could’ve done better on was True Drinks Holdings (TRUU). I got into the stock on one of my patterns, and I couldn’t have done that any better. However, what I needed to work on were my emotions.

You see, I had gains after the stock gapped up. However, I was greedy and thought the stock could run higher. What I could’ve done better was sell into the strength… instead, I ended up selling for a small loss simply because I wanted more profits.

Now, there was something out of my control too. Yes, I was greedy… but the bids fell apart and cratered the stock. When the bids drop in penny stocks, it makes it hard for you to get out and get the prices you want… so I ended up selling just a tad past my stop. So next time, I could do a better job at controlling my expectations.

Want to see what I’m watching and my next moves? Follow me on Twitter @ThePennyPro (sometimes I post video watchlists there).

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