Lessons From A Penny Pro

Stocks Got Rocked: Here’s What I Did

We all know how crazy the month of October can be for the markets…

And here we go again…  two days in, and two days of big market losses right off the bat, starting the month off with a bang.

Nobody can say this came as a surprise… it was more a matter of when it would happen than if it would…

Manufacturing numbers sliced over 300 pts off the Dow on Tuesday, the 1st day of the month… followed by worrisome job growth numbers the very next day…  axing nearly 500 more points off yesterday…

What a way to start an October trading month…

And with more reports coming out over the next two days, it could get a bit hairy…

I’m not saying it’s time to cut and run… but I AM saying it’s time to pay attention…

Am I scared? No way… I don’t let the overall market tell me when I can and can’t make money.

I purposely developed my trading system to overcome the whims of the market.

And I am going to show you exactly how I adjust to times like these…

 

When the market gets tough… The tough get going

 

Listen, I am not going to sit here and tell you it’s simple to make money when the market gets ugly like this…

If the U.S. actually does head into a recession and the market hits a long term slump, things will not be easy for most of the traders out there…

But I will tell you this… it actually doesn’t worry me… because I am prepared for times like these.

Contrary to the last 10 years… the market isn’t going to go up forever…

It’s time to make adjustments…

Here is what I do when the market gets ugly:

First I recognize it

You see, some people have a tendency to keep a blind eye to what’s really happening because they don’t want to face reality… it scares them…

Well I know that’s not going to get me anywhere in life…

… so when I had two of my worst trades (dollar loss) in a year on the first day of October… I didn’t sweep it under the rug… I shared it.

Anyone who follows me knows about it because I take the bad with the good, and I learn from it and move on.

You see I had two trades close out on Oct 1, IMTL and LIBE, that added up to one of my worst days for the year…

Take a look at the chart for IMTL…

I took the trade on a breakout for an overnight Boost… it got close to my target before pulling back and I was adding above the support level looking for a bounce from there…

However, it didn’t happen and broke further down as the market got rocked on Tuesday… so I took my loss and moved on… not all trades work out, and you need to know when to move on.

And when the very next day the market gets rocked again, on major economic headlines…

So what did I do with this?

I recognized it… I took my loss and acknowledged a change in the market…

Second, I take a step back to breathe and assess

So I pulled back on how aggressive I was being in my trades. In my next trades I wanted to see the perfect set up… one that felt just right and not go hog wild with my size while the market is puking…

This allows me to survive while I adjust to the market conditions and the market itself decides what’s next…

It also allows me to regroup and recoup my losses without mental or emotional error.

The last thing I want to do is trade on tilt… and go big after my worst losses, while at the same time the market is clearly upset…

Third, I continue to trade

Yeah, that’s right… I continue to trade.

My system wasn’t developed to make money only when the market is cheery and headed to the moon.

I wanted to be able to make money in any market, no matter what

So I keep trading… I trust my system…

And last but not least… I adjust!

… slightly that is…

How?

I simply scale back on a few fronts…

In an ugly market I want to scale back both my size and my total number of trades…

So when I am using my custom scan to ferret out my trading setups, I am simply being more picky with which ones I take…

And when I take a trade, I use less size as the market makes its mind up… taking my time to get better clarity on which trades are working the best now…

Take a look at NAKD… After taking a hit on one of my worst trades of the year… I didn’t cry, freak out, or sit on the sidelines… I took this trade at the end of that same day…

I realized things were different, I took a breath, adjusted my size, found my best setups, and kept trading…

The result was a gain of over $600…

All that said, even if the market goes into a major downturn and the country goes into recession, I will still be pulling little golden eggs from the market…

My system is set up around trading penny stocks… and penny stocks don’t trade to the market… they move to the beat of their own drummer… a.k.a. Catalysts

Penny stocks tend to move based on a stock specific catalyst… think about a tiny little penny stock getting a huge new contract worth billions, you think it’s going down with the market?

Of course not… and what about a little penny that gets FDA approval for their one and only drug… going down just because the market is? Nope!

So my system focuses on these stocks, and allows me to pull cash from the market no matter what is happening in the general sense…

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