FACT: Penny stocks are very profitable! | FACT: Most penny stocks FAIL!

Understand how to buy penny stocks and How to avoid penny stock scams.

It's true, most penny stocks are scams but only if you don't understand how to buy penny stocks. It's also true that penny stocks are jumping hundreds of percentages a day. The ONLY way I have successfully found to profit and avoid penny stocks scams is by playing their own game. 

No no, that doesn't mean selling worthless securities on the 5% chance it actually becomes something. I am talking about KNOWING the penny stock you are about to purchase is most likely a scam.
Why in the world would you knowingly buy into a scam though? 
Because EVERYONE else is! 

That may sound a little mis-leading but let me ask you this... What makes these Penny stock scams?
Almost every case of a penny stock scam, the company did not deliver on what they promised. So why would they make these promises? You guess it!
They need money for their idea! Whether their idea is really something that will work or whether the CEO just needs some more money to fund his/her lifestyle, they need to attract new investors to fund the "plans". Almost every time, this is done by issuing a Press Release projecting the next big reason why investors should buy in to their companies idea. Sometimes the company makes pretty substantial claims in these press releases in order to attract new investors. Sometime the press release is actually nothing but how they meticulously word the article to exaggerate a simple and meaningless event make it sound like the next best thing since sliced bread. This is what gives penny stocks a bad name but also what makes them profitable.

Ok, So why buy into a scam again? Because everyone else is???
Yep, you just want to be first! Let me explain:
The penny stock scam (or not) is only profitable while the company is trying to raise money. Understanding this is will allow you to avoid penny stock scams. Your penny stock market psychology should be; 
"Which one of these articles is going to attract the most new investors?"
"Which one of these penny stocks look like the best long-term investment?"... 
Unless of-course you do not want to avoid penny stock scams.


Let me give you an example of some Professionals that use this method...

Ever wonder how those penny stock newsletters make all of their money? I mean, do they really make enough to pay for analysts to research these stocks full time? How do they make their money when the penny stock newsletter is free? There has to be something here, everywhere you turn in the penny stock world wide web you are asked to sign up for the next Warren Buffet of penny stocks advice. To be honest, the way these Newsletters are making a majority of their profit follows the same principal of how to avoid penny stock scams... PLAY THEIR GAME.

These newsletters try to get as many people to sign up for their penny stock advice as they can. And if you have searched for anything about Penny Stocks, I am sure you know what I mean. The more people they have the better probability they will find a client. 
Huh? A Client? Aren't the people that sign up for their newsletter's their clients? 
No.. they are merely the bait. The Clients these penny stock newsletters are really after are the low-cap companies looking to raise a lot of money quickly. These newsletters don't care if the company is a complete scam or not and this is why: The more people these newsletters have signed up to receive their advice, the more people they can reach for the company. The more people the newsletters can reach for the penny stock company, the better hyped the penny stock companies press release will be when it is issued. Thats the benefit for the penny stock company. 

The newsletters however benefit a little differently... these penny stock newsletters will charge a HEFTY fee for their services... upwards of $30,000 easily but not all of that goes to the penny stock newsletters. These expensive penny stock newsletters services typically include "pumping" the stock over a certain period with a large portion of that expensive fee. Some newsletters take the "pumping" to forums and any other place investors may be. 

In the $30,000 example; $28,000 may get re-injected back into the company by the penny stock newsletter while they keep the remaining $2,000. The penny stock newsletter then hopes the company (scam or not) has one heck of a Press Release about to be issued. If they do and the stock end's up going running positive, the penny stock newsletter will "Dump" their shares when they feel the momentum has peaked. This will typically create the landslide every penny stock traders has been a part of... The Pump & Dump. Good thing for the penny stock newsletter is they get to keep the profits of that $28,000 as that is in direct relation to how well they performed their "pumping". Bad thing for the penny stock newsletters followers is, they usually get caught in the landslide.

Thats great for them but How do I avoid penny stock scams then?


Remember, although these penny stock newsletters can make you money... They are in most cases enabling the real scam artist: the penny stock company
So I have explained how penny stock newsletters work and how sometimes they may very well make you money but it's not like they are employing penny stock specialists, rather taking a companies word who is paying them. Using the same method of "hoping the company issues good stock market news", without all the extra work, is how you can avoid a penny stock scam and profit as well.

If you are prepared for the scam, you know not to trust a penny stock company regardless of how "real" they may perceive themselves or how substantial they make their claims to be in a press release. This is why people disregard penny stocks as scams, they look at them as long-term investments. Scams are normally short-lived, so why would one have a long-term mentality when they enter the world of short-term? Because they don't understand how to buy penny stocks! To avoid getting caught in a penny stock scam, I wouldn't hang on more than a day. That's how short-term I am talking about. Penny Stock Traders like to call it Day Trading the News.

I am not going to go into detail on how to buy penny stocks but this is the most detailed resource I could find that explains the process very well:
Enough with the Newsletters! How to buy Penny Stocks, the Exciting and Profitable Way.

Too many people look at the penny stock investment world wrong. Penny Stocks are hardly investments and should more appropriately just be referred to as trades.To avoid penny stock scams all together, you must accept the world of which you chose to invest in. While it is risky, it is very rewarding if you understand how to buy penny stocks and avoid their scams. If you choose to trade in the penny stock world or are curious of how lucrative it really can be, I would highly recommend opening a free practice account to trade with fake money.