Speculative Stocks - A Short Guide on How to Handle Them.
This post is being brought on for one reason and one reason alone. I am mentoring a younger trader who I met at the Cigar shop in Phoenix where most of my time is spent during non-market hours.
It’s almost like a right of passage and over the years mentoring younger traders is something that I feel like is a requirement to give back. Plus, the education space is filled with dipshits that either lie or just regurgitate what they believe to be true from someone else — so I like to dispel a lot of it.
What are Speculative Stocks?
Penny stocks, bio tech etc. - Really anything that does what $LGVN did in recent days: 100% move in a day.
Now that’s crazy right? A stock moves 100% in a day. New investors see this and get sucked into chasing these unicorn stocks and it becomes the strategy they start with.
I did it too.
In 2005 I was trading Denedron ($DNDN - dead now) a biotech stock that I knew f*ck all about but I was 19 with little money and the $3K or whatever I had seemed viable because it would have these tremendous runs.
So, I’ve been there.
But what I know now about how to treat speculative plays is entirely different and it starts with the first rule.
Rule 1:
Speculative stocks are pumps. They’re usually pushed on what stock promoters deem ‘stock awareness’ campaigns. Now, not all speculative stocks are like this, but most are. Pumps never last but they suck people in who have champagne taste but beer budgets and it’s a cycle on repeat.
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