There's no life like it !
The years we spent trading on the floor of the old Vancouver stock exchange were some of the best of our lives. Three hundred yelling and screaming, paper everywhere, and insults flying at warp speed.
Well, there's no life like it!
We have seen stocks open at a dime, trade to $20, go back to their entry levels and lower, get rolled -back or simply fade into oblivion. We have dealt with traders, brokers, promoters, and clients of all stripes, and some that just had spots.
We have seen gold rushes and oil surges, market corrections and melt downs, we have heard every tout, lie, story, excuse and alibi imaginable, and we know we've only heard the tip of the ice-berg.
We don't claim to be experts on the bigger exchanges as we have never traded on one. (Oh, to be trading on the CBOE). But we have been in on every penny-stock trading situation we can think of. Through out it all, we have had a great deal of fun in the process. We have learned the beauty of the game is, when you think you've learned it all, you've learned nothing.
Yeah, there's no life like it!
Why Play The Junior Venture High-Risk Markets?
Until the 2008 meltdown, investors that only traded in low risk stocks, paying dividends, yields and promises, were made to feel comfortable that these investments would help secure their future. The prevailing mood by many is that these days are not about to return in the near future. You, who would never trade high-risk stocks who would never gamble, have been wiped out by many of the same factors that have made the venture markets as popular as Scurvy.
We understand the risks of venture market trading, and also the benefits of it, and feel there will be a growing interest in its appeal.
Minimizing Losses
This is probably the most unpopular subject we will discuss, but also one of the most important. In the volatile world of high risk trading, I have yet to meet anyone who has never lost. Obviously one doesn't go into a trade expecting to lose, but it will happen. A strong suggestion is to set a guideline of what you are prepared to lose, i.e. 10%, or whatever number you are comfortable with. If it gets to that area and is consuming your thoughts, don't be afraid to kick it out. As we all know your first loss is usually your best loss.
There is an old saying that one should never sell a winner to support a loser. This is especially true in venture capital trading, as it is uncanny how often the loser keeps losing and the winner keeps winning. If this is confusing remember the word momentum.
Long ago a wily old trader told me what he did if he got a reprieve on a losing position. He simply said if I'm even, then I'm leaving. By the way, there is only one thing about speculative trading that is a lead pipe cinch: If anyone tells you they have never lost speculating in junior venture public trading companies, they are either lying, or they've never traded in one.
Stop Loss Selling
In venture capital trading we have learned stop loss selling is not only dangerous, but borderline stupid. We are not dealing with so called low risk, blue chip dividend paying stocks, but high risk venture capitalism.
It makes no sense to put a stop order in, as when it kicks in it often triggers a hell of a lot more selling, and it is nothing more than a market order that traders will kick the crap out of just to fill. The main thought you should have, is that your gut is already in the sell mode, so why not get off the paper, cash up, and look for another issue. This a very strong dont do that should only be done once to learn from.
Touts
Be very wary of stock tips. These can come from anywhere, from anyone, at anytime, and almost always from someone who wants to unload some worthless position on some unsuspecting victim. A bar or restaurant is a great breeding ground for these little ditties.
During the inane babble of the tout, you will hear how wonderful the deal is, how little stock is available, and how cheap the stock is. (We will use 50 cents as an example). He will most likely tell you this is your last chance. This is probably the only part of the tout that is true. It is your last chance (TO AVOID DISASTER).
As many of these self-proclaimed experts are prone to brag over their tenth beer, there is a sure fire comeback. Ask this genius what his cost is and if hes dumb enough to tell you (We will use 20 cents as an example).
Ask him to tell you where the hell he and his stock tip were then. He will immediately change the subject to steroids in baseball, hot young actresses, or whatever other drivel that comes to mind, and you will have been spared while he slithers off his bar stool, in search of some more nave prey.
We will regularly share touts and pitches we have heard over the years and believe me, they are countless, and are nothing short of bafflegab at its best.
Promoters
The vast majority of Junior venture capital companies employ an investor relations person, or company. These people are basically hired to promote the company that employs them. They are usually the first person you will come into contact with, and can be a very valuable source in making a decision whether or not to invest. We understand the need for these people to be positive, but if you hear the usual babble about how wonderful the stock is and everything else they want you to hear, whether it is true or not, be very, very careful.
On the other hand if this contact is truthful and insightful, giving straight answers to hard questions, and divulging only factual information and data, and resisting telling you all the B.S. that the more shady phone guys spew, this company, at the very least, is worthy of paying attention to.
Animals Of The Stock Market
We all know about the bulls and the bears, and what function they represent. However there are many more animals lurking in the markets. There are sharks, fish, dogs, ducks, snakes, and owls, just to name a few.
The sharks are on the eternal hunt for the fish, the dogs should be left sleeping, and the owls do their best work after the market is closed.
My suggestion is never becoming the fish, never kick the sleeping dog, and if a position has you up all night, seek out the wisdom of the owl. Ill get into the sharks, the ducks, and the snakes at a later date.
Debits
DON'T PLAY IF YOU CANT PAY
Sounds simple enough, but it is amazing how many times people over-load their account in the hopes of the ultimate flip. By settlement date they are usually wrong, and would cry in their beer if they could afford one. The chances of winning are about as good as Jane Fonda winning the Republican nomination for president. If you cant put up the dough you will be w.w.w.gone. What's worse, if you find a broker to take the order, he's probably as desperate as you are.
Some people will try to get around this by taking a loan out to play the market. Anyone with an I.Q. of a lemming will realize that is a very bad idea. All you've done is create a debit that you are paying interest on.
Believers
A believer has many fatal qualities. First off, he is a believer, who cant accept the fact he is wrong, and would be appalled at the thought he would buy into a lie. One of the biggest problems with believers, is that they usually have an ego to match there naivety, and could never admit that they executed a bad trade. Believers almost always will tell anyone who will listen, how smart they really are, and the fact they lost is a direct result of a market not knowing what its doing, or that they are a victim of a conspiracy theory not worthy of the national enquirer. What the unfortunate truth is, believers are nothing more than fish, gobbled up by the all ready too fat sharks that are immediately setting there teeth on a new set of believers with a bigger bankroll to gobble up. Now if one doesn't become a believer, and takes the pound of flesh that the market gives him, he could not only swim with the sharks, he may come to realize that many of the sharks he swims with, are merely ex-believers that survived their wet dreams and came back to reality.
Dreamers
A dreamer is a lot like a believer, except he is so firmly entrenched in la-la land, that he will probably die there. Dreamers are so out of it, that they still think they are winners every time they lose. (Which is almost always). If some one tells a dreamer a stock is going to a certain price, than its going to go there come hell or high water. The difference between dreamers and believers, is that deep down believers will admit what they are, where as dreamers are either oblivious or in deep denial. If you find yourself walking around after buying stock, figuring out how much your going to make, when it gets to your imaginative level, and what toys your going to buy with all the money your never going to make, than you are definitely a dreamer, so do your self a favor and bow out of the game.
Greed
It is a strange world we live in. We know that those who lose are understandably unhappy. What we cant understand is why those that win are even unhappier, because they didn't win enough. Greed will turn these winners into victims faster than a hungry crocodile turns a thirsty impalla into a meal.
Resistance Levels
Every stock on every exchange finds resistant levels, whether they are up or down - ticking. They should not be confused with over - bought and over - sold stocks, or with highs and lows of the stock, as resistant levels can be all over the map. On high - risk markets, these levels should be studied faithfully, for if one recognizes them, they can be taken advantage of, for seeing a nice profit or minimizing a loss. If they are ignored, an investment can disappear faster than a mail - order bride.
FBN (Financial Booze Network)
Alcohol plays a huge factor in investing whether one is diving into a bottle of Bacardi, extremely pleased about how much money he's made, or slamming back boilermakers, muttering about how he just got nailed to the cross. While it is not our place to discourage senseless drinking, we strongly advise against trading while drinking, as getting hammered and making financial decisions always ends up in financial disaster. I cant count the times some lit-up genius phones his broker from the bar to buy some sure-fire winner, that he cant remember the name of until he gets his trade conformation and immediately goes to the can and looses his lunch. What we suggest, if you are going out drinking, and by all means enjoy yourself, but make all your decisions before that first drink hits the spot, because whether you realize it or not, your I.Q. will take a tail-spin and your bank roll will evaporate.
P.S. If you think that you may have a slightly better chance trading hung-over, think
