Blog : $1,000. 3 Trades. Millionaire.

by Peter Leeds on June 14th, 2016

 

Have you ever heard the legend of the million dollar trader?  $1,000.  3 Trades.  Millionaire.

The trader started with only $1,000, and just 3 trades later, he was sitting on a mountain of cash!  Over a million clams, to be exact.

It's kind of like the Loch Ness Monster, or Bigfoot.  Sure, it is possible... but highly unlikely.

However, mimicking the million dollar legend might not be as far fetched as you may expect.  In fact, anyone could do it, and that includes you.

Will you turn $1,000 into $1 million?  No.  However, as you follow this logic you might be surprised how "uncomplicated" the process would be, once we strip out stress and anger and greed and nervousness.

The legend goes something like this...  Well, actually, it's not "something like this," it's more like, "here's what you need to do."

If you start with $1,000, then find a penny stock which increases in value by a factor of 10, then you have $10,000.  Find only two more big trades which play out just like that, and your $10,000 becomes $100,000... then your $100,000 multiplies to $1 million.

"I'm sorry, finding the "ten-baggers" is the easy part?"

Of course, it is incredibly complicated, and this entire legend requires that you never make a losing trade, or get out of a soaring penny stock too early.  

But consider this - finding a penny stock which multiplies by 10 times is not that impossible.  In fact, we've done it many times, and lots of those gains were for increases by more than a factor of ten.

That of course ignores our picks which lost ground, as well as those which only rose by 10%... or 35%... and so on.  

The important consideration is that you can tilt the odds dramatically in your favor.  Maybe you are great at looking into the fundamentals of a company, and recognizing which sorts of businesses will grow.  That alone puts you into the smaller percentage of people who have "enhanced odds" of making significant profits.

Keep in mind, the focus needs to align with our speciality (fundamental research) rather than looking for clues on the trading chart (which we do also, but only as a secondary research metric).  To put it bluntly - no amount of technical analysis will reveal a penny stock which will climb by 1,000% in value.  Technical analysis is just not "built that way."

However, if you look into the operations of a company, and understand their business and the growth drivers, you can find plenty of small companies which are going to grow rapidly.  And no, we're not talking about Microsoft and Apple and all these other after-the-fact high fliers which everyone seems to use as justification for hope.

We're talking about penny stocks which we have selected for subscribers.  Penny stocks like Ford Motor Company (F) - ever heard of them?  

Yes, they were a penny stock, when they traded at $1.87 right as GM was filing for bankruptcy.  We looked at GM's books and shuddered.  Then we took a glance "under the hood" of Ford, and were impressed (especially considering the state of economic affairs back then).

We selected Ford at $1.87, and it soared to $19 within about 24 months.

The point is not to brag, or to gloss over all the losses we took from other mistakes and bad calls.  Rather, it is to demonstrate that there are plenty of penny stocks which will fit the "ten-bagger" bill, and if you become adept at choosing the right ones, you are actually closer to being able to copy the $1 million legend's path.

Of course, Ford was by no means our only huge gainer, it is just the most recognizable name.  We had profiled plenty of others, and some of them even climbed by a lot more than 10 times, as Absolute Software (ABT on the Toronto Exchange) did.

ABT went from 80 cents... to 40 cents!  Peter was nervous since the share price slid so much, but the actual operations of the business were very strong, so he knew not to sell.  Absolute's best days were still ahead of them.

Peter waited for the shares to almost reach a gain of ten times over.  However, when the shares seemed to stall out in the mid $7 range for too long, he took a third of his profits.  ABT still traded flat in that price range for a few more weeks, so he sold another third.  

Eventually, frustrated that the penny stock (which was not a penny stock any more) hadn't kept going higher, Peter cashed out the rest,  It wasn't 10 times his money exactly, but 8-point-whatever is close enough,right?  In fact, it was up about 18 times over from the low point it had hit at 40 cents.  

Then the worst thing happened:

Absolute spiked higher, once Peter had sold, and roared to a (split-adjusted) high of about $42!  Although they feel worse than trading losses (missed gains are hard to stomach), thankfully they don't actually cost you anything.  

Disclosure:  Peter is invested in Absolute Software once more... but just for the dividend payments.  He doesn't expect ABT to rise quite so dramatically again.

So, we've gotten off topic a bit, but let's go back to the point.  

Fact:  There are plenty of penny stocks which will rise in value by a factor of ten.

Fact:  You only need to find one of these, and if it plays out as you are hoping, you'll be sitting on a good chunk of cash.  

Fact:  If you understand a little about business, and look into each company deeply, you significantly will increase your odds.

Fact:  Now just do that same thing twice more, and you'll get to the million.

Thus, your job in penny stocks should be to find those fundamentally-solid companies which are growing rapidly.  Rely on the results of the business operations, rather than technical analysis.  And have a stupid amount of patience.  

The best winners... those which multiply by a factor of 10 or more... take several years to fully make their move.  That is because it is based on the operations and growth of the underlying business.

P.S.  I have over a quarter million dollars invested into one of my favorite penny stocks, and I fully expect this 14 cent company to break above $1.40, in my opinion.  

If you subscribe, then I'll be able to tell you all about it, along with all my personal holdings, plus weekly penny stock picks, along with lots of extra insights and tactics.

So, swing by to join the 41,000 others who have put their trust into Peter Leeds!  We would love to help you profit from penny stocks.

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