Ten Trades to a Million Bucks?

It seems like there are constantly penny stocks out there that reach 2x, 3x, 5x, or even 10x+ their value. I suck real bad at pennies, so I'm not ready to try this experiment yet, but it seems like there are some people here - those that have the smarts and patience to wait for just the right time - that can make money off pennies consistently, often doubling their money or better.

Did you know that if you start with only $1000 and double it 10 times, you reach $1 million?

One day, I will get better at picking them, and I'm going to try this experiment:

I'm going to start with $1000, and wait for just the right time to pick a penny stock with lots of potential. Whether the company is good or not is irrelevant, as long as it's got the momo. (Rumours on the board often have the power to make a stock skyrocket!)

When I am confident that the stock has a much better chance to double than it has of halving, I'll go in and hopefully double my money. My exit will always be either 100% up (or more), or 50% down.

Once I reach the double mark, I'm ready to pull the trigger if it shows weakness. On the other hand, if it continues to rocket, I'll hold as long as it's going up. My goal is to get as much as possible, but mainly just for the double.

Once I've doubled my funds to $2000, I'll wait for the next perfect opportunity. Months if I have to!

Do it again to $4000, then $8000, then $16000, $32k, $64, $128, $256, $512 and finallly $1024000!

Ten trades with minimal risk. (Remember, you only started with $1000 of your own money, even if you've reached the $128k mark, you only ever really risk $1000 of 'your' money). Hell, I might even take out my initial $1000 after my third or fourth trade just to say that the entire experiment is free!

Now here's the real cool part. You can fail. You can fail as often as you want!

The ONLY goal you need to reach is to have picked 10 MORE double baggers than you did 50% losers. You can trade a total of 40 times, but if you picked 25 winners and 15 losers, you still get your $1 million! Hell, you can trade 150 times, as long as you picked 10 MORE doublers than 50% losers.

Say you lose the first trade. Now you have $500. Lose again, you got $250. But if you double twice, you're right back to where you began again. 10 trades away from $1 million.

Start - $1000.
Lose - $500.
Win - $1000.
Win - $2000.
Lose - $1000.
Win - $2000.
Win - $4000.
Win - $8000.
Lose - $4000.
Win - $8000.
Win - $16000.
etc...

You can see here that it really is true. All you ever need to get is 10 winning trades more than losing trades, regardless of how many trades you make!

The only problems I see with this are:

1) It won't be easy. If it was, everyone would do it! But I believe, from what I see on this board - people nailing doubles all the time - that with practice and patience and following the momo stocks carefully, it's very possible to do. You just need time to wait for the 'perfect setup' to happen. Don't chase stocks, etc.

2) When you get up to $128k or more, it will be difficult to get in and out of stocks quickly. You'll have to strategize more carefully.

3) It will take a lot of balls, or maybe just 2 really big ones, to keep going after you're up $30 or $60 or $100 grand! Most people will start to get very worried about losing it all, instead of remembering that they've only really got $1000 in there. Balls of steel will be essential. Or severe stupidity. One of the two.

Just wait for the momo to really pick up steam, wait for the pullback if you're too late, then place your trade. Simple! For someone that's actually good at pennies, I imagine they might reach this goal within just a couple of years or less.

I would love to see someone give this a shot and succeed!

Actually, I didn't ignore psych at all. That's why I said you'll need balls of steel at those levels.

Of course, the whole point is to only start with $1000, so all those months or years of flipping to double is only supposed to be a side project. When you see a penny you're almost sure will double, do it, leave it, and go on to earn your living trading with the rest of your portfolio. Getting back to where you were? Only 1 good flip away! Seriously, if anyone were to try this, psychologically, it would be important to keep reminding oneself that it's only ever really only $1000. It's not a quarter million. That's just paper in an account. Until you reach a mil.

And anything over $2000 in pennies is risky, I think. LOL.

LOL. Yeah, I know. I was actually thinking that. I think, if anyone were ever to really make it to the $250k mark, you'd have to split it up and pick two pennies. You'd eventually have to make 14 of 15 good trades instead of 10. Or maybe just not trade the 0.03 ones. Might have to go up closer to $1 stocks?

Uh, what?! Oh, no, no, no... Please say that this isn't true! You can't possibly have to pay taxes on every gain earned from individual transactions if your losses outnumber your gains, can you?!

I mean, jeez, I've been going up and down like a yo-yo since I've started. All those fluctuations probably add up to half a million dollars by now, while the losses add up to half a million dollars plus a several thousand that I'm currently down.

Are you saying that even though I'm at a loss for the year, I'm going to have to pay taxes on half a million dollars worth of capital gains?!!!!! This can't be right!!!

Just to be clear. Are you saying that if a person starts with $5000, and makes two transactions - a ten bagger that brings him up to $50,000, and then another one where he losses 90% of his money so that he ends back up at $5000 - he still has to pay taxes on that $45,000 gain?! How can this be possible? It makes no sense...

You're trying to do just this? That's awesome. Good luck! And let us know how it's working out! But, dude, unless you're already rich to begin with, I certainly wouldn't suggest you try starting out by putting your entire portfolio into a penny!!!

Well, I guess my assumption is based on the idea that you're not depending on luck so much as your skills in picking the right stock at the right time. I find that there are times when you absolutely know that a stock is going to go up, that you can make money on this stock right now. Those opportunities don't come by that often, but they do come by every once in a while. And if a trader with the right amount of patience (I don't have it yet!) waited just for those times to place a trade, then I think flipping from 32,000 or 64,000 to a mil, or 1,000 to a mil, wouldn't make much difference. If you can do it in five trades because you're good, you can do it in 10 because you're good. It will just take longer.

Personally, I think the only people who could afford to risk that much money in a penny are already rich.

But I hear what you're saying. Maybe a trader with 40 or 50k might be willing to start with $2000 or $4000 instead, in order to shave off a flip or two. Those two extra flips might be really hard to get, or take a very long time, so it might be worth it?

OK, now you're seriously scaring me Amo!

How in the world can that be right? I mean, at the end of the year, how are day traders supposed to make any money? You'd have to be right ALL the time. If you're correct, I am not shitting you, I am BANKRUPT.

Whew! OK, that's what I thought (assumed) and was trading that way. Can you imagine if a daytrader had to pay taxes on all his/her capital gains, but could never write off the losses? All those fluctuations surely add up to hundreds of thousands of dollars per year!

A quick check on about.com confirmed that you do indeed calculate the TOTAL capital gains against the TOTAL capital losses for the year.

Thank God!!!!