Penny Stock Success Stories

It’s one thing when you look at someone else’s trading record and see where they have profited from penny stocks that hit it big, but it’s an entirely different thing when you’ve been able to extract profits from the penny stock markets for yourself. Nothing feels quite as euphoric as seeing that trade confirmation when you’ve closed out a position at a significant profit. I had the pleasure of doing just that today with the FSNM penny stock I highlighted in my post entitled “Hot Penny Stock Alert”. For those who may not be aware, I encourage you to go back and read that post, along with my follow up alert on April 12th. Again I say, you could not find a better case study as far as what to look for in penny stocks than we recently witnessed with First State Bancorporation (NASDAQ: FSNM). It was the classic example of a sideways channel chart formation, with strong resistance at $0.60 per share, and once that resistance was broken, it popped significantly above that level. I was able to buy at $0.56 on April 9th, and today, FSNM went ballistic, cracking over the $0.80 level (the high was $0.85). In my previous post, I mentioned that I believed that FSNM had the potential to hit the $0.80 level, but I truly didn’t expect it to happen this quick. Check out this screen shot of the 6-month FSNM chart from my TD Ameritrade charting tool (it’s pretty cool):



The main premise that I based my “hypothesis” on was the fact that back in January of this year, FSNM cracked a high of $0.83 per share, and I just felt (based on the chart formation) there would be a revisiting of that level on a serious run up. Well, that run came today. I had the privilege of watching the action live, and man, I was refreshing my page every 10 seconds around 1:00 p.m. today, just looking at the feeding frenzy that was taking place. The volume was off the chain (it cracked 1 million shares & some change), and the price action was fast and furious. I will have to admit, I sold out, but not at the day’s high, which was somewhat of a disappointment. Truth be told, I got spooked, and I’m not fully sure why. Maybe it seemed too good to be true or something…it’s funny how even a 9-year veteran of penny stock trading can still have his moments. That just goes to show you that trading psychology is the ultimate ongoing battle for the penny stock trader. I actually sold out at $0.77, and even though it left me with a not-too-shabby 37% profit, again, I don’t believe I fully stuck with my instincts, and honestly, I think it’s because I was caught up in watching the live action. I normally just set my limit order and leave it alone, and I don’t even watch the market action during trading hours. I actually had a limit order set at $0.81 before the market even opened, but when I started watching the crazy intraday price action, I did the classic cancel/replace and went for a lower price, I guess because I was so eager to lock in a profit. Pretty big mistake; it cost me all kinds of extra profit. But, I was so concerned about the price deflating quickly on such a large spike that I let my emotions get the best of me, and I cancel/replaced myself right out of an extra $0.04-per-share profit. Again, this just goes to show you that you should always stick to your plan and your exit points. Yup, that sucks when your own mind gets the best of you. On a different note, however, I did want to mention that if you ever wanted to see a bull pennant formation, you’ve got one to study right here with the FSNM price chart. This past week has provided any student of price action with a perfect illustration of how a bull pennant forms, and how it’s basically a setup for an additional pop once the hesitation period passes. Well, anyway, it’s almost midnight, and I was trying to get this post done before today turns into tomorrow, so I’m signing off. I’ll be back with more penny stock research and new featured stocks once I run another screener and weed out the duds.