Wild Penny Stocks

There are tons of examples of wild penny stocks that have produced downright outrageous returns in very short periods of time. It is due to these cases, I’m disappointed to say, that penny stocks sometimes get a bad reputation as being “too risky” or “for gamblers only” and so forth. It is quite possible for you to actually employ a regular trading methodology that includes pre-calculated entry and exit points, as well as employing solid capital management, when trading penny stocks. In other words, it doesn’t have to be this “roll the dice” type of a venture that permeates the average investor’s conscience. You can actually have a plan and work the plan, realizing that not every penny stock you buy is going to go to the moon, and also realizing that leverage in penny stocks is a double-edged sword that cuts both ways. I believe that if you adopt a sound approach to trading penny stocks, you have a very good chance of extracting insane profits out of the markets, while most other investors (and I use that term loosely) are just going from one gamble to the next, with no solid plan in place. But before I get too far off on a tangent, if you’re looking for examples of wild penny stocks, check out the following price chart for Old Second Bancorp (NASDAQ:OSBC), which perfectly fits the bill for a “wild penny stock”:


Here you see a chart of a penny stock which by all accounts has had a ridiculously volatile ride this past year. I would hate to be a clueless shareholder of this stock, because he/she probably has ulcers by now. The stock took a huge dive from early August to early September 2010, losing over 50% of its value and hitting an embarrassing low of around $0.68 back in early September 2010. Not even 12 trading days later, the stock skyrockets violently up to a high of $2.47 (basically tripling in price for those who are paying attention), with a HUGE intra-day trading range. After this explosive move to the upside, you had a little bit of sideways consolidation with support holding at around $1.50, but then the stock took a complete cliff dive once the support was broken. The price then went into “recovery mode”, with a little more sideways action, and then the most recent surprise to the upside happened on July 28, 2011 when the stock again spiked up to a high of $1.83, but closing at a modest $1.30 per share. All of this volatile price action could probably cause some investors to get motion sickness. Again, as I have always said and will always say, penny stock trading is not for the faint of heart, and not for the investor with a low tolerance for risk. I would advise (even though I am NOT a professional advisor) anyone with a low risk tolerance to stay the heck away from penny stocks. They are truly for the gamers, not the investors that cling to more stable and “secure” investments (which I think is a myth, when it comes down to it). You have to be quick on your feet to properly trade penny stocks, and when you’re dealing with the more wild penny stocks, sometimes it can seem no different than trying to tame a wild animal. The price moves will be unpredictable, the volatility will be present in full force, and if you’re not prepared with a solid trading methodology and utilizing sound capital management, believe me—there will be blood.