According to Timothy Sykes, an expert trader:

“(…) penny stocks are the most hyped and corrupt niche in the entire investment world. These two qualities make them the easiest to profit from (legally) because the vast majority of people who play penny stocks are suckers and all-around ignorant people. If you have any intelligence whatsoever, you have a clear advantage and it's like playing basketball against mental midgets”.

Timothy Sykes view on penny stocks is quite extreme and funny. I really like this little definition. Timothy Sykes non-conventional approach allows him to make a living from penny stocks trading. For the month of June 2009 alone, if I calculated right, its 7 153$ he was able to make from his trading!

Basically, penny stocks are stocks that you can purchase for a few pennies. The easy cash come from the fact that since penny stocks price is so low, only a few hundred of dollars is needed to allow investors like myself to own thousands of stocks. And it’s here where things are getting interesting: let’s say the price of the a penny stock company you had invested in increase suddenly of – even only 1 cent – you sell and you can make easily make hundreds of dollars. Let’s calculated: you purchase 80 000 stocks of company X at 0.005 cent. The investment value is of 400$ only. Once you acquire your stocks, you place a sale order for the 80 000 stocks at 1 cent for an 800$ value. Here you go, you just had made a profit of 400$ out of nothing at all. Simple and easy money, just the way I like it. And it’s a 400$ cash that you didn’t work for!

That was for the easy part. But the complete opposite can also happen, it could happen the price never jump of 1 cent. As a small investor, it’s the reason why I concentrate on only one penny stock at the time and each time, I only invest a few hundred of dollars of my very own money, not even a thousand. Penny stocks can be dangerous trading but if you trade in an efficient manner like Timothy Sykes, money can be made. I don’t know too much about Timothy Sykes way of trading, but I guess he had it all right since he had been able to make money from his trading.

My experience with penny stocks

It’s not easy to make money from penny stocks – an especially in Canada. Seem to me that in Canada, there’s less investors who are interested in penny stocks trading. And unfortunately, not too many trades = not too much change in the value of the stocks (what’s call volatility). From my believes, to be successful in penny stock trading a high volatility market is needed (which we have), but also, the title we want to trade need to be also volatile. And it’s not all penny stocks that can represent good business opportunities.

My experience with Blue Note Mining

I once had to cancel a purchase order because of a lack of volatility in the price value of a company. In this case, it was regarding Blue Note Mining. Back in the time, Blue Note Mining was experiencing around 10 trades per day, and the value price was stocked into the 1 cent. Since I knew for sure that the price wouldn’t have jump to 2 cents, my goal was the following: to purchase 80 000 stocks of Blue Note Mining at 0.005 cents (that’s right, half a cent!!). After what, I wanted the sale the 80 000 stocks at 1 cent. And make a fantastic profit of… 400$!

This unfortunately never happen. I close the purchase order after a week or so. Blue Note Mining price was remaining 1 cent and it’s seemed it wouldn’t want to decrease. Just recently, Blue Note Mining stock had varied from 0.005 cent to 1 cent. The deal could had work out. But unfortunately, I wasn’t patient enough. I am not even tempted to continue betting on Blue Note Mining anymore.

Even if I am more an investor who’s more willing to purchase and hold – especially for dividend, I am willing to try different avenues and I am looking forward to see can possibly come from my penny stocks trading.

About Blue Note Mining (BN.H)

Blue Note Mining own Caribou and Restigouche (New Brunswick) lead-zinc mines. Some gold had been found and an announcement had been made about it on December 10, 2008, but it wasn’t probably not enough to save the company. Back on June 22, Blue Note Mining had filed a plan of arrangement and reorganization with the Quebec Superior Court. Strangely, Blue Note Mining only mine is located in New Brunswick and their headquarters are located in Montreal (Quebec).

Anyway, I had interest in Blue Note Mining since August 26, 2008. I currently own 12 000 stocks of Blue Note Mining. Back in August 2008, I had purchased the 12 000 stocks at 6 cents. Currently, Blue Note Mining now worth 0.005 cent per stock. But hope remains. I pretty sure Blue Note Mining will continue their activities in their Caribou and Restigouche mines.

And now Dumont Nickel (DNI)

After falling with my penny stock trade with Blue Note Mining, I continue my penny stocks adventure. No money had been lost, so I decide to try another Canadian penny stock. This time, I try Dumont Nickel. Dumont Nickel is in much better position than Blue Note Mining. For the good reason that Dumont Nickel is currently still in activity. Also, Dumont Nickel owns several mines and had activities in gold and diamonds, among other.

I purchase 23 000 stocks of Dumont Nickel at 3 cents on June 22, 2009. The transaction value had been of 719$ (690$ value investment + TD Waterhouse too high commission of 29$). Back on June 15, the price had rise to 4 cents after a major announcement had been made. For the month of July alone, and the month of July is not even over yet, Nickel Dumont came with 3 major announcements.

I am looking forward to sale Dumont Nickel at 4 cents. This is quite a realistic goal. Since Dumont Nickel had reached 4 cents not so long ago, chances are that it will reach 4 cents, again and if not, even more, in a close future. From my point of view, and only from my point of view, I strongly believe Dumont Nickel is an undervalued stock.

Since June 22, 2009, Dumont Nickel had decreased to 2.5 cents, and even 2 cents to jump back to the original 3 cents. Since the stock remain relatively stable to 3 cents, only time and another good positive announcement are needed to make the price value jump again to the 4 cents. As you can see, I am not looking to make a fortune from Dumont Nickel. I am trading for the experience and to satisfy my curiosity.

Finding success from penny stocks trading

Anyone can be successful at penny stocks trading. The market need to be closely studied and reasonable trading need to be made and after what, reasonable amount of money can be made. I wasn’t able to make money from my hot penny stock picks yet, but I am confident Dumont Nickel will, one day, make me a happy penny stocks trader.