The Ult im at e St ep- by- St ep Guide
t o Day Trading Penny St ocks

© Jason T. Brook All Right s Reserved


Copyr igh t , Le ga l N ot ice a nd D iscla im e r :
This publicat ion is prot ect ed under t he US Copyright Act of 1976 and all
ot her applicable int ernat ional, federal, st at e and local laws, and all right s
are reserved, including resale right s: you are not allowed t o give or sell
t his eBook t o anyone else.
Please not e t hat m uch of t his publicat ion is based on personal experience.
Alt hough t he aut hor has m ade every reasonable at t em pt t o achieve
com plet e accuracy of t he cont ent in t his eBook, t he aut hor assum es no
responsibilit y for errors or om issions. This eBook is for inform at ional
purposes only and is provided wit hout warrant y of any kind. The cont ent ,
inform at ion, t echniques, m et hods and dat a cont ained in t he " The Ult im at e
St ep- by- St ep Guide t o Day Trading Penny St ocks" should not be
int erpret ed as invest m ent advice, or as a recom m endat ion t o buy or sell
securit ies.
Furt herm ore, by viewing t his eBook, you agree t o hold t he aut hor
harm less and t o com plet ely release t he aut hor from any and all liabilit y
due t o any and all loss ( m onet ary or ot herwise) , dam age ( m onet ary or
ot herwise) or inj ury ( m onet ary or ot herwise) t hat you m ay incur.
The aut hor assum es no responsibilit y and is not held liable for t he
consequences, financial losses or ot her dam ages result ing from reliance
upon t he cont ent , inform at ion, t echniques, m et hods or dat a cont ained in
" The Ult im at e St ep- by- St ep Guide t o Day Trading Penny St ocks" . The
reader assum es t he ent ire cost and risk of any invest ing and/ or st ock
t rading he/ she chooses t o undert ake. Day t rading penny st ocks involves
high risk.

You should use t his inform at ion as you see fit , and at your own risk.
Any t radem arks, service m arks, product nam es or nam ed feat ures are
assum ed t o be t he propert y of t heir respect ive owners, and are used only
for reference.


D e dica t ion
This eBook is dedicat ed t o all t hose who wish t o break free of t he financial
rat race which enslaves t he vast m aj orit y of people.
To t he beginning of your financial freedom .


Ta ble of Con t e n t s
Dedicat ion
Table of Cont ent s
I nt roduct ion
1. Overview of Day Trading Penny St ocks
Get A Bird's Eye View of The Profit Making Process
2. Get t ing St art ed
The ABSOLUTE Minim um Requirem ent s You Need
3. What Drives Penny St ocks Up
I dent ify These and Wat ch Your Profit s Sky Rocket
4. Wat ch Out For These Traps
Spot These and Save Your Capit al From Being Wast ed
5. The Power of Trends
Learn To Spot “ Trend St ocks” and Easily Double Your Money
6. The Best Tool
Mast er The Tool That Gives You THE EDGE
7. The 10 I rrefut able Laws of Day Trading Penny St ocks
Follow These and Reap Consist ent Profit s

8. THE ALPHA LAW of Day Trading Penny St ocks
I gnore This And Be Doom ed To Failure
9. Paper Trading
Your Training Wheels Program To Ensure Success
10. Put t ing I t All Toget her
A Day Trader's Daily Rout ine


I n t r odu ct ion
Warning: Do not dive int o day t rading penny st ocks wit hout a t horough
com prehension of t his eBook.
How it all began:
For as long as I could rem em ber, m y fam ily was never financially secure.
Sim ply put , we were poor and I hat ed it .
I was det erm ined never t o live like t hat when I got older so I st art ed t o
educat e m yself on how t o m ake m oney. I ’ve heard of people m aking
m oney by invest ing in t he st ock m arket so I buckled down and hit t he
books.
Blue chip, Warren Buffet , CANSLI M, holding, averaging down,
com pounding, t hese were t erm s t hat I soaked up like a sponge at t he
public library. Then, I realized som et hing t hat m ade m y st om ach sink.
Lit t le did I realize t hat long t erm invest ing in t he st ock m arket on average,
only ret urns 10% A YEAR.
For exam ple, if you do t edious research on choosing t he right com pany t o
invest in by looking at t heir balance sheet , indust ry, com pet it ion,
fundam ent als, cash flow, EBI TDA, t echnical analysis, et c, and invest
$1,000 in it , you’ll get $1,100 aft er 1 year. And t hat ’s not even a
guarant ee. All t hat hard work for a m easly 10% a year.
That ’s WAY TOO SLOW for m e. I needed som et hing t hat ’ll ret urn profit s
fast er.

About t his sam e t im e, I also st art ed a j ourney of personal and financial
developm ent .
Along t his j ourney, I read a num ber of books such as Psycho Cybernet ics
and Rich Dad Poor Dad t hat involved t he power of beliefs and ways t o
obt ain financial freedom .
I read in Rich Dad Poor Dad t hat you’ve got t o m ake m oney work FOR
YOU.
Many people reverse t his st at em ent . They work FOR MONEY. To t hem
THEY ARE A SLAVE TO MONEY. NO NO NO.
M ON EY I S A SLAV E TO YOU.


Let m e repeat t hat because it is t he underlying t hought of all financial
success.
M ON EY I S A SLAV E TO YOU.
That is a very powerful belief. I t changes your whole out look on finance.
Kiyosaki’s m ain t hesis in Rich Dad Poor Dad was t o use your m oney t o
buy asset s, m eaning invest your m oney int o vehicles t hat will give you a
nice ret urn.
So I asked m yself, what can I buy, wit h relat ively lit t le work t hat will give
m e subst ant ial profit s fast ? I t sounded like a quest ion wit hout an answer.
That ’s where t he personal developm ent cam e in. I read in David
Schwart z’s The Magic of Thinking Big t hat if you firm ly believe som et hing,
t he how t o part will t ake care of it self. I fir m ly be lie ve d t hat t here was
a way t o use m y m oney t o buy asset s t hat will give m e subst ant ial
ret urns fast . I wait ed for t he how t o part t o t ake care of it self.
And so I wait ed. And wait ed. And wait ed, t ill t he answer finally cam e.
The answer.
Day t rading penny st ocks.
Exam ple A

St ock ABCD increases from $10.00 per share t o $10.05 per share. A 5
cent increase, a 0.05% increase.
Exam ple B
St ock BCDE increases from $0.05 t o $0.10. The sam e 5 cent increase,
BUT a 100% increase.
I f you invest ed $500 in st ock BCDE, you would’ve got $1,000 – t he cost
of com m issions.
That ’s m aking your m oney work FOR YOU right t here.
Now I know m ost of you are saying day t rading= losing all your m oney.
See, t hat ’s t he power of beliefs.
The prevailing belief is t hat day t rading is risky, you’ll lose all your m oney.


Because people believe t hat , t heir eyes are shut off t o t he possibilit ies of
m aking m oney by day t rading. They have t unnel vision. Their belief
dict at ed t hat . As a result of t hat belief, t hey don’t bot her t aking t he t im e
t o educat e t hem selves on day t rading penny st ocks.
That ’s ONE BELI EF.
There is ANOTHER belief t hat is EQUALLY POWERFUL I N TRUTH.
YOU COULD MAKE A TON OF MONEY BY DAY TRADI NG PENNY STOCKS
and you know what … PEOPLE DO.
So I sim ply t ransform ed m y belief.
TH ERE I S M ON EY TO BE M AD E I N D AY TRAD I N G PEN N Y STOCKS.
BI G M ON EY.
The next quest ion I asked m yself was HOW CAN I DO I T?
I asked m yself consist ent ly, “ How can I ident ify WHI CH st ocks will rise in
value and how can I lock in t hose profit s?”
I asked m yself t hat quest ion on a daily basis for years and discovered t he
very knowledge t hat leads t o profit ing from day t rading penny st ocks.
That is what t his book will ent ail.

_______________________________________________________
The inform at ion in t his eBook refers t o a specific niche. I t ’s not general
inform at ion. I t is specialized knowledge t hat is derived from experience
and pain, som e of t he great est t eachers known t o m an.
I t ’s a st ep by st ep guide t hat will show you t he ent ire process of profit ing
from day t rading penny st ocks from st art t o finish.


Ch a pt e r 1 : Ove r vie w of D a y Tr a din g Pe n n y
St ock s
I know when I first heard of day t rading penny st ocks, I was t ot ally lost .
There was so m uch vocabulary, so m any t hings t o rem em ber, I didn’t
know where t o st art . I didn’t know how everyt hing fit t oget her. That ’s
what t his chapt er will solve. This chapt er is dedicat ed t o giving you t he
overall process of day t rading penny st ocks.
Let ’s get down som e key t erm s first .
Day t rading sim ply refers t o buying and selling shares of a st ock on t he
sam e day.
Penny st ocks are st ocks t hat t rade on t he OTCBB ( Over The Count er
Bullet in Board) and Pink Sheet s ( t hink of t he OTCBB and Pink Sheet s as
t he Nasdaq and New York St ock Exchange of penny st ocks) . Their t ypical
price/ share is around $0.0001- $5.00.
Due diligence ( oft en referred t o as dd) – refers t o t he research t hat is
necessary before deciding t o buy a st ock. I t is ext rem ely im port ant .
Market m akers – inst it ut ions t hat regulat e t he st ocks on t he OTCBB and
Pink Sheet s.
Bid – t he price at which m arket m akers are willing t o buy your shares. I n
ot her words, t he price you can sell your shares at . I t ’s t he bidding price
for your shares.
Ask – t he price at which m arket m akers are willing t o sell you shares. I n

ot her words, t he price you can buy shares at . I t ’s t he asking price t o buy
shares.
Profit Percent age Gain – t he m axim um percent age level at which you
want t o t ake your profit s. For exam ple, if your profit percent age gain is
20% , t hen you will a lw a ys t ake profit s when t he st ock rises by 20% .
You won’t wait for it t o go higher. You’ll sell and t ake t he 20% profit .
St op Loss Percent age – t he m axim um percent age level at which you will
t ake a loss. For exam ple, if your st op loss percent age is 15% , and a
st ock you invest ed in falls by 15% , you will a lw a ys sell your shares and
t ake t he 15% loss t o preserve your capit al.
Now t hat we got som e basic vocabulary out of t he way, let ’s find out what
day t rading penny st ocks is really all about .


Day t rading penny st ocks is sim ply buying and selling shares of a penny
st ock on t he sam e day.
Now, why in t he world would you want t o do t hat ?
Be ca u se t h a t is h ow you ca n REAP t h e M OST PROFI T in t h e
SH ORTEST AM OUN T OF TI M E.
Here’s an exam ple.
Penny st ock ABC is t rading at $0.05 cent s/ share. That m eans each share
is wort h 5 cent s.
You buy 10,000 shares of ABC. That m eans you spent $500 ( 0.05 *
10,000) .
Penny st ock ABC rises t o $0.08 cent s/ share.
You sell 10,000 shares of ABC at $0.08 cent s/ share.
That $500 dollars you invest ed in has t urned t o $800 ( you sold 10,000
shares at t he price of 0.08 so $0.08 * 10,000= $800) .
$500 - > $800 I N ONE DAY! That ’s a 60% gain. You WI LL NOT see 60%
gains in ONE DAY wit h st ocks t rading at t he NASDAQ OR NYSE. ON LY

PEN N Y STOCKS displa y t h is k in d of r a pid gr ow t h .
Hist orically speaking, long t erm invest ing in t he st ock m arket yields an
average of 10% A YEAR.
W it h da y t r a din g pe n n y st ock s, you ca n ge t 1 0 % A D AY.
We’ve all seen t he exam ple of com pounding 10% a year and becom ing a
m illionaire in 60 or so years. What would happen if you com pounded
10% A DAY? Would it t ake as long? You don’t need a m at h degree t o
figure t hat one out . The result s are j aw dropping!
So here is day t rading penny st ocks in a nut shell.
1. Do research ( dd) and com e up wit h a list of st ocks t hat you would
consider day t rading for t hat day.
2. Gauging how t he m arket react s, pick one st ock accordingly.
3. Ent er a LI MI T ALL OR NONE buy order t hrough your online broker.
4. Buy t he shares.
5. Sell t he shares when you reach your profit percent age gain.
6. Get on wit h t he rest of your day.


7. Repeat st eps 1- 6 daily and go on a well deserved vacat ion wit h t he
m oney earned.

Quest ions t hat m ay arise are:
How do I research?
What am I looking for?
How can I ident ify which st ocks will go up?
Which st ocks do I buy?
When do I buy?
When do I sell?
How m uch m oney should I use?
Fear not , all of t hese quest ions will be answered t hroughout t his eBook,

but first you’ve got t o get st art ed.


Ch a pt e r 2 : Ge t t in g St a r t e d
When you undert ake a big endeavor, you want t he best of t he best . You
want t o m ake sure you have all t he t ools necessary t o get t he j ob done.
You wouldn’t st art building a house wit hout t he proper t ools would you?
The sam e t hing applies t o day t rading.
Here is what you need t o get st art ed:
1. A reliable and fast com put er ( at least 256 MB of RAM, at least a 1.2
GHZ processor, and a net work/ wireless card for I nt ernet
connect ivit y)
2. Fast I nt ernet connect ion – ex: DSL/ Cable/ T1/ T3/ Wireless
3. MicrocapFeed – powerful t rading soft ware wit h real- t im e dat a
4. I n- dept h knowledge of t his eBook
5. One m ont h of paper t rading experience

1 . A r e lia ble a n d fa st com pu t e r
You need a fast com put er in order t o execut e t rades online. Tim e is of
t he essence when it com es t o day t rading. You don’t want t o be st uck
wit h a slow com put er. You also want a reliable com put er. You don’t want
t o put in an order only t o have your com put er freeze, t hen have t o rest art
your com put er and log back on again. You need a reliable and fast
com put er t o prot ect your invest m ent s.
2 . Fa st I nt e r n e t con n e ct ion
The sam e logic applies t o your int ernet connect ion. You do NOT want
dial- up for day t rading penny st ocks. Speed is of t he essence. I f you
were t o use a 56k m odem , you would see connect ing…..loading…..and
t hat would t ake several seconds. You m ight have m issed t he t rip by t hen.
I t ’s bet t er t o have t rades execut ed inst ant aneously. DSL is m ore t han

enough and is pret t y cheap. I t runs about 20 dollars a m ont h and is a
really good invest m ent .
3 . M icr oca pFe e d – pow e r fu l t r a din g soft w a r e w it h r e a l- t im e da t a
You absolut ely need MicrocapFeed in order t o day t rade penny st ocks.
MicrocapFeed is a real- t im e dat a feed applicat ion and is THE TOOL t hat
will give you THE EDGE you need t o profit from day t rade penny st ocks.
I t has everyt hing you need in real- t im e. Free st ock quot es online are
delayed 15 m inut es, which is an et ernit y in day t rading. MicrocapFeed
also has sales t im es and quant it ies and Level I I , so you get m ore inside


inform at ion on what ’s happening. They also have powerful real- t im e
scans and filt ers which are ext rem ely useful.
MicrocapFeed is explored in- dept h lat er on in t his eBook.
spe cia l de a l w it h M icr oca pTr a de ( t h e com pa n y t h a t
M icr oca pFe e d) , a m on t h ly $ 2 0 .0 0 discou n t is give n
t h is e Book ! The link t hat provides t he discount is given
Chapt er 6 ( chapt er dealing wit h MicrocapFeed) .

Th r ou gh a
offe r s
t o bu ye r s of
at t he end of

4 . I n- de pt h k n ow le dge of t h is e Book
St udy t his eBook t horoughly, wat ch for t he t raps, know when t o buy and
sell, lock in your profit s et c, apply t hem , and you will be m ore equipped
and knowledgeable t han 99.9% of t he newbies out t here. Do not at t em pt
t o st art m aking m oney wit hout reading t his eBook from st art t o finish.
5 . Pa pe r t r a din g

Even aft er reading t his book and underst anding it , you have t o APPLY I T.
I f you st art wit h real m oney wit hout any pract ice, you will LOSE it out of
em ot ion. I t ’s bet t er t o “ paper t rade” , m eaning use fake m oney t o get a
feel for your skills. Take som e t im e t o apply t he rules in t he book t o see
how well you fare paper t rading. Do t his for a m ont h and record your
result s. This will give you t he essent ial confidence you need when you
st art day t rading. More on paper t rading is given lat er on in t his eBook.
But wait , don’t I need an online broker account wit h cash so I can buy
and sell shares? Yes you do, but when you’re get t ing st art ed, it ’s bet t er
t o paper t rade. Once you’re done wit h t hat , yes go set up an online
broker account . There are m any out t here such as E- t rade, Scot t rade,
et c. Preferably, I choose Scot t rade. They are very orderly, have nice
cust om er service, and are very reliable when execut ing t rades and t heir
prices can’t be beat .
Now t hat we’re all set , let ’s go t o day t rading school and figure out what
t he heck drives penny st ocks up.


Ch a pt e r 3 : W h a t D r ive s Pe n n y St ock s Up
Class is now in session.
Let ’s st art off wit h a quick lesson on econom ics. When you hear t he word
econom ics, what do you t hink of?
Dem and and supply.
Dem and and supply. That ’s all we need t o look at when it com es t o day
t rading penny st ocks. We want t o m axim ize bot h fact ors in our favor. I n
ot her words, w e w a n t H I GH D EM AN D a n d LOW SUPPLY.
I f we find t hat com bo, we are SURE TO FI N D AN I N CREASE I N PRI CE.
Let ’s first look at t he dem and side and figure out how HI GH DEMAND is
creat ed.
H I GH D EM AN D = GOOD N EW S + H I GH VOLUM E

Not hing else m at t ers. Not how m uch cash t he com pany has, how m any
em ployees, what t he CEO get s paid, et c. Rem em ber, you’re buying st ock
at 9: 35 AM and selling at 10: 04 AM. I n ot her words, day t rading. You
don’t need t o do HUGE am ount s of analysis. You’re j ust riding t he
dem and wave and t aking profit s from it .
Let ’s look at news first . News provides t he fuel t hat drives penny st ocks
up. A perfect exam ple of t his is GLI F.


Chart court esy of St ock Ch a r t s.com

Look what happened on Sept em ber 22, 2005. Yup. A HUGE JUMP I N
PRI CE. Alm ost a 1000% I NCREASE! ! ! I f you had invest ed $500, you
would have t urned t hat int o $5,000 in ONE DAY! What caused t his huge
j um p?
I m por t a n t N ot e : For t he benefit of t he reader, I want ed t o include t he
full t ext of all press releases ( PR) in t his eBook. However, due t o
num erous copyright issues from various news wire organizat ions, I was
not able t o include t he full t ext of all PRs. I nst ead, I insert ed a link t o t he
PR, but be warned t hat t hese links will expire in t im e.
Reading press releases and get t ing a “ feel” of t he cont ent is VERY
im port ant . Fear not ! You will have plent y of t im e t o read num erous
press releases during your paper t rading period. More on t hat will be
covered lat er on in t he eBook.
Gr a n t Life Scie n ce s Aw a r de d Pa t e n t for V it a l Com pon e n t s of
Blood- Ba se d Ce r vica l Ca n ce r Te st


That m y friends, is t he power of news.
The next quest ion is, what kind of news? Will any news cut it ? Will a

press release about a com pany wit h a 10% increase in revenue cut it ?
No, of course not .
The underlying principle in det erm ining whet her or not t he news is good
enough t o shoot a st ock up is t o use t he “ WOW” t est . Aft er reading t he
PR, is it enough t o m ake you say “ WOW” ?
Here are som e t ypes of news t o look out for.
1 . Affilia t ion w it h a big com pa n y
I f a m aj or corporat ion is doing business wit h a penny st ock com pany,
t hat speaks volum e of t he penny st ock com pany. Big businesses are very
careful w ho t hey do business wit h. They only do business wit h com panies
t hat are serious and get t he j ob done. By affiliat ing t hem selves wit h a
penny st ock com pany, t hey are sending out t he m essage t hat t his penny
st ock com pany has what it t akes. You’ll see a perfect exam ple of t his
wit h GZFX lat er on in t his chapt er.
2 . N e w pa t e n t
I f a penny st ock com pany has right s t o a new pat ent , t hat is really good
news. What t hat m eans is t hat t he penny st ock com pany basically has a
m onopoly on t he product / service t hat t hey got t he pat ent for. I t ’s
indicat ive of high fut ure revenue num bers. A perfect exam ple of t his was
j ust given – GLI F.
3 . Gr e a t qu a r t e r ly fin a n cia l n u m be r s
Every year, penny st ock com panies release t heir quart erly num bers.
Som e of t hem have really great num bers. This can be due t o a num ber
of reasons such as great er num ber of cont ract s, royalt y fees, higher
dem and for product s/ services, et c. Bot t om line, t he num bers speak for
t hem selves. This will usually result in a rapid increase of price t o reflect
t he current quart erly num bers of t he com panies. An exam ple of t his is
given lat er on in t he chapt er. You will see an exam ple of t his wit h ATSI .
4 . Esca pe fr om ba n k r u pt cy
When a penny st ock com pany announces t hat it has filed for bankrupt cy,

t he st ock price goes down drast ically. Panic selling ensues. The price is
at an all t im e low. Then, if a com pany releases a PR drawing up a
det ailed plan of escaping bankrupt cy, you’ve got a basem ent floor bargain


here. Prices are at an all t im e low, and t he com pany has a plan t hat t o
get out of bankrupt cy. I nvest ors com e in and buy again, driving t he price
back up. You can get a piece of t hat act ion. Not ice t hough t hat a plan in
it of it self is enough psychological leverage t o get invest ors t o buy and
drive t he price back up. I t ’s all about invest or psychology.
5 . Re ve r se m e r ge r
A reverse m erger is basically m oney in t he bank. 9/ 10, t he price will go
up. Som e of t he com panies in t he penny st ock m arket are “ shell”
com panies. They serve no purpose except t o funct ion as a way for
privat e com panies t o go public.
The t radit ional way for a privat e com pany t o go public is t o issue an I PO
( init ial public offering) . This can be very cost ly and t im e consum ing. To
get around t hat , t he “ shell” com pany offers it s shares t o t he privat e
com pany t o buy it out . The privat e com pany, by t aking t hose shares,
owns t he m aj orit y of t he “ shell” com pany’s st ock. This result s in a
t ransfer of ownership from t he “ shell” com pany t o t he privat e com pany.
The privat e com pany t hen becom es a publicly t raded com pany.
The reason why t here is pret t y m uch a guarant ee of an increase in price
is because t he “ shell” com pany did not have any asset s and was not
generat ing any revenue. The privat e com pany, no doubt , has asset s and
is generat ing revenue. Wit h a reverse m erger, t he “ shell” com pany
lit erally has revenue and asset s overnight . The price of t he st ock should
reflect t he acquisit ion of t hese new asset s and revenues, and it does so
by increasing t he price or value of t he penny st ock.
6 . I n side r bu yin g

Whenever em ployees st art buying shares of t heir com pany, t hat ’s a very
good sign. Nobody else knows what is exact ly going on inside t he
com pany except t he em ployees t hem selves. I f t he em ployees are willing
t o put down t heir m oney t o buy shares, you can expect t hat t hey know
som et hing good is com ing up t hat will give t hem a ret urn on t heir
invest m ent .
7 . Goin g t o m or e pr e st igiou s e x ch a n ge su ch a s t h e N ASD AQ, or
N YSE, or AM EX.
I f a penny st ock com pany announces t hat it is leaving t he OTCBB or t he
Pink Sheet s t o go t rade on a m ore “ prest igious” m arket , t hat ’s a good
sign. Market s like t he NASDAQ, NYSE, AMEX have st rict requirem ent s
t hat m ust be m et before t hey can be t raded. These serve t o weed out
t he m en from t he boys. I f a penny st ock com pany has m et all t he
requirem ent s t o t rade on a m ore “ prest igious” m arket , t hen t hey are


invit ed t o play in t he m aj or leagues. By m eet ing t hose requirem ent s,
t hey send a posit ive signal about t he advancem ent of t heir com pany.
8 . Bu yba ck of sh a r e s
I f a com pany announces t hat it ’s going t o buyback it s shares, t hen t hat
effect ively reduces t he num ber of shares t o be t raded. I t also signals
t hat t he com pany has t he cash t o do so. That ’s a healt hy sign. When t he
num ber of shares are reduced, t hat lim it s t he supply, t hus m aking an
increase in price m ore likely t o occur.
9 . W in n in g of big con t r a ct s
I f a com pany announces t hat it has won m ult i- m illion dollar cont ract s,
t hat effect ively m eans t hat t heir revenues have increased by t hat m uch.
Even t hough t he service has not been rendered, it ’s invest or psychology
t hat t he com pany has a lot m ore revenue now. The st ock price m ust
reflect it , so it goes up.

1 0 . D oin g bu sin e ss in t e r n a t ion a lly
When a com pany st art s doing business int ernat ionally, it signals t hat it
has t he resources and capabilit ies t o do so. I t also signals t he st art of an
even great er cust om er base, which leads t o even great er pot ent ial
revenue. All good t hings in t he eyes of t he t rader.
To sum up ident ifying good news, use t he WOW fact or. I F t he news
doesn’t m ake you say “ WOW” , it ’s not wort h it .
Here is anot her exam ple.


Chart court esy of St ock Ch a r t s.com

What was t he news t hat m ade it shoot up on Sept em ber 14t h?
ATSI Re ve n u e Up 3 7 9 Pe r ce n t
And anot her exam ple.


Chart court esy of St ock Ch a r t s.com

What happened on Oct ober 5 t h t hat m ade t he st ock price soar m ore t han
400% ?
Cir cu it Cit y t o Offe r Ga m e Zn Flix 's On lin e Vide o Ga m e a n d D VD
Re n t a l Pr ogr a m
Closely correlat ed wit h good news and bearing t he ot her half of t he
equat ion t o high dem and is VOLUME. I f you look at t hose chart s again,
you’ll see t he volum e SKYROCKETED t he day of t he news.
For t hose of you who aren't savvy wit h invest or t erm s, volum e is sim ply
an indicat or of t he am ount of shares being bought and sold. High volum e
can go eit her way. I t can m ean a t on of people are SELLI NG and in t urn
having t he price DROP, or a t on of people BUYI NG, m oving t he price UP.

The logic behind looking at volum e is sim ply t his. I f all of a sudden, out of
t he blue, a st ock begins showing high am ount s of volum e, in part icular
people buying, t hen som et hing m ust be up. People are buying for a
reason, a GOOD reason. Join t hem and ride t he wave.
Som et im es, volum e in of it self is so powerful t hat it alone can creat e high
dem and.
Here is a perfect exam ple, SWKJ.


Chart court esy of St ock Ch a r t s.com

Take a look at Sept em ber 12, 2005. About 35 m illion shares t raded.
Looking at t he range of volum e, you can see t hat t he average volum e on
a given day was about 5 m illion. On Sept em ber 12, SWKJ was showing 7
TI MES t he average daily volum e. Som et hing was up. See what
happened? I t went from about 0.025 t o alm ost 0.06. That is a 240%
I NCREASE! There was no news release on t hat dat e. The st ock j ust
skyrocket ed on VOLUME ALONE.
Anot her reason why volum e is good for day t rading is because it provides
liquidit y. That m eans it 's easier t o buy and sell your shares because t here
so m any people involved in t his st ock. The m ore t raders t here are of a
st ock, t he m ore volum e t here is. This result s in a snowball effect because
all of a sudden, t raders see abnorm al volum e on a st ock, com e over t o
check it out , and t hen j oin in on t he fun. Your j ob is t o m ake sure you get
in t here early.

Anot her exam ple t o prove m y point .


Chart court esy of St ock Ch a r t s.com


As you h a ve se e n in t h e e x a m ple s, it s ABSOLUTELY CRI TI CAL you
h a ve a cce ss t o n e w s of pe n n y st ock s a n d volu m e a le r t s.
What I m ean by volum e alert s is filt ering ALL t he penny st ocks t o see
which st ocks are showing unusually high volum e.
Wouldn’t it be great if t here was an applicat ion t hat showed you real t im e
penny st ock news and volum e scans?
Well t here is, and you guessed it , it s MicrocapFeed!
Now you’re beginning t o see why it ’s so valuable, but it has t ons m ore t o
offer as you will see lat er on.
Thus, we fulfilled HI GH DEMAND. We t hen have t o fulfill low supply.
W E M UST TAKE SUPPLY I N TO ACCOUN T. Eve n if t h e r e is h igh
de m a n d, a h igh su pply w ill j u st n e u t r a lize t he in cr e a se in pr ice .
LOW SUPPLY = LOW FLOAT + RSI LEVEL BELOW 5 0
What t he heck is a float ? Float is sim ply t he num ber of shares t hat are
available for t rading. There are out st anding shares which are t he t ot al
num ber of shares, and t hen t here is t he float , which is t he num ber of
shares t hat are act ually allowed t o be t raded. You want t o buy st ock wit h
a low float . Anyt hing under 30 m illion shares is considered t o be a low
float for a penny st ock, but t here are except ions.


Here’s an exam ple of a st ock wit h good news but a high supply, m eaning
a high float .

Chart court esy of St ock Cha r t s.com
On Oct ober 3 rd , ONEV released a press release saying t hat t hey’ve
t eam ed up wit h Dell, one of t he t op leading PC m anufact urers. Affiliat ion
wit h a big com pany like t hat is sure t o t urn heads ( rem em ber GZFX and
t he news wit h affiliat ion of Circuit Cit y) and t he volum e poured in. About

14 m illion poured in. But let ’s look at t he float .
The float for ONEV according t o ot cbb.com is 311,136,312 shares as of
8/ 11/ 2005. Only a fract ion of t he float was t raded. Once t he price didn’t
go up, t raders wondered why, discovered t he huge float , realized t hat
t here were t oo m any out st anding shares, sold t heir shares, and as a
result t he price t anked.
But som e of you m ay be wondering about GZFX. The float for GZFX is
about 925,001,665 as of 06/ 30/ 2005. About 3 t im es as m uch as ONEV.
Why did it show such t rem endous gains? Let ’s look at t he chart for GZFX
again.


Chart court esy of St ock Ch a r t s.com

Look at t he volum e t raded on t he day of t he huge spike. Alm ost t he
ent ire float got t raded! That ’s t he key in det erm ining t he whet her a st ock
has a low float or not . I t ’s all relat ive. A st ock m ay have a huge float like
GZFX, but if t he dem and is high enough t hat t he ent ire float get s t raded,
it ’s safe t o say it ’s a “ low float ” st ock, relat ively speaking.
The second fact or is t he RSI . RSI st ands for relat ive st rengt h index and
is a m om ent um indicat or t hat t ells t raders how oversold/ overbought t he
st ock is. That ’s t he cool t hing about day t rading penny st ocks. You j ust
need t o rely on one t echnical indicat or. You don’t have t o worry about all
t hose ot her confusing indicat ors. The m ore oversold, t he lower t he RSI
would be, t he m ore day t raders like. A RSI of about 20 is considered t o
be ext rem ely oversold. As day t raders, we like it when t he RSI is at 20.
Most st ocks bounce up at t hat level. A RSI of about 80 would be
considered overbought . Most st ock prices go down aft er reaching t hat
level.
Let ’s look back at t hose previous st ock exam ples. Pay close at t ent ion t o

t he RSI levels at t he beginning of t he spike and at t he end and you’ll see
what I ’m t alking about .


Chart court esy of St ock Cha r t s.com
You can see a correlat ion bet ween t he RSI level and t he price. As t he
price rises, t he RSI levels rise as well. When t he st ock price shot up, t he
RSI level was around 40 and shot up t o 65.


Chart court esy of St ock Ch a r t s.com

This is a m ore drast ic exam ple. Before t he spike, t he RSI level w as
nearly at 20, which is very good for us day t raders. We like t hat . Look
how far it spiked up, t o 80. NEVER BUY when t he RSI is t hat high. Look
what happens. The price falls. That ’s why it ’s SO I MPORTANT t o t ake
int o account t he supply side of t he equat ion.