Penny Stock Alert Services Are a Trap – Be Cautious in Subscribing to Them:
The best penny stock alert services are the ones that deceive the most people. Typically, the people running the services are more concerned about marketing – not trading. And the way they sell subscriptions is by preying on your desire to get-rich-quick.
By promising “explosive returns” in short periods of time, you have a hard time ignoring their message. It might seem a little too good to be true, but you want to pull huge sums of money out of the market so badly that you ignore rationality. This is your dream, and they’re promising that dream on a silver platter – all you have to do is pay a subscription fee of $100 per month, $1,000 per year, or whatever the case may be. But that’s nothing compared to the profits you’ll generate by following the alerts. Just look at their track record – not a single losing trade in months! After quick deliberation, you’re full of excitement and decide to give it a shot.
Within a few short days or weeks, however, you quickly realize that these “hot stock alerts” aren’t working for you as expected. The alerts are delayed and you can’t get the same entry and exit prices. You’re missing the bulk of every move. Even worse, not only are you not making money with the alerts, you’re actually losing money. Yet the “guru” behind the alerts is still banking thousands of dollars on each trade – how is that possible? You were expecting profits like clockwork, trade after trade, but your results are nowhere close to “explosive” – not in a positive direction anyway. The service is nothing like you expected it to be. And there are no refunds.
2 Major Reasons Why Penny Stock Alert Services Won’t Work For You:
I’ve used dozens of penny stock alert services in the past, so through my own personal experiences I can tell you why they’re so attractive and seemingly successful, and why that success most likely won’t be transferred to you.
Reason #1: The Dynamics of Stock Alert Services Provide You With Diminished Returns
You have to understand that the returns achieved by the gurus sending out the alerts are drastically skewed in their favor. As a result, the “explosive returns” you see prominently displayed on the home page of their websites or in marketing emails are completely distorted. Let me explain. When they enter a low-priced, low-volume penny stock and then alert that entry to thousands of subscribers, the extraordinary buying pressure immediately drives the price of that stock up, anywhere from 5-100%+ within minutes. Then when they sell their position, it usually has the opposite effect, resulting in what is known as a pump-and-dump.
So while the service providers have tremendous confidence in their alerts and a stellar track record to show for it, it’s because the dynamics of their operations set them up for success, but not necessarily the majority of subscribers. With thousands of subscribers blindly following their alerts, buying into specific stocks at a moment’s notice in hoards, there’s virtually no way for them to lose. That type of cushion could make any trader look good. The problem is that the same level of success doesn’t transfer to subscribers. If you’re not one of the first handful in, then you’re getting stuck in the downswing. It’s an approach that only benefits a small few – primarily the service providers. Sadly, the majority of subscribers are left in the dust wondering what they’ve gotten themselves into.
Reason #2: Your Get-Rich-Quick Mindset Will Never Produce Consistent Trading Success
The get-rich-quick mindset is nearly universal amongst novice traders, and it almost always leads them down the path of “gurus”, “foolproof systems”, and “hot stock alerts”. There’s no doubt in my mind that this greatly contributes to the soberingly low success rate for traders. You go into it thinking that these services offering shortcuts will fill some emotional holes that you have inside of you. You want respect from your parents, the approval of your spouse, the ability to be financially free, or whatever it may be. You’re heavily invested in these outcomes. Unfortunately, your deep-down desires are exactly what these services dishonestly feast upon.
They essentially take advantage of human nature. Our preference for the path of least resistance. The one that requires the least effort. The ironic aspect of relying on stock alerts is that it actually makes your path to achieving consistent trading success more difficult, time-consuming, and expensive. In other words, the path of least resistance is destructive and full of pain, both emotionally and financially. There has to be a complete change in perspective in order for you to achieve your trading goals. You have to shift from random and impulsive trading to structured and disciplined trading. From dependency on alerts to self-reliance in finding setups and executing on them. The only shortcut that exists is focusing on building your core trading skills and mindset right from the start.
The 1% of Penny Stock Alert Service Subscribers That Succeed – How Do They Do It?
It’s important to point out that these services do actually work for some people, but it’s not from blindly mirroring the alerts.
Many alert services aren’t solely alert services. They tend to also provide daily watch lists, special reports, and even full courses with recorded video lessons and live webinars. So the small percentage of subscribers who legitimately find success are the ones who focus on the educational aspects, specifically the video lessons and webinars, so that they can evolve into self-sufficient traders. Trying to frantically trade based on alerts is a recipe for disaster. Achieving self-sufficiency, however, can produce long-lasting success.
When you see reviews and testimonials for specific penny stock newsletters or alert services, take notice of how they typically focus on the short-term. Those subscribers are talking about just one or two trades – not consistent trading success over the course of months or years. That’s because those trades are nothing more than a fluke, chance, or luck. Anybody can hit huge winners from time-to-time, but that doesn’t necessarily equate to long-term success. Huge winners can quickly get wiped out by large, frequent losses.
Conclusion – Replace Penny Stock Alert Services With Legitimate Courses and Mentorship:
It took me years to realize that penny stock alert services weren’t effective in turning me into a consistently profitable trader. I wasted lots of time, energy, and money (in both subscription fees and trading losses) as a result. The last thing I want is for more people to take the same path that I did. If only traders understood that long-lasting trading success doesn’t come from following alert services.
The main objective of these services is to brag about their own results and mislead people into thinking they can capture the same returns. With high hopes, you subscribe with dreams of achieving the same explosive returns, and as the subscriber-base grows, the guru’s results only become more and more distorted. The increased buying volume behind every alert produces even larger returns. Those massive returns for the guru are then used to promote and attract even more subscribers. This cunning cycle continues to feed on itself until it becomes a massive marketing and pump-and-dump machine. The guru wins big. But most subscribers lose.
As I stated in the very first sentence of this article, the best penny stock alert services are the ones that deceive the most people. They’re seemingly great when you look at the guru’s amazing results, but they’re not very effective for subscribers. With massive returns, they attract an abundance of followers. From the outside, a massive following and explosive returns paint the picture of a great service. But in reality, it won’t help you achieve your trading dreams. Unfortunately, even though alert services don’t really work, they’re still in unreasonably high demand. Do yourself a favor and focus on the two core components of trading success instead.
The best free stock market advice – DO NOT rely on a penny stock alert service for achieving long-lasting, consistent profitability.
Learn More in the Trading Success Framework Course
Written by Matt Thomas (@MattThomasTP)
Related Pages:
- Best Swing Trading Sites and Services For Beginners
- What is the Foundation For Stock Trading Success?
- A How to Guide For the Stock Market – Achieving Consistent Profitability
- What is 2ndSkies Trading? Change the Way You Think, Trade, and Perform
- Where to Learn How to Trade Stocks – Build Your Foundation Here
This is very useful information on penny stock alert services. I agree that it is so easy to get sucked in by these guru’s sales talk. The thought of promises to make big money gets us excited and carried away. I am glad that I have read your post for grounding. In future I will ignore these services (at least the alerts component) and concentrate on the core components of trading success instead
I am not familiar with any specific penny stock alert services but you explained how they work very well. So many people get pulled into get rich quick debacles – or go into things with the wrong idea of what they are or inappropriate mindset. I’m glad there are people like you to help others realize how false and misleading some of the promotions can be. By informing us, we will know what to look for and what to avoid, and how we can approach services in this industry.
Thanks Nina – I appreciate you sharing your thoughts. I hope this article helps individuals understand how penny stock alert services work. As a new/inexperienced/naive trader, the idea of a penny stock alert service seems great. You see a guru boasting about explosive returns and think: “how hard could it be to simply mirror his/her trades?” You can theoretically make the subscription fee back (and much more) by capturing a huge profit on just one trade. But reality ends up being much different. Most subscribers actually end up losing money – the trades are too fast-paced and the subscribers can’t get the same entries/exits as the guru. In addition to that, they’re usually unprepared in terms of both knowledge and skills – and that’s a result of thinking they don’t need to know anything in order to be successful. They’re dependent on alerts for their success, but the alerts don’t work as expected.
With that being said, not all penny stock newsletters and alert services out there are totally bad or totally good. The truth lies somewhere in-between. Many of them actually offer much more than just stock alerts – including video lessons (or complete courses), chat rooms, watch lists, webinars, and other forms of ongoing mentorship. But in my opinion, the alerts are the worst part of these services. They handicap people into thinking they can easily achieve massive trading success without putting in any effort. So the alerts alone end up being what most subscribers focus on, while they ignore the other aspects that can actually be educational and help build core trading skills. Overall, my goal is to make sure people understand exactly what they’re getting into with these types of services, and most importantly, how to actually use them effectively if they decide to subscribe. Far too many individuals go in with an incomplete understanding of stock alert dynamics and unrealistic profit expectations.
I always have suspicions of websites offering penny stock alerts, because they promise on making money quick and easy. These kind of schemes are never actually effective, I don’t believe. I like how you pointed out that the get rich quick mindset cannot produce consistent trading success, couldn’t agree more.
These alert services seem effective based on the guru’s massive following and explosive profits, but subscribers never come close to experiencing similar results. Most subscribers don’t even make money following the alerts – they lose money instead. So not only are they paying for an ineffective service, but they’re losing even more money in the market.
Most of the blame should go to the services for making false promises and deceiving subscribers into thinking they can achieve the same results, but there’s also a part of the blame that should go to the individuals. Myself included for subscribing to such services in the past. It’s our get-rich-quick mentality that gets us into these messes, but that mindset certainly won’t produce long-lasting consistent profitability.
Luckily, I made it past the point of thinking that these alert services are the answer, and now I understand what it takes to be a legitimate trader – a focus on building core skills and the proper mindset. There are far fewer services out there that actually focus on these two aspects. Because guess what? They’re harder to sell!. It’s not what people want. We prefer shortcuts. But at least these services are actually effective when we commit to growth and development of our skills and mindset.