What is a Penny Stock Alert Website/Service and Which One is the Best?
A penny stock alert service typically consists of a self-proclaimed trading guru sending out buy and sell alerts on low-priced stocks. Typically, these stocks trade at just a few dollars per share or less – sometimes even as low as mere fractions of a penny.
The penny stock world can be exciting, especially for market newcomers, because it’s easy to get mesmerized by the incredible potential. Everybody wants to find the next Apple or Amazon – industry behemoths today that once traded for under $5 per share.
At this point in time, Apple shares are trading at roughly $150 per share and Amazon is trading at roughly $3,325 per share. Wouldn’t it have been nice to put $5,000 into Amazon 20 years ago? If you did, you would be a millionaire many times over at this point.
This thought of capturing massive riches by finding hidden gems within the penny stock arena is usually what attracts people to it. But the reality is that virtually all penny stocks end up failing. Long-term success stories like Apple and Amazon are a rare occurrence.
This is why you probably won’t see any penny stock alert services focusing on long-term investments because the odds of these stocks thriving or even existing decades down the line are slim to none. Instead, every penny stock alert service focuses on day trading.
Why You Should Be Concerned About Subscribing to Penny Stock Alert Websites/Services:
If you’re actively reading this post, then you’re about to understand the dangerous dynamics of penny stock alert services – and by avoiding them you’ll probably save thousands of dollars. Not just in subscription fees, but from dodging disastrous trades as well.
I’m not saying it’s impossible to make a ton of money trading penny stocks because people have certainly done it. But what I’m saying is that it definitely won’t happen for those who blindly follow trade alerts. Mindlessly copying some guru’s trades won’t be as easy as you think.
Based on the marketing and advertising of penny stock alert services, you would definitely think they’re designed for you as the subscriber to win: “Make a 300% annual return on the side while working a full-time job by copying our easy-to-follow alerts!” But this is bogus.
They say things like this in their advertising because it attracts a bunch of subscribers. They emphasize benefits like huge profits, easy systems, limited effort, and no experience required. In theory, it sounds like a dream come true. But in practice, not so much.
The reality is that there just isn’t enough volume in penny stocks to support thousands of followers entering and exiting at anywhere near the same price. So by the time you receive an alert (even if only a minute or two late), you might have already missed the trade.
The Earnings Claims Of Gurus With Penny Stock Alert Services Are Most Likely Distorted:
One of the biggest issues with penny stock alert services is the deception that occurs in terms of profit-potential. The lead guru is usually capturing extraordinary profits on a daily, weekly, monthly, and yearly basis. But subscribers simply can’t find a way to match it.
This is because the guru alerting their trades has an incredible advantage. Every time they enter a trade and alert it, thousands of followers pile in, which typically results in a substantial short-term price spike. This cushion makes it easy for the guru to win.
But for the vast majority of subscribers, this cushion doesn’t exist. It’s an outrageous fight to get in and out at the same price as the leader. With thousands of other subscribers trying to do the same thing, the odds of you being one of the first to act are slim to none.
So when these types of services act like you can be a busy professional and also make a killing on the side by following their explosive penny stock alerts, it’s complete BS. If you’re not actively anticipating or waiting for an alert, you’ll probably miss the trade.
Overall, the leader is typically the only one that consistently wins while 99% of the subscribers lose. But as ineffective as they are, they often still continue to grow by advertising the leader’s incredible win rates and profits – and attracting even more blind followers.
It’s a vicious cycle that makes it seem like penny stock alert services are amazing when in reality they’re almost entirely worthless.
Avoid Alert Services Altogether and Focus on Building Legitimate Trading Skills Instead:
If you’re reading this article and still considering subscribing to a penny stock alert service, I highly recommend choosing one of these two different paths instead: 1) take trading seriously and focus on building legitimate skills or 2) don’t actively trade at all.
1. Take Trading Seriously and Develop Legitimate Technical, Analytical, and Mental Skills
In my personal experience, this is the only way to achieve durable trading success. Unfortunately, I spent several years of valuable time hopping from one chat room, newsletter, and alert service to the next looking for one that could spoon-feed me a consistent flow of winning trades. But I never found it. Sadly, these attractive shortcuts only handicapped my progress as a trader.
The reason I stopped losing money and slowly started to actually make money trading was by focusing on actual learning and skill-building. I stopped looking for gurus to follow and decided to focus on the market and myself. All those years I thought I needed someone to copy or tell me exactly what to do. But what I actually needed was training to build legitimate skills for self-sufficiency.
2. Don’t Even Bother Day Trading at All (Alert Services Aren’t Some Magical Answer)
I truly don’t mean this in a rude way because I actually think it will help people save a ton of time, effort, and money – but if you’re not willing to take trading seriously and develop legitimate skills, then you should avoid active trading altogether. Day trading is an extremely difficult endeavor and alert services simply aren’t the answer to making you some sort of amazing trader without effort.
I understand how enticing these services can be and how easy it is to start believing that they can satiate all your financial desires, but alert services (especially for penny stocks) won’t work nearly as well as you expect. And on top of that, there’s much more to trading success than just entries and exits – there’s also position sizing, risk and money management, trading psychology, and the list goes on.
Conclusion – Even the Best Penny Stock Alert Services Are Largely Ineffective For Subscribers:
To wrap this up, there is no penny stock alert service that I personally recommend. To me, guru alerts alone are completely useless.
If there was ever a specific stock alert service that I would recommend, it would have to be trading products with high liquidity (not penny stocks), actually put a reasonable cap on the number of subscribers, and create a gated structure that requires subscribers to go through a specific set of educational material and pass a test before receiving access to trade alerts.
With these measures in place, subscribers would be more likely to get the same or similar entries and exits as the leader and also not completely distort the market. But most importantly, the gated structure would require subscribers to actually understand what they’re getting into and have a foundation of trading knowledge before ever receiving an alert and placing a trade.
Unfortunately, you probably won’t ever find a worthwhile service like this because there’s no money in it for the service provider. Venturing outside of the penny stock arena typically means slower moves and longer hold times. This isn’t as attractive to people looking to get rich quick. The cap on subscribers also limits the income that the service provider can potentially make.
Overall, you have to be careful because the stock trading educational space is full of sellers using clever marketing tactics to promise explosive returns with their stock picking services. But 99.99% of people just get disappointed going down this path.
Avoid the ridiculous claims and false promises of gurus, and focus on legitimate training/skill-building instead.
Written by Matt Thomas (@MattThomasTP)
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